RENO, NEV. – After contending with one of the nation’s hardest-hit housing markets, Reno, Nev.-based Encore Audio Visual Design found gold in them thar hills, almost literally.
CEO Brad Bolotin, who launched the business in 2010 with chief financial officer and custom designer Sean McNeal, disregarded Horace Greely’s famed advice and headed east instead of west, to the town of Elko, Nev.
There, the partners found an underserved market of 75,000 that also happens to be, as Bolotin described it, the “epicenter” of the gold-mining industry. With the closest major retail centers some 300 miles away, Encore quickly became the default specialty A/V dealer and custom installer for a boomtown flush with gold miners and cash.
“They had no one like me that can do a great job in audio and video,” Bolotin said. That’s no hollow boast, as Bolotin comes from a retail background, starting out in his family’s Chicago furniture business. He entered CE in 1978 by founding Wild West Electronics, a Reno car stereo shop that evolved into a local video and audio favorite of consumers and commercial accounts.
Bolotin sold his interest in Wild West in 2000 and stayed on as CEO until 2010, when the owners walked away from the business. He then started Encore, bringing his contacts at casinos, corporations, home builders, real estate operators and small businesses with him, along with key vendors including Paradigm and Bose.
Bolotin also found critical support in Home Entertainment Source (HES), the BrandSource buying group division led by Jim Ristow. The specialty group provides Encore with financing, flooring and extended-warranty programs; face time with manufacturers; and group-negotiated deals on A/V and custom-install products. Eighty-five percent of inventory is delivered via BrandSource’s in-house distribution system, and Encore’s assortment is supplemented by assists from nearby distributors Almo and AVAD.
But Reno’s stagnant housing starts and high unemployment sent Bolotin off to find fortune in Elko, where he established a 2,500-square-foot showroom in 2011. He heavily invested time and money in the new market with saturation TV, radio and billboard advertising (his pitch: “We’ll meet or beat any price on a flat-screen TV, so why spend $150 on gas?”), and became involved in the community by joining the local Rotary club and the Elko Chamber of Commerce board.
The store quickly became an “out of the park success,” he said, but business really took off, as did profits, when he opened a turnkey BrandSource mattress shop right next door. With guidance from BrandSource home-furnishings exec Mike Allen and leveraging his own furniture background, he filled the SleepSource floor with 22 different mattress sets spanning all price points, and the proximity to Encore and their shared BrandSource private-label credit card created a synergistic sales effect that “helps offset slim margins on TVs,” Bolotin said.
Indeed, mattress manufacturers “protect the dealers” more than most video vendors by providing derivative models, profitable promotions, co-op dollars and market development funds (MDF), he said.
Together with a fast-growing commercial business that includes sports bars and mining company training rooms, the Elko operation now comprises 65 percent of total company volume.
Meanwhile, the Reno store, which offers a higher-end assortment and more elaborate installations, is “holding its own,” Bolotin said, as the market stabilizes, custom home builders reemerge, and work returns on casinos, corporate board rooms and software and other high-tech companies.
Nevertheless, retail and custom home installs still represent 65 percent of the combined businesses, driven by mattresses, soundbars, receivers, projectors, flat-panel TVs and a promised “big-box store price-match guarantee.”
“I’ll make my seven to 10 points on a TV and make it up on extended warranties and HDMI cables,” Bolotin said.