Last spring Tweeter Home Entertainment Group began a sweeping reorganization that, by year's end, will have fully integrated the management and chief merchants of its Dania Beach, Fla.-based Sound Advice subsidiary into its home office here.
One of the most visible aspects of the consolidation is the now semi-permanent presence in Canton of Michael Blumberg, formerly senior VP of the 25-unit Sound Advice and its 14 affiliated stores, and now senior VP of purchasing for all of Tweeter. TWICE recently caught up with Blumberg, who, pending empty-nester status this fall, divides his time between business in Massachusetts and family in Florida.
At the time of the acquisition last year, Tweeter said that Sound Advice would remain a separate business. What changed?
Early on, Sound Advice was going to be run autonomously, at least for the first one or two years. Business was good, some stores were doing $30, $40 million, and we didn't want to interrupt it. But we knew we'd have to integrate, and that ultimately everything had to evolve into one entity. We just didn't think it was going to be this soon.
So we put together the best practices between the organizations, and the best people were chosen. Car stereo [led by 12-volt VP Dan Jeancola] was the first to move, and by Jan. 1 we will have integrated everything.
[Editor's note: More recent Sound Advice arrivals include former COO Christopher O'Neill, now senior VP/in-home operations; custom goods buyer Mike Mears; Frank Roshinski, senior merchandising manager/display products and furniture; and Tim Coakley, senior merchandising manager/audio.]
What does Tweeter hope to accomplish with the consolidation?
To get the company closer to the sales-per-showroom status of Sound Advice.
One of the things we're trying to bring to Tweeter is our focus on custom installation. Sound Advice was one of the first in the business, and it's growing the category 50, 60 percent annually. In fact, we withdrew from CEDIA last year because we felt we were doing more teaching than learning. The new Tweeter Design Centers [see sidebar, below] came from our Showcase Home Entertainment stores in Arizona, and 30 to 40 percent of Sound Advice is that look.
Also, if you look at our mix of goods, flat-panel represents 14 percent of our total sales, the biggest in the country, compared to 7 percent for Tweeter. And plasma manufacturers say Sound Advice is the biggest selling retailer in the country. We got on that early, and are now rolling out a 14-by-16-foot flat screen TV wall at Tweeter with four plasma sets and 8 LCDs. It's a fast approach that will allow us to do 140 stores real quick.
What's your outlook for the quarter? Will you be impacted by the West Coast dock situation?
Right now we're not affected. We're running with excess inventory. Plasma and LCD has always been flown in, along with the high-velocity stuff like camcorders, although there's a bunch of audio out in the water. It's going to take time to unload all that stuff.
The fourth quarter should be good. Sears, with its new flat screen strategy, will advertise the hell out of it, so awareness will increase. We could never get that kind of blanket message out. They'll get some share out of it, but our customers will come to us.
Mobile has been holding up very well, particularly multimedia mobile, and I don't see anything stopping that. And XM's numbers continue to grow month by month.
I am concerned by audio. The low-priced HTiB and little Sony and KLH systems are commoditizing the category and bringing down the price. As a result, sales of real audio components suffer.