Over in big-box land, Circuit City, who’s been in need of some positive publicity lately to say the least, prevented a terrorist attack on Fort Dix, of all things. Perhaps consumers can buy some extended warranties from them just for the sake of giving them props.
Let’s get back to the Harvey/MyerEmco and Tweeter stories, though. Each of these three companies has based an increasing amount of their business on professional custom installation services and design. Each, with the exception of MyerEmco, has struggled mightily.
In the case of the Harvey/MyerEmco merger, a lot of questions remain unanswered. Exactly what factors led to this transaction, and what will these companies gain from being more or less separate but equal corporate partners? They claim that not a whole lot will change in consumers’ eyes in terms of each company’s branding and market approach. So just what is the point?
MyerEmco honcho Gary Yacoubian hints that it will have a lot to do with sharing best practices, but the two companies already are members of the same buying group, where such sharing supposedly already takes place. So why would MyerEmco, apparently doing boffo business and, as a privately-held company, free of the shareholder pressure and prying media eyes that have driven Harvey to the brink, choose to be absorbed by that publicly-held company—one with questionable finances, a company that just half a year ago jettisoned its longtime CEO and which somehow, some way, has been losing serious money in the nation’s largest and most prosperous market? What was the real motivation here?
Your guess is as good as mine, but I’m sure we’ll find out more as the companies get closer to closing their deal.
Meanwhile, Tweeter’s troubles have been well-documented, but its acknowledgement today that a bankruptcy filing is within the realm of possibility (probability?) caused many a gasp here and around the country. It doesn’t even have the cash on hand, apparently, to break the leases on the stores it is closing. It finds itself in a dire situation.
(Tweeter is kind of like Britney Spears in a sense—everyone has been predicting its demise for what seems like forever, but now that it finally seems to be hitting bottom, we’re all still kind of surprised and taken aback.)
Back on point: Consolidation is the word of the year in the electronics retail space. It seems like the distant past today, but it was only about a month and half ago that Ken Crane’s Home Entertainment bought Leigh Adams Discount Sales.
When Tweeter looks in the mirror, I wonder if it ever ponders whatever happened to Ultimate Electronics, a similar publicly-held specialty chain that two years ago, cash-poor and overextended, declared bankruptcy, closed half of its stores, exited various markets, got bailed out and taken private by a hotshot investor who had grand designs on transforming the company with a curious mass market/installation-focused model that he would take national…and hasn’t really been heard from all that much since, although it still maintains most of the locations that survived the bankruptcy. (Go to its web site today, and you’ll see it selling Pioneer Elite plasma TVs and earbuds. How is this a sustainable business model? I hope to catch up with the notoriously private Ultimate soon.)
To the average outsider, it sure looks like the hybrid retail/installation model is broken and cash-poor. Where are the investors? Where is the venture capital? Where is the profit? Where are the customers?
Outside of the self-congratulatory realm of our industry events and trade shows, these are the questions that increasingly are being asked.
The outsiders don’t see how well the HTSA and HES dealers are doing. They don’t see the independent installers and integrators who operate in office parks and industrial areas, without a retail presence. They don’t see how well the distributors are doing, serving the little guys who power the custom industry—the little guys who are the embodiment of the American dream, the true entrepreneurs, the people who sure do look happy and prosperous every time I see them.
The outsiders just see the large hybrids struggling, and the big-boxes booming, and they wonder how much America really wants or needs custom installation and integration. “Who really needs to pay more for a TV?” they dismissively ask, as if that’s all you really do—overcharge for TVs, invade people’s houses to charge too much for installation, try to sell them other stuff they could easily buy on the internet or at Best Buy. They still don’t get it.
It looks like the CEDIA channel, the custom integrators, the small but vibrant operations, are going to be operating under the radar for quite a while longer. Something tells me that for most of you, you wouldn’t have it any other way.