Tweeter Opening Five Locations With New Format

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Tweeter Home Entertainment Group plans to open five concept stores this year, and will add elements of the new format to three existing locations.

The prototypes, which feature a concierge desk, functional vignettes, a design center and other interactive elements to help demonstrate whole-home solutions, represent a radical departure from Tweeter's standard retail box. Tweeter opened its first concept store in Las Vegas during the 2005 International CES, and a second prototype in Oakbrook, Ill., in March.

The next opening is set for June 30 in Burlington, Mass., to be followed by a fourth location, in Atlanta's Buckhead district, on Aug. 25.

Tweeter also plans to open concept stores in Chula Vista, Calif.; East Plano, Texas; and the Las Vegas suburb of Henderson, Nev.

In addition, elements of the concept stores will be added to existing Tweeter locations in Boca Raton, Fla.; Cool Springs, Tenn.; and Tysons Corner, Va., in the coming weeks, as the company evaluates a cost-effective way to roll out the new format. A Tweeter store in Mission Viego, Calif., was already retrofitted on May 17.

Speaking at a PiperJaffray analyst conference here earlier this month, president/CEO Joe McGuire noted that the concepts stores have “much higher gross margins” and higher labor penetration as a percent of sales than any other stores in the chain. “We're pretty encouraged,” he said.

Elsewhere, McGuire said Tweeter will increase its market share of 50W-inch and 60W-inch flat-panel displays by expanding its SKU assortment and dedicating more space to the category in stores. He described flat panel as a traffic driver, as compared to audio, which drives margins despite flat sales. Tweeter has seen a resurgence of high-end component audio, he said, and will be upgrading its assortment and sound rooms accordingly.

To promote both categories, along with custom install services and programmable remotes, Tweeter has developed home theater room vignettes featuring furniture and a single remote control that operates A/V functions and lighting. The displays are currently being rolled out chain-wide. Tweeter is the nation's No. 1 seller of programmable remotes, McGuire added.

Tweeter has also begun feeding TV demo displays in all stores from a centrally controlled, hard-drive-based HD source that will provide controlled content and ensure an optimum signal. “The manufacturers are pretty excited about this,” McGuire said.

In contrast with video, which is Tweeter's fastest-growing category (up 21 percent year-over-year for the first half of 2006), mobile fell 10 percent during the first six months. McGuire acknowledged that the category “significantly underperformed the marketplace,” but has high hopes for the business, which is now run by former Staples exec Jonathan Magasanik, who joined Tweeter as VP/general merchandising manager in February. Tweeter has also developed a new interactive digital entertainment center for mobile electronics comprised of “learning pods” and “learning bars,” where customers can “play with and connect” various mobile electronics devices, McGuire said.

The display, which debuted in the Oakbrook store and will appear in the new Burlington location, underscores the role that head units will play as a hub for GPS devices, mobile video, satellite and HD radio, MP3 players, and Bluetooth-enabled mobile phones, he said.


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