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ProSource Debuts, Upbeat On Prospects

ORLANDO, FLA. — Brand Source’s Home Entertainment Source officially became ProSource at the group’s Summit & Expo, here, last month, with Jim Ristow, co-president and chief business officer, and Dave Workman, co-president and COO, emphasizing the strengths of the $3 billion organization.

The new group, which has been under development for four years, is a combination of the Ristow’s former Home Entertainment Source and Workman’s Progressive Retailers Organization (PRO Group) operations. The group consists of three types of members:

CI: More than 400 dealers with annual sales of more than $1 million that are custom integration members, many being top 20 percent CEDIA members, and “has more sales than all other groups combined,” Pro Source said. The goal is for more than 500 members.

CI Power: Sixty-six dealers with more than $4 million in annual sales, some of which are retailers, but the rest are large integrators and custom showrooms. The goal is for 75 to 100 members.

Pro: Fifteen members currently with annual sales of more than $10 million who are “promotion specialists” and “retail/e-tail” operations, Pro Source said, with the goal of 20 to 25 members.

Ristow told TWICE in an interview after the presentation that the “goals” for each tier of members in Pro- Source is “not a numbers game” but an effort to “look for the right type of members” for each segment so the organization can “grow correctly.”

He added that the segments are based on “putting members with other members of similar profiles” based on types of products sold, services offered and annual sales.

Workman explained, “Whether a member has $3 million in annual sales, or $30 million they may have the same issues in certain areas and will be able to share perspectives as part of [ProSource] which is an advantage.”

In his part of the presentation, Ristow illustrated with a show of member hands that “freeze-o-nomics,” brought on by a cold winter, hurt business in January and February, but business was better in 2013 and should continue to grow in 2014.

Ristow cited members’ strengths, such as selling more than one brand of wireless multiroom systems, and the expansion of home-automation jobs for both lower- and higher-priced installations for the expected growth.

Ristow said new app-controlled sensor-based home-automation products aimed at average homeowners is expanding demand for these systems, which ProSource members can install.

Workman and Ristow told TWICE that we are “in a connected world” with smartphones being used more and more as remotes for such systems.

In discussing home-automation systems, Workman said, “They are more than just audio and video in the home. They include IP-based security systems that you can monitor what is going on in your home around the world. These systems also involve heating and cooling, lighting, and many more functions.”

Ristow said these types of products “will sustain our members for a long period of time. They all require networked solutions in the home, many over stable, wireless networks and provide solutions” to consumers.

He then went through the group’s key suppliers for some of these categories — Control4, URC and Savant — and concluded the $1,000 price point for entry-level home automation is crucial. But he stressed, “Don’t abandon the high end,” since once installers get these new customers, they can later expand them into more elaborate systems.

Ristow said Google’s $32 billion purchase of Nest products is drawing the attention of mainstream consumers and will bring “rapid growth” to installers and integrators. “We will ride the wave,” he noted.

He quoted the National Association of Home Builders’ (NAHB) forecast of a 24 percent gain in newhome building in 2014, with a 32 percent gain in just single-family homes alone, and more double-digit growth in 2015.

Turning to Ultra HD TV, he cited a Consumer Electronics Association study that showed 73 percent of consumers who see the new format “want to buy it.” Ristow added, “Who shows those sets” and explains features? “We do.” He urged members to “think big” about the category — not just in terms of screen size but in terms of “sales and profits.”

Workman said that seeing the demand for 4K and OLED this year, “luxury [products] matter,” and that falls right into the ProSource members’ business model. These sets, with models ranging from the 65 inches to 98 inches, will have to be demonstrated, both Ristow and Workman said.

Ristow checked off some of the TV suppliers’ products that were on display here, including LG’s 77-inch curved OLED Ultra HD TV, available later this year. (LG showed the TV for the first time during the TWICE/CEA Ultra HD Conference last November, and it officially debuted during International CES in January.)

In addition, Samsung will have eight more Ultra HD TVs available this year, and Sharp will show its 2K screen QPlus technology that it said will approach the performance of 4K.

In wireless home audio there will be competitors to wireless multiroom audio systems such as Sonos, which Ristow called “the gold standard.” New offerings are available from Samsung and Bose, the latter of which is going to offer the group its line of personal audio products for the first time. Competition will also come from DTS Play Fi products and Definitive Audio.

But, Workman said, “legacy audio is still important,” noting hat many upscale brands get 20 percent to 25 percent of its sales from ProSource members.

He said the group has a bright future based on Ultra HD, home automation and other categories. “We have a mass of retailers and custom installers,” which are “a unique combination … and we are on the right side of [industry] momentum.”

He stressed, “Vendors love to see growth” and that as an “old-dog retailer, … I love to see 20 to 30 percent growth rates.”

All of which shows “that when you look at ProSource, 1 + 1 = 3, namely that the whole is bigger than the sum of its parts” since the group “combines integrators and retailers.”

Ristow summarized the prospects for its members as “a tidal wave” between improved housing starts, better technology, 4K and Ultra HD TV, and home automation, where Pro Source can go “with higher end as well as go wider” with more products for a wider audience that need to be explained and installed.