HTSA Dealers Cheer New Video Pricing Policies, Hope They Stick

SAN DIEGO -- The Home Technology Specialists of America group kicked off its first member meeting under CEO Bob Hana, who joined the group last October, with a major push toward marketing and outreach. Hana told Consumer Electronics Daily that the goal of the spring meeting is “about making it practical” and giving its 63 dealer members “usable, executable information” to help grow business. “We need to walk the talk that we really are a cohesive group,” Hana said.

Toward that end, the organization recently hired Kathleen Marini as director of marketing, a new post for HTSA, and is planning its first marketing-only meeting June 11-13 in Chicago. Topics for the Chicago meeting will include communications tools, eMarketing, social networking, outreach and operations/ROI, Hana said. The new marketing position and Chicago meeting did not necessitate a hike in dues, Hana told us, but he wouldn’t say how the group absorbed the additional costs, or what annual dues are.

HTSA is looking to vendors for “more engagement with their marketing organizations,” Hana told us. HTSA dealers’ customers represent a “very strong demographic of individuals all of our vendors want to reach,” he said. Vendors are “branding at the high level,” Hana said, “but you also have to tell [consumers] where they can find the goods.” Vendors are starting to understand that their marketing efforts “aren’t just about internal integration but also about working with your partners to integrate your message,” he said. That includes giving dealers “compelling messages to email out to their database,” he said.

HTSA opened on Tuesday minus two members, having lost Phoenix Unequalled of Memphis and Advanced Audio Design, Sarasota, Fla., which is undergoing a reorganization, according to a member of the service department, who answered our phone call Wednesday. Reports among HTSA vendor and dealer members that Advanced Audio Design had shuttered operations under that name weren’t confirmed or denied by owner Andrew Guenther by our deadline Wednesday, but the service department staffer said the company was reorganizing under the name Advanced ESI. Advanced Audio Design operates showrooms in the Florida cities of Sarasota, Tampa and Naples, according to the website, which was operational Wednesday. Phoenix, meanwhile, still in business, didn’t comment by our deadline a call on its decision to leave HTSA -- or whether it was joining another buying group.

Few details were available on specific marketing plans the buying group plans to implement. Marini, who was attending her first member/vendor meeting, having been with HTSA for a month, said more details would emerge throughout the year. Initiatives for now focus on creating “focused energy” on areas including the connected home, digital media and smart displays and integrated marketing communications between members and vendors, she said. Marini wouldn’t disclose the group’s marketing budget.

Vendors we spoke to liked what they heard from the group’s plans, following the first day of meetings. Michael Bridwell, director of marketing for Digital Projection, said the dealer attitude has shifted from “looking for ways to cut overhead” to exploring ways to drive growth. “It’s encouraging to hear them identifying ways to create growth as an objective,” Bridwell said, citing HTSA plans for outreach programs, the hiring of a marketing director and a “strategic investment to get out in the world.” After several years of trying to stay in business, dealers are at the point where they're confident enough to fund marketing efforts “on future business,” he said.

Dealers seemed energized by upcoming changes in the organization, which Hana and dealers said was a reflection of an uptick in business. David Berman, vice president of sales and operations for Stereo East in Frisco, Texas, said his store’s business is up 30 percent for the year due to a robust new housing market in the Frisco area that has surged 200 percent. Berman is also sanguine about pricing stabilization in the CE market during the transition from older to newer models. New products are “holding the line” on prices, which manufacturers don’t want to sell off “inexpensively,” Berman said. He gave kudos to Sony for a “re-dedication to the specialty channel” with fewer SKU’s, “actionable pricing policies,” and holding lines on margins. In addition to flat-panel TV sales that “pull people into the store,” new audio products from Integra and Marantz will deliver healthy margins between now and September because of limited availability and new technology, he said.

Referring to a “re-awakening” of HTSA, Franklin Karp, Chief Operating Officer of Audio Video Systems, Plainview, N.Y, said he’s excited by a plan to implement an “operating system” that links databases of members and vendors. Franklin said a cloud-based business management system based on NetSuite software could help dealers better run their businesses under one management platform they can share. “If you have to look at four sources for data, it’s cumbersome,” Karp said. “There’s nothing out there to track labor, utilization, accounting and inventory,” he said, because HTSA as a group has been too small for a software company to address with a custom platform. End result if the program is implemented, Karp said, is that dealers would be more efficient and more profitable. The program would take a year or more to implement, he said, if enough members are interested.

Dealers were also energized by the early promise of universal pricing programs from Samsung and Sony. “I applaud it,” Karp said about UPP programs, adding “it’s too soon to tell” if the policies will hold. “For us to be able to put a TV price in a proposal and not get our asses kicked is a good thing."

Observing “it’s still early,” with programs having started in the last 15-30 days, Hana said dealer attitude is “very positive” that the moves are “in the right direction.” On an equal playing field, “the customer can decide where they're getting the best service and support and integration into their homes,” he said. “That plays into our members’ sweet spot.” Taking away the discounting below MAP pricing “is a good thing,” he said. Whether it will last or how long it will last, “it’s too early to tell,” he said.

Audio Video Lifestyles in Fort Wayne, Ind., has already seen positive results, said owner Todd Freeland. Store policy is to match TV prices from brick-and-mortar stores such as Best Buy, but not to compete with e-tailers Amazon or Buy.com, Freeland told us. Best Buy “got around” MAP policies in the past by not listing prices until a TV was in a customer’s shopping cart, he noted, but now customers have to enter a credit card number to see the final price. “It’s a pretty cool deal,” he said. “They're basically obeying the rules.” If the new TV pricing policies hold, “gone are the days of losing a sale over $50,” Freeland said. He shook his head recalling recent $20 margins on 42-inch TVs.

UPP programs were “much needed” to stop the “race to zero for both of us,” said Donald Soohoo, buyer at Paradyme in Sacramento, Calif. Paradyme hadn’t been stocking video inventory, Soohoo said, because it was “too risky” there would be a decline in value for inventory held 30-40 days. The moves have added “some stabilization” to the video market, he said, adding, “I hope it holds."

HTSA Notebook

Lenbrook America is leading a charge to bring computer audio customers into specialty AV stores. The company announced at HTSA a program designed to help specialists differentiate from mass merchants by educating consumers about computer audio, said Dean Miller, CEO of Lenbrook America, parent company of NAD and PSB. Miller said Lenbrook has been concerned “for quite some time” about the overall direction of the specialty AV industry from the “fundamental business model, level of business, differentiation from mass merchants and long-term sustainability of the specialty dealer,” which was borne out by closing of longstanding retailers including Flanner’s Home Entertainment and Tweeter, Miller said. Lenbrook has been testing its Digital Music Experience Center concept with various retailers including The Little Guys in Mokena, Ill., where the first 475-square-foot showroom was set up as beta model. Listen Up in Denver and Gramophone in Timonium, Md., are to follow, Miller said. AudioQuest and Panamax/Furman have been consultants for the centers, along with Chris Connaker, president of Computeraudiophile.com and Gordon Rankin, creator of the USB DAC on the project, he said. While products from other manufacturers are being used in the program, the showroom plan is copyrighted by Lenbrook and only available through Lenbrook, Miller said. Lenbrook will initially partner with HTSA members “during the development stage,” he said. Digital Music Experience Center is a temporary moniker, Miller told us, as Lenbrook tries to secure the iFi Zone name. Lenbrook is in discussions with Klipsch about using the iFi Zone name for the showrooms, but Klipsch owns rights to the trademark until November, Miller said. It’s not clear whether Klipsch will renew the trademark at that time, he said, or whether Lenbrook will be able to license the name. Miller’s hope is to have the iFi Zone name customized to each participating retailer to read, for instance, iFi Zone @ The Little Guys.

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HTSA has added five new dealer members so far in 2012, the group said. They include Kiwi Audio Visual, Spires Integration, Surround Sounds, Digitech and Audio Dimensions. New vendor members for the year to date are Key Digital, NAD and PSB parent company Lenbrook America, Leon Speakers, networking company Pakedge and Sunbrite TV, Hana noted. Hana told us the remaining dealers have “weathered the storm” and are more optimistic about the future than they have been in the past. “Now we have to get them focused on doing better marketing and creating demand as a group so we can sell more stuff,” he said.