HTSA, Seeking New Members, Drops Annual Sales Requirements

ST. LOUIS -- “Revivify” is the theme of this fall’s Home Technology Specialists Association meeting as specialty audio/video dealers -- hit hard by the economy, changing technology and a fading customer base -- seek to energize their business with new products and fresh approaches. In his opening remarks to dealer and vendor members, Executive Director Richard Glikes outlined changes that have taken place in the customer base and retail landscape that have reshaped how specialty dealers have to adapt to survive.

Most HTSA dealers got into specialty audio as a hobby or because they were musicians, “but you don’t see hobby stores anymore,” Glikes said. Best Buy, with $56 billion in annual sales, dominates audio and video now, and he urged dealers to take back $100 million of that business -- less than two-tenths of one percent of Best Buy yearly revenue -- by being “more digital” and “bridging the gap” with younger customers. Glikes said HTSA members have lost more than $100 million in sales over the past two years.

The HTSA strategy is payback, Glikes said, since “Magnolia is trying to be us.” He encouraged dealers to turn the tables on the big box retailer by taking advantage of Magnolia design centers, which have “elevated the consciousness of specialty retailing.” The message to dealers is to encourage “choice” for consumers who shop at Magnolia stores, and “we have some plans to attract those clients,” he said.

Glikes referred to digital products from Arcam and Peachtree Audio that integrate with iPods and iPads as “steps in the right direction” and said nine to 12 HTSA members will become Apple dealers in the next 30 days. Just carrying Apple products won’t be enough, he said. “We need to hire a different generation to sell those products."

The organization is also trying to get new members and changed its bylaws this week to lower the financial barriers to entry. In the past, members had to have $5 million in sales annually to be in HTSA. That number has been halved to $2.5 million, Glikes said, “at the discretion of the board.” Dues will go down to $995 a quarter from $1,875 in an effort to expand membership, he said. As part of the effort to boost dealer members to 70-75 from its current roster of 58, HTSA is asking vendors to submit the names of 20 potential dealers. Glikes said there are states with no HTSA representation, including Nebraska, Iowa and Kansas, and no dealers in the Albuquerque area. The goal is to expand but to remain small enough to have effective sharing of ideas, he said. He specifically said the group doesn’t want to approach the size of Brand Source’s Home Entertainment Source (HES) group, which claims membership of more than 500 members, he said.

Glikes asked vendors for additional website support including elevated spots on dealer locators, and “click-to’s” to dealer websites. He said HTSA is shifting its marketing dollars to the Internet “where customers are going” and plans more targeted female promotions, banner campaigns and new member websites.

HTSA dealer members had one-and-a-half days together at this week’s meeting prior to the arrival of vendors and media, and David Berman, HTSA director of training, said the overall mood was “upbeat.” While big jobs are slower to come, dealers are seeing “signs of life,” he said. New technologies such as client monitoring, which Berman sees as the next evolutionary step in service, home health technology, green technology and home control, all hold promise for HTSA members, he said. Control4, URC, and Lutron -- companies that were traditionally focused in one niche -- have introduced control products for the whole home, he said, and the concept has moved more mainstream, creating more awareness for the category. IP addressability has taken home control to more affordable price points, he said, but presents challenges for dealers who now must have networking expertise on staff and be aware that computers, iPhones and iPads, and mobile devices in general, are converging with the business model of the past. “That requires new core competencies and younger, more computer- and game-savvy individuals in their businesses to be able to relate to the clients of tomorrow,” Berman said.

Knowledge of the interoperability of IP-enabled devices should be part of HTSA members’ skill set going forward, Berman said, as consumers see more appliances and products on the home network. “There’s no discerning between a refrigerator and a TV or an HVAC system,” he said. “They're all part of consumers’ lifestyle and so the ability to control them needs to be common.” The disparate systems are “opportunities where we can do business,” he said. That business comes with a learning curve. IP-enabled devices require firmware upgrades, something that consumers haven’t had to deal with in the past with entertainment products, and Berman said that provides a chance for specialty dealers to provide solutions around those upgrades. “I don’t think most mainstream distribution channels structure their businesses in a way that could handle that because they're focused on selling products,” he said. Specialty dealers can schedule firmware upgrades or “give themselves the ability to do it invisibly for clients so there’s no downtime or interruptions to customers’ lifestyles from technology updates,” he said.

As home electronics products become more networked, changes to one product can have an impact on the operation of another. Berman said client monitoring services give specialists a way to deal with those issues. “We have the ability to see the entire chain and see which device caused subsequent problems in the system,” he said, “and we can power cycle or auto re-boot in advance before the client is impacted by an issue."

How much consumers are willing to spend for home monitoring remains to be seen. “It’s a change in mindset in how products are sold,” Berman said. HTSA encourages dealers to think about selling “the entire meal,” not just ingredients like TVs, Blu-ray players and speakers one at a time, he said. “Technology is forcing us to think about what we want to do and less about the products that make it happen.” The value of an HTSA technology consultant becomes “significantly greater because they're able to look at a broader range of influences and propose solutions that will tie all that together for clients,” he said. “We have to educate our clients about how to shop for meals rather than shopping for the ingredients to make their own meals.”