As we look back at the last three years, I must admit that we have spent an incredible amount of time and energy to do/be something, which we did not need to do/be. The more things change, the more they stay the same, let me highlight.
During the 2000-2007 period, the custom business was growing way too fast, obviously boosted by building too many new homes, and by escalating home values, prompting homeowners to take out loans for remodeling. It was going at an incredible pace, totally unsustainable. Best Buy got into the action, as this was now an attractive category.
2008—the crash came, Circuit was gone, Internet sales kept on going up and the custom installer consolidated, and held on to his operation.
Today we are where we need to be, and we now know that there will not be a second coming of the crazy years from 2000-2007. So the custom houses have learned how to operate in the shadow of the big box and the Internet; they have become mentally tough and know better what their contribution is in the food chain. Two years ago I stated, in an earlier article in CustomRetailer, that the custom retailer might have to get used to making money on services, knowing all the new technologies, and in a lot of instances forget about profit from the product. I think I was right, as we have seen with flat panels and the margin Apple allows custom retailers to make: next to nothing.
So we are back to what the custom installer should be doing—create exciting solutions for the customer, be on top of what all the new technologies can do and how these wonderful technologies can make our lives interesting and relevant.
All the custom installer has to do is sell services and information and pain-free installation. Do not try and sell on price ever again; that train has left the station and even the conductor has fled.
Let Best Buy, hhgregg, Walmart, Sears, Office Max, Office Depot and Amazon fight it out—at least one is going to have to go away. I know it will not be Amazon, but there is always one or two that have to go away; you pick which, first sign is dropping comp sales, just a question about time and history repeats itself.
So in an ever-rotating carousel of consumer electronics, stay calm, and stay with what you do better than anybody else, custom installation and service.
Helge H. Fischer is president of Audio Video Advisors, LLC.