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ProSource Sees Steady Q4, Looks For Positive 2014

DENVER — ProSource dealers and manufacturers at the group’s annual CEDIA Expo reception seemed to expect business in the next three months to keep about even with the prior year in overall sales volume.

ProSource, the 500-member, $3.1 billion A/V and integration division of the BrandSource buying organization, celebrated a CEDIA Expo that many said appeared to present a rejuvenation in new audio and system integrations technologies that should help dealers drive new growth.

Dave Workman, ProSource president and CEO, told TWICE: “The overall CE outlook at retail is probably going to be a little bumpy this holiday season. I think we still have some challenges, with the big categories of PC and the swapping of dollars that’s going on between technologies. All of the new introductions in the smartphone category come out now, so that’s going to do well, and it’s going to be a gaming Christmas. The overall numbers, I think, will show well, but it depends on the categories you’re playing in.”

Workman said there are “pockets of audio that are doing extremely well — Bluetooth audio is off the chart, soundbars are off the chart, and legacy audio, for our organization, is holding up very well.”

In video, Workman said the performance of recent introductions of new 4K Ultra High-Definition TV products “is anybody’s guess. A lot of manufacturers are declaring their positions now, so what we see with the promotional roadmaps is going to determine what happens with 4K. I don’t think we’ve seen the last story on that yet.”

Workman speculated that the industry “is motivated to do a setup play this fourth quarter for what will be their 2014 roadmap. They need to get a little momentum going, simply because where I think the industry is struggling is the consumer isn’t paying the premium for features, and they will pay a premium for performance. I think you are going to see an evolution of strategies where manufacturers are going to be taking the premium pieces in 2K and figuring out how to move that into a 4K story for 2014. If that occurs, what we will need is a setup play for the fourth quarter to build a runway into 2014.”

Workman said ProSource dealers will play an important role in providing an educated sale to the consumer.

“We recognize that we are not a volume player — Walmart and others will always have a bigger presence in the market — but we do premium very well and we do best with emerging technology,” said Workman.

Bjorn Dybdahl, founder of the Texas-based Bjorn’s A/V specialty chain, said recent Ultra HD and new OLED TV introductions show promise.

Regarding Samsung’s recent launch of an OLED TV (Bjorn’s is not an LG dealer), Dybdahl said, “I think people are looking at the price, period, and it’s discouraging to me because it’s worth the nine grand, but with the prices that are coming in now on some new 4K products,” people are holding off to see where it all settles out.

As for the fourth quarter, Dybdahl said Bjorn’s expects flat results compared with 2012.

“We’ll be OK,” he said. “I don’t think we are going to see sales go down. The [unilateral pricing policies] obviously help. Sony’s SURE program helps. We can compete on an even footing with everybody else, so I think we are going to have an OK quarter.”

Dybdahl lauded Sony for its recent aggressive market posture that has supported smaller A/V specialty dealers.

“[Sony has] been a great supporter of us,” Dybdahl said, adding that Bjorn’s will have a launch event for Sony’s new TV products on Oct. 16.

As for the old TV technology favorite — plasma — Dybdahl said he still loves it and the value it offers the consumer, but he has been discouraged by Panasonic’s recent moves to cut down its direct distribution to smaller retailers. This is forcing Bjorn’s and other A/V specialists of that size to buy Panasonic-branded products through distributors, “so you can’t make money on it,” he said, adding that he continues to carry Panasonic’s products to serve his clientele.

Alan Guyes, Roanoke, Va.-based A/V installer Audiotronics A/V buyer and corporate secretary, said, “Business has been very good, particularly the custom integration portion. It’s roared back to life. We are doing a lot of housing starts for 8,000-square foot and larger homes. A lot the commercial guys that have put projects off for years, are now spending money again.”

Guyes added: “The brick-and-mortar portion of our business is also doing well. We are an Apple reseller, and that brings people in and sells itself. It’s hard to get excited about televisions anymore, but 4K may hold promise. Customers aren’t biting on it yet, but they get it. I think they are so conditioned now on waiting for prices to drop, but they are interested. Customers are coming into stores looking at it and talking about it. I think next year is going to be the year for 4K.”

Meanwhile, the ProSource event also brought out a few familiar retail faces from the past.

Casey Crane, former president of the once prominent Southern California, A/V specialty chain Ken Crane’s, was at the party representing Progressive Finance, where he’s been tailoring a retail-friendly offering for low-margin business owners.

Crane said he can offer dealers consumer-friendly financing programs at no cost to the retailer.

Gary Yacoubian, former MyerEmco president, CEA executive board chairman and current CEO of SVS, said his business has been phenomenal since he took the helm in 2011.

“We’ve built our brand and our business in direct relationship to our customers. We’re selling conventional audio products in a disruptive and unconventional way, and it’s been going through the roof. We are still a little under the radar screen in our industry because we don’t deploy the giant infrastructure that we see over in the convention center. We simply design and build great products and then engage our customers directly. We’ve grown to the point now that we are looking to bring the model out in more conventional ways to engage the customer.”

Yacoubian said that while SVS was not exhibiting at CEDIA this year, it will be at CES and will likey be at CEDIA Expo 2014.

“I’ve been really happy with the meetings we’ve had here, and I think this has been phenomenal CEDIA. It’s got to be the best one in past three or four years for audio.”

Mike Vitelli, former Best Buy president and longtime Sony executive, attended CEDIA to meet with old friends.

Vitelli said that he’s taken the time since leaving Best Buy to travel with his wife and relax.

“I’m taking a break for the first time in 40 years,” Vitelli said. “I don’t know what I’ll do next. I don’t think I’ll just stay home, I feel like I’m a little young for that, but I think there is still something else to do.”