Buying Groups Urge Dealers to Prepare for Reality After COVID-19 Sales Spikes

The home entertainment industry expects a strong holiday quarter, riding the pandemic's spike in consumer tech spending, but dealers need to be thinking about what happens next, ProSource CEO Dave Workman told Consumer Electronics Daily. “The one question everyone needs to be thinking about is, when everything does open up, when does it turn in the other direction? And it will,” said Workman.

Home electronics are hot now as people are spending more on home theater, outdoor entertainment spaces and beefing up home networks. “There’s going to come a day,” Workman said, when consumers are going to feel comfortable traveling again, and they’ll take their disposable income elsewhere. “You’re going to see a shift backwards,” he said, to a “predictable downturn.” Smart dealers will "predict that it is going to happen.”

Home tech business won’t go away, but it won’t be at the level it is now, Workman said. The good news for custom integrators is that housing starts are almost back to pre-2008 levels, though many projects are stretching out due to materials shortages. The buying group head is pushing dealers to develop a reach-out campaign to customers for smaller jobs “to fill in the blanks between the big projects … to carry you through that cycle we’re going to go through.”

Demand for premium TVs has been “robust,” outstripping supply in some models, said Workman. Work shortages that affected TV parts supplies in Q1 put TV makers “behind a little,” and that’s a problem for smaller retailers: “It’s the one category where the big nationals eat first,” he said. “They take the containers directly off the production floor.” When demand is high, vendors send TVs to volume retailers like Best Buy, Costco and Sam’s Club. “They have a tendency to take the first cut out of the apple,” leaving the rest of available inventory to regional and independent players, he said.

ProSource retail dealers are modifying strategies with buy online, pickup curbside options for customers skittish about shopping in store, Workman said. A trade-off there is the lower ticket when a customer “self-directs.” Salespeople can’t upsell to a higher-priced item or tack on accessories: “When a customer buys online, you never get the complete market basket that you would with an in-store sale.” Though store traffic is down, a positive trend is that the “quality of the sale is better,” he said. Big-box retailers tend to generate traffic with “doorbuster-type pricing,” but that’s not necessary at a time when consumer interest level is high. “What traffic you do get is a much higher quality consumer.”

At Azione Unlimited, President Richard Glikes is urging dealers to develop a marketing campaign “and work on efficiencies” ahead of a possible slowdown, he emailed. After a COVID-19-led slump through May, June through September were “Christmas on Steroids," Glikes said. Clients called “all at once after waiting six weeks” and wanted “everything done yesterday.” TVs are hot, “outdoor audio and video are huge,” and “theaters are back,” he said. Shortages in AV receivers have been a challenge, but TV supply shortages have begun to ease.

The Home Technology Specialists of America buying group began nudging dealers to do customer outreach in late spring, Executive Director Jon Robbins told us, using pandemic needs as a peg. "We don’t want you to sound like an ambulance chaser,” Robbins told dealers, but call customers, ask how they are and “show compassion.” The idea was to “put little ideas in their heads” about benefits home entertainment and upgrading networks for better streaming and Zoom experiences, he said.

By early May, HTSA realized “some of these opportunities are real,” Robbins said. Customers were engaging and wanted to do things around their homes to improve the shelter-at-home time. The biggest revenue producer has been front projectors, with customers switching out older models from when home theater was the rage a decade ago and then “cooled off.” Customers also realized whatever entertaining they were going to do would happen outdoors so that drove outside AV system sales, he said.

Buying groups aren’t committing to plans for in-person meetings with the pandemic still raging. Azione is holding its fall meeting virtually next week, and HTSA will follow at the end of the month. Azione is holding out hope its April 27-29 spring conference will go ahead as planned. The next ProSource event is the Summit, slated for March in Las Vegas, but Workman said it’s too soon to commit one way or the other. A virtual event wouldn’t have the same impact as a live event, he said, but Nevada has conference limits in place so “we couldn’t do it if we wanted to.” The decision will be made on “the risk we’re willing to accept” and dealers’ attitudes toward an in-person meeting. If delaying the event means getting to have it in person, “I’m not wed to March,” he said.

Virtual events are better than none at all, said the executives, but they know they don’t have the level of attention through Zoom events; dealers are distracted by business. “It’s a completely different animal when you’re offsite at a venue,” Robbins said. “You’re there.” When they’re attending virtually from home or the office, they’re still plugged in to the business.

The September virtual CEDIA Expo proved the limitations of virtual conferences, Robbins said. “It’s glaringly obvious that as hard as everyone tries, there’s no substitute for in-person, face-to-face meetings.” HTSA plans some live and some recorded sessions at its fall event to avoid “overloading” dealers. “When you do it, it’s got to be professional,” he said. “You can’t have dropouts."

Workman called CEDIA Expo “anticlimactic. We ended up with a bunch of meetings we could have done with or without.” Virtual “isn’t the same as in person,” because at a conference, dealers are able to “mentally check out” of day-to-day office life. Azione’s Glikes said, “I love CEDIA but it was a bust. Vendor feedback has been very negative with lack of dealer participation the biggest rub.”

Angela Larson, Savant senior vice president-customer operations, told us “it’s all in how you approached it,” saying her company used the virtual event as an education opportunity for dealers. Attendance at invitation-only sessions "exceeded our expectations.” A broader introductory event had over 2,500 attendees, she said.

Chris Kane, AudioControl vice president-sales and marketing, said Expo was his company’s first foray into virtual shows “and I think we’ll do more.” There was some initial pushback from dealers over attending classes for AudioControl’s 15 new products, but the company was pleased with attendance at 300 dealers per class vs. a typical 50-100, plus 2,400 booth views. Dealers who visited the AudioControl booth were “all new people,” Kane said, though he wasn't able to identify some who didn't fill out forms. Overall, he said, “there’s a role for a show like this,” especially with cost-savings: “I don’t have to put people on airplanes and deal with unions.”

CEDIA Expo owner Emerald said the Sept. 15-17 virtual event “propelled the industry forward with one of the first completely virtual trade shows.” It drew 7,600 registrants and 110 virtual exhibitors. Emerald logged 14,288 virtual panels or program registrations, said the company.