HTSA to Name New Director Soon, Board Members Say at Fall Meeting

DENVER - Facing new leadership for the first time since its inception 15 years ago, the Home Technology Specialists of America buying group “has set a good path” but hopes to “get a bit younger” in the next chapter, board members Brian Hudkins, president of Gramophone in Timonium, Md., and Jon Robbins, CEO of Hi-Fi House in Broomall, Pa., told us Wednesday at the group’s Fall Pump-Up conference. HTSA will announce a new executive director in the next few weeks, Robbins said, following the departure of former executive director Richard Glikes, who announced his resignation at the end of August after the board rejected his request for a salary increase and a 3-year contract.

The current group largely comprises members who began their retail careers in the specialty audio business, Robbins noted, and now it’s important to reach out to new member companies on the automation side who have “a different skill set.” There are some “really bright, entrepreneurial people out there on the automation side who are looking for guidance on the audio/video side and have some of the intellectual property that we may not have,” he said. “We're not so bold to think that we can’t learn something from these people, and they can learn from us,” he said.

The original charter of HTSA called for member companies to have minimum annual revenue of $5 million, but Hudkins acknowledged that that figure “has always been flexible” for dealers interested in growing their businesses. When Hudkins’ company was accepted into the group, it didn’t meet the annual volume requirements but “we were identified as a good target,” he said. “We quadrupled our business in our time in HTSA, and we like to think that kind of success story can be repeated with other people.” The organization changed its bylaws at last year’s Fall Pump-Up to lower the barrier to entry $2.5 million in an effort to grow membership to 70-75 retailers.

HTSA dealer membership stands at 60, Hudkins said, saying it hopes to add 10-15 new members over the next 3 years. The group wants to maintain its idea-sharing focus “without bumping up against the anonymity that has to occur when you get to a certain size,” Hudkins said. That focus can only be achieved in a group smaller than about 100 members, Hudkins said. The group has between 40 and 45 vendor members, he said. Total annual revenue for dealer companies stands at $450 million, Hudkins said.

Glikes, meanwhile, announced last Friday, just before the semi-annual HTSA meeting, that he was starting a new buying group with a target of 250 member companies and 32 vendors. Although Glikes told us he had no interest in signing HTSA members, he also said retailers unhappy with their current buying group were target members. Robbins said he had “no concern” over HTSA members going over to Glikes’ venture because “most of our members are comfortable and not looking to make a move,” he said. “We wish Richard the best, but there’s a significant difference between him and us."

Dealer members we spoke to agreed with that. David Rogers, CEO of Dallas Sight and Sound, said HTSA “makes sense for us” and the group’s membership is its biggest value. “Too bad it ended the way it did,” Rogers said of Glikes’ departure. Regarding whether he'd consider a jump, Rogers said, “It’s way too early to consider it” and it “hasn’t been worth thinking about.” HTSA “is our group,” he said. Looking ahead for HTSA, Seth Lauritzen, marketing director at Dallas Sight and Sound, said he hopes HTSA going forward concentrates on diversification of its dealer base with a focus on integration.

A vendor member, who asked not to be identified, citing politics, said he “probably would” join Glikes’ buying group because “he supported us,” when that company launched. At the same time, he said, he doesn’t know how the new group will fit into the picture. “I don’t understand the premise,” he said, “and where are the members going to come from? More power to him if he can pull together a group of dealers that aren’t already with another group,” he said.

Hiring new management provides an opportunity “to step back and project a new vision of where the industry is going,” said Keith Burrows, president of Sierra Integrated Systems, Reno, Nev. In reference to Glikes, he said, “When a director has a strong vision, members tend to rely on that vision.” Members now can have a more “proactive” role in where they want to be in five years, he said. Burrows’ view is that he'd like the group to move away from commodity segments like flat-panel TV and toward design and services including alarm business, networking, firmware upgrades and calibration where there’s a “strong recurring revenue base."

The current focus of HTSA is high-quality installations where systems are easy to use, Hudkins said. Robbins added, “We want to provide the best experience and exceed expectations.” If in the process a recurring revenue business model arises, “that’s great,” Hudkins said. But the group hasn’t identified recurring revenue as a business strategy that it wants to pursue, he said. Priority number one, as the group heads into its next chapter, “is to focus on existing vendor partners,” he said.

The economy remains the biggest challenge for HTSA members, who relied early on on the top-tier business driven by luxury new home construction, Robbins said. Robbins said members are seeing a spike in the very high end of the construction market, but the big challenge is the custom and semi-custom business “because they still don’t have the activity that they once had.” All categories, other than flat-panel TVs sales where average selling price have dropped, are up over last year, Hudkins said. “We're seeing a spike in business from people investing in their existing homes,” he said. Growth is occurring in new categories including CCTV and high-end networking systems that support audio and video streaming. With streaming content, “It’s far more important to have the right network in your home,” Robbins said, saying HTSA members have the skill set to support networking technology.