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Re: Good points, Bruce

Posted by J-PMatt@Comcast.Net on April 29, 2007 at 08:52:34

In Reply to: Good points, Bruce posted by jim@signalpath on April 24, 2007 at 11:39:52:

"(1) as the prices of flat panel TVs fell, the dealer margins fell with it....AND the additional units sold didn't come close to making up the dollars."

That's true for the Chain Retailers, but not true for the Independant Custom Installation Company. It's true that the race to zero among the flat panel manufactures reduced profit for the retailers, but in reality, TV's dropping to more affordable prices did two things for my custom business:

1) Opened the door to new clients who had been holding off on a Media Rooms because of flat panel prices. This actually helped to drive the business.

2) Helped to redirect budgets towards product that made more profit anyway. If a client has, let's say a $15,000.00 budget to spend for Family Room entertainment, then that client is now getting better and more expensive speakers and subwoofer, and a better remote control with greater and better programming. They're also getting better cabling for their systems.

Remember, when you read about how poor the 1st quarter was in CE, that applied to ALL the retailers, including those with little to no experience in CE, like Boscovs, Sam's Club, BJ's etc. For the established Independant Custom Install company, it was business as usual, meaning we were able to react quickly to market changes while the behemoths as well as the trunk-slammers were slowed by their own bureacracy, poor hiring practices or lack of strong service.

"When you consider that Video is >55% of most dealers' business, it makes for a very very difficult situation."

Not for the Independant Custom Install company. That number is way off. For the big three cited elsewhere, more likely that's true.

"As music purchases continue to increase via downloads and decrease via CD sales, we'll see a tougher and tougher market for the independent high-end audio specialist. What products will be appealing to the download generation?"

This certainly is contributing to the demise of the High End 2 channel Brick and Mortar dealer, but far more damaging has been internet sales. I've said this before and I'll say it again, the manufactures are going to have to take dramatic steps soon, because unless they have the resources to open their own stores, this business and hobby is going to die off. At the least, self proclaimed audiophiles are going to find it very tough to audition equipment. The 30 day money back guarantee is gonna go away because of the beating it will take, and it will take a big one from the average audiophile, who, let's face it, is never happy for very long with any of their purchases. That one indisputable fact is what made Audiogon what it is today.

Maybe some manufactures will pool together as partners and open stores of their own, but don't count on seeing too many of these. The truth of the matter is that the high-end Custom Installation companies are now the ones who can afford to show these products to the audiophile, and once that dealer gets sick of the audiophiles ways, that'll be one less resource.

So in a nutshell, greed and lack of new hobbyists is what's gonna kill the business. The hobby won't go away mind you. It will just evolve into something else.

This post is made possible by the generous support of people like you and our sponsors:

Atma-Sphere Music Systems, Inc.

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