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HES, PRO See Challenges, Opportunities In Q4

Atlanta – Brand Source’s Home Entertainment Source (HES) and
alliance partner the PRO Group both see challenges and opportunities for retail
members as the fall selling season looms.

That was the message of Jim Ristow, executive VP of HES, and Dave
Workman, executive director of the PRO Group, when they hosted their annual
CEDIA Expo reception at the Hilton Atlanta Thursday evening.

It toasting its members and suppliers at the event Ristow said
that retailers of both groups are important, successful and relevant in today’s
difficult marketplace.

In discussing with TWICE current retail conditions for their
members, Ristow and Workman both said the summer was slow, with the HES
executive saying the group is “cautiously optimistic that business is trending
upward. We do have more and bigger [installation] jobs that we are working on.”

Workman added that Labor Day weekend, “was a disappointment” but
in the past two weeks business has picked up for his members.

One of the notable bright spots that has been mentioned at CEDIA
Expo this week by several executives has been home audio sales. “We have done
very well in audio this year. Our business is up in double digits,” Ristow

But the summer was a disappointment for the industry, even when
you consider it is usually quieter than the rest of the year. One theory has
been that the introduction of iPad and other handheld electronics may have
taken sales away from TV. Workman said, “It made a limited impact,” but was one
of several problems in the market, not the biggest. He did say that the three
hottest products this holiday season will be, in no particular order,
e-readers, iPad and phones.

Workman added, “That doesn’t mean that flat panels will not be
popular in the fourth quarter.”

Turning to TVs, both men said 3D TV will “definitely be popular”
in “our channel” of independent retailers, but Workman noted the perception
problem with 3D’s consumer acceptance so far this year. “If suppliers had been
more realistic in their sales goals, acknowledging that there would be limited
software and content available” that perception would not exist.

And Workman echoed complaints made earlier this year that, “If
independents had been able to introduce 3D and demonstrate it properly we could
have helped establish the market and explain the technology effectively.”

Both men quoted a study their groups commissioned saying that
their members demonstrate 3D TVs 59 percent of the time while national chains
have done it 22 percent of the time. “If you go to national chains the quality
of their 3D demos are non-existent … or ineffective,” Ristow said.

Another problem with the hoopla surrounding of 3D TV is that, “It
has stepped over IPTV, which is a very viable and useful feature for
consumers,” Ristow noted.

And finally, when asked if this would be a typical Black Friday
or will heavy retail promotions make it a “Black November” for flat panels,
Workman noted, “In some cases it was a ‘Black Labor Day,’ ” but noted that this
year there will be “major Black Friday events.” The danger is — if the promotions
get too aggressive — “it will drive people into the stores that weekend, then
they disappear for two weeks,” until retailers promote heavily again to get
consumers back right before Christmas.

However Ristow noted that the two groups’ members, being independents,
boast support that is “quick and nimble and can react with strong promotions,
be competitive and can take market share,” during the fourth quarter.

On specific HES matters Ristow said the group introduced  Connected Source, a store within a store that
has everything needed for installing IT, IP, lighting and other systems, with
Control 4. The initial launch will involve four stores.

Also, HES will hold its 2011 Summit at the World Marriott Center
in Orlando Feb. 20-23, 2011.