It certainly doesn’t get any easier for specialty electronics dealers. Maybe more interesting, depending on how you look at things, but definitely not easier.
Once again, specialty dealers who gathered at PRO Group‘s Spring Meeting find themselves at another crossroad. Last year, it was all about cutting costs, stabilizing business and fighting for basic survival. This year, it’s all about adapting to the massive industry-wide changes they all face.
“Business is changing quickly and retailers have to change and adapt to it,” said Dave Workman, PRO Group’s executive director. “But I do believe there are tons of opportunities out there.”
One of the biggest changes, several dealers said, is the loss of the luxury or aspirational customer. The next big change they face is developing the skills, product sets and partnerships to offer higher-margin, service-rich solutions such as energy management, home healthcare and home networking. Another is creating the marketing and merchandising strategies needed to penetrate social media platforms and reach consumers on mobile and connected devices.
“We’re now focused on where our revenue is coming from and what our customers looks like,” said George Manlove, CEO of Vann’s in Montana, adding that “maintaining margin” is more important now than ever. “We have to look at devices more as a conduit to the consumer than just a piece of hardware.”
Now that the luxury customer has traded his aspirations for greater value, dealers like Walt Stinson of ListenUp in Colorado is training his sales staff to identify customers that fit into three categories: Novelty, such as those seeking 3DTVs or new technologies and solutions such as iPad control integration; Necessity, those that need to replace an outdated or broken product; and Frugality, those looking for the greatest value.
“Everyone that used to trade up is now trading down,” Stinson said. Workman agreed. “The big difference today is the aspirational customer, which we all lived on for years. That has changed.”
To address that challenge, Stinson and other dealers are trying to work with their manufacturers to deliver products that target new consumer demands, create definitive channel programs that vendors actually stick with, and work together to develop new markets.
“We’re trying to get existing partners to address these, and to help us come up with offerings that address one or two of those touchstone (customer categories),” Stinson said.
As PRO Group dealers figure out their next move, many of them will be focusing on selling full 3DTV solutions (the set, cables, audio, installation, etc…) for short-term gain. Unlike other dealers we’ve interviewed at recent buying group meetings, the majority of PRO Group dealers seem relatively bullish that 3DTV solutions will drive incremental sales. Even though specialty dealers will compete with the national chains, Workman said the dealers can find a niche, such as offering bigger screen sizes and full, optimized solutions.
“We don’t have to have a dominant share in TVs, just a segment” Workman said. “These dealers made their businesses focusing on subsets.”
If those dealers want to survive, Workman and others said, they’ll have to develop new subsets, branching out from home entertainment to more sophisticated home technologies.
Manlove, for one, is developing business plans to tap into the developing home healthcare and energy management markets. Those will require Vann’s to retrain its staff and form new partnerships with solution providers and vendors, Manlove said.
“We think there are huge opportunities there,” he said. “We’ve got to do something to provide a revenue model for (the sales team).”