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HES Outlines Battle Plans For Q4

Home Entertainment Source (HES) is bracing for a bitterly competitive holiday season by planning aggressive dealer promotions before, during and after Black Friday.

The spot promotions are designed to drive traffic into member stores, where the half-billion-dollar buying group’s A/V specialty dealers are adept at up-selling customers and attaching high-margin accessories.

“I’m cautiously hopeful for Q4, although it will be promotional, and we need to be promotional,” HES executive VP Jim Ristow told members during strategic Webinar sessions last month.

Indeed, competition for share between Walmart, Best Buy and could send Black Friday pricing as low as $50 for Blu-ray players, $250 for 32-inch LCD, $400 for 42-inch plasma and $600 for 50-inch plasma, he said.

Nevertheless, Ristow advised dealers to “embrace Black Friday,” noting that “these are not everyday prices, and the quantities and sales are limited, sometimes to just a few hours.”

HES’s own doorbuster specials can still make dealers money, he said, while creating opportunities to sell other, more profitable products, such as LED TVs and step-up 1080p plasma; jumbo DLP TVs and margin-rich flat panels from Mitsubishi; and audio, accessory and warranty attachments and labor.

HES, a division of the $14 billion Brand Source home furnishings buying group, is also exploring new high-margin opportunities in automation, lighting, furniture, energy management and health monitoring, which will be discussed in detail at the groups’ Spring Summit in Dallas March 28-31, 2010.

Ristow was also optimistic about the core A/V business, based on a recent visit to Japan and Korea with strategic buying group partner Progressive Retailers Organization (PRO Group). Manufacturers are reexamining their distribution strategies and will more strictly enforce their Internet sales policies, he said, while developing more differentiated step-up models for the specialty channel and transitioning the new lines as early as the first quarter.

Next year’s TVs will be thinner, larger and “sexier” in styling, he said, and enhanced video-on-demand capabilities will become as popular with consumers as iPhone apps.

In other HES news, the group’s customer service portal, a new Intranet feature for the group’s Expert Warehouse distribution program, has become operational. The automated system tracks vendor refunds for merchandise purchased through Expert Warehouse, and can deliver checks for rebates, price protection and returns to members in 15 days rather than months, HES believes the new service could recover millions of dollars in unclaimed funds for dealers who are overwhelmed by the requirements of vendor programs.