HTSA Vendors Playing Wait-and-See On New Buying Group

DENVER -- HTSA vendor members are taking a wait-and-see approach to former executive director Richard Glikes’ plans for a new buying group, they told us at the HTSA Fall Pump-Up this week. Some told us they're waiting to hear details and others said they're waiting to see how the group progresses before making a decision to join yet another buying group for the independent dealer channel.

Meanwhile, Glikes, former HTSA executive director, who left six weeks ago over a contract dispute, posted to his Facebook site Wednesday that his new buying group, Azione, would move into its new headquarters in West Chester, Pa., on Thursday. Glikes, who had headed HTSA for 15 years, announced the new group last Friday as HTSA members were gearing up for this week’s conference. Glikes said Azione was targeting 32 vendors and 250 dealers, some of whom might come from existing buying groups.

"We'll have to see where and how it goes,” said Jim Arnold, senior vice president of residential sales for Control4, regarding that company’s interest in joining the new group. “There’s a lot to understand,” he said. Arnold said there’s “always room for a group that adds value,” but another broad-based distributor “doesn’t make a lot of sense.” With the appropriate members and suppliers, it could work, he said. Noting Glikes’ plans to open the group to dealers not happy with their current buying group, Arnold said some groups are more focused than others, and “a group that’s more focused adds value.” He noted that the universe of dealers “is not expanding” and in fact is contracting. One of the challenges of starting a new buying group today, he said, is that “it’s hard to imagine there are a lot of non-affiliated members available."

"Loyalty” was the initial response we received from Max Wasinger, executive vice president for Mitsubishi, when we asked whether his company would support another buying group. Wasinger told us his company was the first video manufacturer to recognize HTSA early on. “We have a lot of loyalty because they believed in how we go to market,” Wasinger said, and now HTSA dealers “sell the experience” of home theater, which “plays into what we do.” Azione is not in Mitsubishi’s plans at the moment, Wasinger said, “but we have to be open to change.” Mitsubishi currently does business with all the major independent buying groups, including Pro Group and HES, he said. Most important, Wasinger said, is the need to “keep the eye on the ball and work hard to support our loyal customer base” in this challenging retail environment.

Whether Sony would support a new buying group for independents "depends on the focus,” Jon Lin, category manager for Sony’s AV specialty channel, told us. Regarding Glikes’ group specifically, Lin said “it will be interesting to see what he does because he definitely has the experience.” Lin would like to see more “consistency” among Sony dealers, citing the Sleep Train mattress store chain in the HES channel “where all the stores are independent but look the same.” A uniform look would offer more consistency for the Sony brand, and would give the company its maximum value, he said. Currently, “total support is lacking” among buying groups, which aren’t going “deep enough” but are scattering their support for Sony instead, he said.

From a manufacturer’s perspective, the only way a buying group is worthwhile is when it’s set up to foster an “equal and open exchange between vendor and integrator/retailer,” according to Michael Bridwell, marketing director at Digital Projection. If the relationship “is simply one where buyers get discounts, and the vendor value is limited to mere proximity to the buyers, then the vendor gets very little cumulative value,” he said. Bridwell promotes a group with “a core principal that acknowledges how much both sides need each other, and that the two should come together, preferentially, before all other partners, to give each other competitive advantages,” he said. Pricing should only be one aspect of the vendor-dealer relationship, along with business strategy exchange, marketing partnerships and general creative brainstorming, he said. “The buyers’ group that embraces this approach becomes a strong asset to the vendor, and the value of participating in such a group is apparent to all parties,” he said. Bridwell’s focus on the current relationship with HTSA makes him “philosophically opposed” to joining another buying group at this time, he said.

Meridian Audio attended its first HTSA meeting as a member company this week after watching from the sidelines for several years, said Norm Steinke, vice president of sales. The value Meridian sees in HTSA membership is the trust established over time between dealers. The company had two word-of-mouth referrals this week for dealers that “fit with what we're doing,” Steinke said. “That kind of trust comes from knowing each other for 15 years,” he said. Whether those kinds of relationships can be achieved with a new buying group is questionable, he said. “You can try anything, but you can’t re-create what this group is,” he said. “They'd have a lot of ground to make up.” Steinke also referred to the limited pool of quality dealers. “Once you divide them, you put them in competition with each other,” he said. Meridian will watch to see what Glikes’ group does, “but we want to take advantage of HTSA,” he said.

"I don’t know enough yet,” said Greg Caves, eastern regional sales manager for Runco, of his interest in Azione. Caves said what he'd want to see in a new buying group would be a strong base of custom installers.” HTSA has been the group that has best mirrored the profile of the dealer Runco wants, he said. “I'm not against another buying group, but it would have to mirror HTSA,” Caves said.

Totem Acoustics, is taking a cautious approach based on how Glikes plans to differentiate his group from others, said Stephen Libin, national sales manager. Libin isn’t sure if there’s room for another buying group or Glikes’ plans for three meetings a year. “It would depend on the location,” he said. Universal Remote Control wouldn’t comment on the new group.

Regarding HTSA going forward, Bridwell of Digital Projection believes the change in management could be a positive thing as it pushes members together toward a common goal. “This patch feels pretty optimistic,” he said. “When a ship loses its captain, it can either disband or band together.” His sense this week is that the group is pulling together. “Buyers are doing more business with vendors who have more skin in the game,” he said. “We're all working toward the same thing.”