HES Pushes Profit Plans, Backs Vendor Policies

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Home Entertainment Source (HES) is looking to new unilateral pricing and online sales policies by video manufacturers, and group support of dealer-friendly vendors, to help return profitability to the TV category.

Addressing members and manufacturers during the buying group’s spring Summit meeting here at the Marriott World Center, executive VP Jim Ristow said vendors are taking action in response to “a sick industry.”

Pricing policy rather than products was the focus at International CES last month, he said, and vendors now appear committed to putting profits ahead of market share and production.

The new policies, plus mounting pressure to enact a national Internet sales tax collection statute, “all bode well for the pendulum to swing back” to a more level playing field for independent dealers, Ristow noted.

“It’s a great first step to bring back profitability, if the polices can be executed,” he told TWICE.

To further press their advantage, Ristow called on all 550 members of the $3.6 billion specialty CE and custom-install group to throw their purchasing power behind the most supportive manufacturers, and to extend that focus down to even the SKU level.

Ristow also urged members to consider the margin and profit opportunities in whole-system projects, compared with sales of individual products, and to tap into the burgeoning mainstream control and integration market.

Winning that category is dependent on demonstrating “abstract concepts” like Skype and Apple’s streaming AirPlay platform, which HES is addressing with Connected Source showrooms. The turnkey merchandising and design program, which was piloted with members Talk of the Town and Five Smooth Stones, features five in-store stations for demonstrating streaming content; home theater, gaming and 3D TV; distributed audio; headphones; and whole-home control.

All are being fueled by the “Trojan horse” that is iPhone and iPad, as well as other smartphones and tablets, which can function as low-cost controllers, Ristow said.

Other profit opportunities include commercial automation; LED lighting; audio, including headphones, wireless powered speakers, high-end components, and premium $1,500-$7,000 soundbar systems; and Elite’s receiver, TV, and client eco-system, he said.

TV also offers promising advances, including glasses- free 3D, super-slim OLED displays, voice and gesture control, and 4K panels, Ristow said.

On the distribution front, the group’s in-house logistics program, Expert Warehouse II, has now doubled its inventory from last year as new manufacturers like Denon, Marantz, Paradigm, and more recently Klipsh and ZVOX Audio, join the ranks.

Other new additions include:

• Lutron’s battery-operated shades, available for limited distribution through the group’s Custom Warehouse program;

• new direct programs with Cinemacoustic Solution, makers of custom home theater interiors and acoustic treatments, and Salez Toolz, for sales, budgeting and presentation software;

• and new partnerships with Runco, Savant, Sim2 and Vutec projector screens.

Also addressing the rank and file was HES president David Pidgeon, CEO of Dallas-based Starpower, who warned that one-third of the industry’s dealer base will dissipate due to changing consumer habits and industry trends, and that independents must evolve with the times to succeed.

Echoed Ristow, “We have been clerking panels, and we need to get back to top-down selling.”

Bob Lawrence, CEO of parent group BrandSource, noted that HES now represents the buying organization’s largest division, and that CE has supplanted major appliances as the group’s largest category. CE comprises 40 percent of BrandSource volume, he told TWICE, compared with 35 percent for majaps and 20 percent for furniture.

Elsewhere at the HES Summit, power management supplier Panamax/Furman presented its 2011 HES Dealer of the Year Awards to AVIO, DSI Entertainment Systems and Premier Custom Audio & Video. The company, which has been an HES vendor partner since 2008, said it created the awards to recognize the group’s dealers for using its extensive product line, which can “address all of an installation’s power needs while maximizing profits.”

Winners were selected based on the growth of their business with Panamax/Furman, and success in representing the BlueBOLT energy management and control platform.

Based in Troy, Mich., AVIO was honored with an award based on its significant increase in sales over 2010. DSI Entertainment Systems, headquarted in Lake Balboa, Calif., also posted a sizeable year-overyear sales increase, with the breadth of the Panamax/ Furman line contributing to its profits. And Carmel, Ind.-based Premier Custom Audio & Video was selected for its “trailblazing approach” to presenting Blue- BOLT, which has made it one of the company’s Top 20 BlueBOLT dealers in the U.S.


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