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HTSA Upbeat As It Prepares For Market Changes

Home Theater Specialists of America (HTSA) has increased its membership this year by five, to a record 51 retailers and custom installers, and is having a good 2004 as the holiday season beckons.

The buying group’s executive director Richard Glikes reviewed current market conditions and outlined future plans during its fall meeting which, for the second time, was co-located with CEA’s Fall Forum, held at the Fairmont Hotel, here, last month.

Glikes said during the group’s meeting, “A majority of our members said sales were up 5 percent, with others saying they were up 8 to 12 percent. While we don’t rely on Christmas business, we do some volume then, and it should be a good fourth quarter.”

The reason for fewer “holiday-centric” sales, compared with other buying groups, is that HTSA’s members are mixed between “custom-only operations, specialty retailers and custom retailers. Our membership [consists] of more custom people than retailers. We do a lot of custom install and big installations year-round.”

At HTSA’s meeting, members were shown a preview of the group’s Web site, which will be operational on Jan. 1. Glikes said the site will enable retailers to “forecast sales and place orders via the Web so manufacturers can accurately predict what our needs will be. We should have live tests soon.”

In addition, HTSA is producing its own TV commercials for its members. The TV spots, which Glikes said will cost around $150,000 to “produce and customize for participating members,” are designed to “brand the dealers and extol the virtues of a different shopping experience” from the national and regional chains HTSA members compete against.

Glikes said that HTSA’s ultimate goal would be to be a national buying group, but to do so, “We need to fill in 15 states. But to do that you can’t pick anyone. You need qualified retailers and installers.”

HTSA has 42 vendor partners, most of which attended the group’s meeting. The biggest challenge that Glikes’ group faces is “consistent product supply from vendors, whether they are specific model types” that are already in the line, “and some late-year model introductions.”

Glikes noted that his members are “concerned about being low on the allocation ladder. If we create demand for new categories and don’t get enough product, and a competitor does, that can tear our heart out.”

Specifically, Glikes said HTSA has experienced shortages of plasma TV products “from key suppliers, with shipments being difficult or uneven.” Microdisplay shipments “have not been a problem,” however.

In audio, “sales have been pretty good, due to the demand for HDTV. Retailers have been more attentive to the category, giving it more focus,” Glikes noted. “Improved sales training and [sales] management have helped … especially the speaker business, which has been great.”

Glikes expects the industry to change rapidly in the next few years, with HTSA and suppliers having to change dramatically with it.

Best Buy’s move to the higher end is a concern, with its installation of Magnolia Audio Video departments being more of a worry than its Customer Centricity effort. “I’m less concerned with Customer Centricity than Best Buy’s Magnolia plans. The [Magnolia Audio Video] departments are inside Best Buy locations that drive traffic into them.”

It is understandable why Best Buy is moving upscale, Glikes said. “Of course margins are better and there are more gross profit dollars available.” To continue its growth curve, HTSA “has to evolve so we become better merchants. We are going to incorporate more drama in our home theater presentations, really display vividly the home theater experience through our store concepts. We have to stay ahead of the curve.”

As the industry changes, Glikes said that his group sees “product quality becoming an issue again. Quality has been a given for a long time, but due to compressed new product cycles we could go back to those years of demonstrable differences in quality between brands.”

And speaking of brands, Glikes said the industry may see “a ‘brand rotation’ in the near future with revered brands being replaced by new ones that will take top spots. Top retail chains will force that.”

HTSA’s strength during changing times is that the group “attracts affluent customers,” Glikes noted. “We expect entirely different types of products designed with content delivery and control issues in mind. We will operate under new business models that will enable us to get revenue from that and service solutions.”