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Diversification Is The Key

You hear the words “entrepreneur” or “innovator” thrown around a lot in this industry.

And if you have attended the recent Nationwide Marketing Group, BrandSource, Mega Group and NATM meetings, or went to CEDIA Expo in Indianapolis earlier this month, you know many of the attendees exemplify the definitions of those lofty words. You’ll probably meet a few more at the HTSA meeting next month too.

These executives have not waited for the effects of the Great Recession to end. They have launched strategies for growth and profitability. In the words of one independent retailer who contacted TWICE recently: “Diversification is the key to these times for survival.”

They are changing strategies to emphasize their strengths — explaining and displaying products live, shipping them on time and installing them — to counteract the threats from online retailers and the showrooming trend.

You can’t just rely on selling individual products anymore, especially if most of your sales are through brick-and-mortar stores. You have to sell systems, and many independents are embracing new technologies that require explanation and installation — such as integrated home systems that involve lighting controls, installed security and others — many of which can be retrofitted into existing homes.

Some are even doing commercial A/V installations in addition to home systems, as execs from ProSource and Capitol Sales told me at CEDIA Expo. The PowerHouse Alliance is working with the Mega Group to get those appliance/electronics retailers into the installation game too.

Retailers are also turning back the clock and going after furniture and bedding sales — for store traffic and margin.

Best Buy got some attention last week when it was revealed that Gardner-White opening test stores later this month in a couple of the chain’s locations to sell furniture. But that is old news for many independents that turned to furniture to replace profits from HDTV a few short years ago.

Many of these retailers, distributors and installers don’t only handle CE products — they sell major appliances too. An offshoot of major appliances is kitchen cabinets. At the BrandSource meeting last month that I attended I found out about a kitchen cabinet program it provides to members where they can offer kitchen cabinets, or sell them along with some kitchen appliances.

If you are a CE or majaps vendor, you may ask, “How does that help us?” In my humble opinion, it will because it makes your retail partners financially stronger, more diversified and more important to their (and potentially your) customers.

In dealing with the double-whammy of tough economic times and having to deal with the public’s voracious appetite to shop online, the best independent retailers and distributors are diversifying, and honing their sales and installation skills.

Those skills will help CE and major appliance vendors that have lines that need to be explained, delivered and installed. They are positioned to be sold for a profit, and they need these reinvigorated retailers and dealers to sell their products.