Supply Chain Woes Easing in CI Channel; HTSA Doubles Down on Lighting

AV receiver shortages that plagued the custom installation channel have started to ease, but supply chain issues remain for processors and control products, Home Theater Specialists of America Executive Director Jon Robbins told us last week. “It depends on the category,” Robbins said of supply: “There are some categories that were challenged 60, 90, 120 days ago that are not nearly as challenged as they were." AVRs “were critical,” he said, and the category is “flat to slightly up” for the year, he said.

HTSA put strategies in place to help dealers navigate shortages, Robbins said, including telling dealers the best ways to purchase during a supply chain challenge vs. “how you’ve always done things.” That includes planning out further and bringing in inventory earlier. Though earlier inventory adds costs, “You build it into your business plan; that is part of your investment,” he said. The group also pushes dealers to get “larger upfront deposits," he said, saying that's an accepted practice with other luxury categories, including high-end appliances.

After a “spectacular year” in 2021, when demand was far ahead of supply in residential systems, HTSA is continuing to see growth, Robbins said. June was up “in the teens” year on year and August sales were up 20%, he said. Inflationary pressures that are playing out in the broader retail market aren’t largely being felt in HTSA’s customer segment, he said.

On whether dealers are catching up with backlogs caused by product shortages, Tom Doherty, director-new technology initiatives, said “Our segment of the channel is near the top of the pyramid.” Other segments of the custom installation channel "are edging toward flat or they’re starting to see softening," he said, "but we’re seeing much less of that just because of the upper wealth of clientele we serve.”

Some members, though, are starting to report that architects they work with “are seeing fewer opportunities,” Doherty said. Over the past couple of years, architects were “either turning down projects or telling a client, ‘I can’t work with you on this new house you want to build for a year,’” he said. “There’s still very brisk business; it’s just that the pipeline is not as far out,” he said.

Lighting continues to be HTSA’s primary focus and is “growing exponentially,” Robbins said. After a hastily assembled Lightapalooza last year in Dallas, which drew 250 attendees and 17 exhibitors, the event will be back Feb. 20-23, this time in Glendale, Arizona, at the Renaissance Phoenix Glendale Hotel & Spa. With more planning time for the 2023 event, “We’ll at least double our attendance” over what was “a very successful” inaugural event, and exhibit space is expected to grow, too, he said.

Doherty said 500 attendees at the Glendale event would be a “low number,” saying he expects, based on industry feedback, the event to draw 750-1,000 people. Lightapalooza could have had double the attendance last year, “but a lot of people thought you had to be in HTSA to attend last year; that was not a fact.” He compared Lightapalooza to the early days of CEDIA when home theater was new: “We are so early in this curve still.”

Though HTSA has been focusing on lighting for five years, only half of members “are fully engaged,” Doherty said. Half of those, about 25, are “well on their way, and it’s a significant part of their business,” he said, saying they have created their own lighting design departments and have lighting showrooms for the fixtures and control systems they sell.

But the market penetration of HTSA dealers providing lighting fixtures vs. lighting control is “still teeny tiny,” Doherty said. “The potential is huge,” and extends beyond lighting systems, he said. “It allows companies to be made aware of projects well before they otherwise would.” When dealers are engaged in the lighting design process with the architect and client early on, “you establish trust and that makes providing all the audio video and everything else that our members sell a slam dunk,” he said. Those not selling lighting “are just one of 20,000 people in the country that do audio video.”

The cost to attend Lightapalooza last year was $750, with training, meals and education included, Doherty said. For the upcoming show, with a larger show floor, more manufacturer participation and higher expected attendance, “I’m looking at more like $150 or less to attend,” he said, with a la carte pricing for some courses. “Cost will not be an inhibitor for any integrator,” he said.

HTSA is putting on Lightapalooza “to give a good return for our own vendor partners," Doherty said. Plus, "it benefits everybody for the lighting channel to grow and for us to set the course for how [lighting] should evolve in the CI channel,” he said. Holding the event is propelling the category “as opposed to waiting for the industry to catch up three or four years in the future.”

On whether the lighting event is a strategy to grow HTSA membership, Robbins and Doherty said no. “A lot of people suspected” that Doherty was trying to “poach” dealers from other groups by opening the event to non-HTSA members, he said, “but we’re not wired that way. You cannot write a check and become a member. We base our membership on the best people that we can find in a particular market," he said, saying HTSA is "kind of capped in the 100 range. We’re not looking for any more members.”