HES Plans to Have 25-50 Connected Source Stores Up and Running by Year End

ORLANDO -- The Home Entertainment Source’s Connected Source store-within-a-store concept is still in flux a year after the idea was first floated to dealers, Executive Vice President Jim Ristow told Consumer Electronics Daily Tuesday at the group’s 2012 Summit. “The reason it took so long to do the betas was a lot of it was behind the scenes, not the actual implementation of the store,” he said. Implementation is 90 percent complete and will enable members to scale the Connected Source space as needed, Ristow said. Talk of the Town in Allendale, N.J., was one of the first test sites, and HES is eying 25-50 installations by year-end, Ristow said.

Some products out of the 20-25 SKUs that will make up the Connected Source product package are set, including TVs from Elite and audio products from Pioneer Elite and Klipsch, along with the “control backbone” from Control4 and handheld remotes from Universal Remote Control, Ristow said. High-margin headphones and other accessory products will be part of the package, too, he said. “It’s an Elite ecosystem, and we're finalizing others right now,” Ristow said. HES chose products based on solutions, he said, and tried to choose efficient approaches. “There might only be two surround-sound demos to build four systems off of,” he said. He wasn’t able to provide a complete product list during our meeting Tuesday but said it should be complete after this week’s meeting. A handful of stores are “in the queue” for the next conversions and will begin installation soon, he said. “What happens at the show will determine what happens after that,” he said.

The Connected Source package includes furniture, fixtures and signage, Ristow said. Members will pay dealer cost for equipment, “less a significant discount,” for product “they probably have displayed somewhere in their stores,” he said. Installation can be “a very short period of time,” he said, and includes wiring, painting and merchandising.

To be part of the program, dealers have to commit to the Connected Source merchandising mix, brands, signage and continued adherence to the standards as the products morph, Ristow said. Dealers have to be able to install and connect the solutions, and 98 percent of members interested in the concept have the technical ability to execute, he said. Training for the connected stores is focused on “solution-based selling” and “demystifying the process,” he said.

Connected Source will be offered to all members, but not all will be selected, Ristow said. Those who want to participate will be evaluated for a good fit, he said. Comparing the store location strategy to that of Apple stores, Ristow said some markets will have more than one Connected Source store, depending on several factors. He wouldn’t say how stores would be selected. Last year, some 80 members said they'd be interested in housing a Connected Source location, he said, and over 2012 he expects “more interest than we can roll out in a controlled way.” Dealer interest, he said, “will greatly exceed our ability to do it the right way."

Connected Source stores will be divided into zones with kiosks to help educate consumers about the various connected home solutions, Ristow said. Size will vary according to location, and HES will assist members in scaling the Connected Source spaces to their stores, Ristow said. In outlets where members have listening rooms for audio or home theater, one of those rooms will be converted to a Connected Source space, he said.

Home Entertainment Source Summit Notebook

Two years after dealers attending the HES Summit in Dallas were hoping that 3D would be the premium feature to send customers into their stores (CED March 30/'10), the technology received barely a mention at this year’s Summit. HES Executive Vice President Jim Ristow told dealers, “3D was not one of the highlights of last month’s CES.” “3D is not the buzz,” he said, and glasses appear to be the buzz killer. Ristow gave a flicker of hope to glasses-free 3D as a technology for the future, however. Dealers we spoke to who tried to bank off the 3D hype haven’t seen much success. Richard Schmetterer, owner of The Audio Lab in Wilmington, N.C., held 3D events in his store around TV programming, including the World Cup and National Geographic specials, publicizing the events on local TV and in the newspaper. “People didn’t want to wear the glasses,” Schmetterer said. Hall Radio & TV Service, Camden, S.C., has sold “very few” 3D TVs on the 3D capability, said owner Ronnie Bradley. The ones they did manage to sell went to “mature” customers, Bradley said. “Those with families were afraid of the kids breaking the glasses,” he said. “They're expensive to replace.” Bjorn Dybdahl, owner of Bjorn’s in San Antonio, Texas, still has hope for 3D, though, and new, lightweight $20 active 3D glasses from Samsung could break through consumer resistance, Dybdahl believes. He said, “3D didn’t have a chance from the beginning.” He cited broadbased distribution and lack of education. But consumers with negative feelings toward 3D initially have come around once they've experienced it at home, he said. “It becomes compelling when they see something that they enjoy, and then it changes their attitude. I think it could be a growth area,” he said.