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What Leading A/V Specialists are Doing to Drive the Future of Custom Installation

This past Fall, a group of specialty audio/video retailers and manufacturers sat down at a conference table and developed the latest strategic plan for their industry. As the board of directors for the Professional AudioVideo Retailers Association (PARA), this influential group of business owners was representing a microcosm of the specialty A/V business, an industry filled with large and small companies, alike, that are owned by 30-year veterans as well as relative newcomers.

This past Fall, a group of specialty audio/video retailers and manufacturers sat down at a conference table and developed the latest strategic plan for their industry. As the board of directors for the Professional AudioVideo Retailers Association (PARA), this influential group of business owners was representing a microcosm of the specialty A/V business, an industry filled with large and small companies, alike, that are owned by 30-year veterans as well as relative newcomers.

When the PARA board sat down to begin their meeting last October, one of their goals was to develop new strategies to help the industry grow and prosper in a market filled with increasing competition, tighter profit margins and constantly changing products.

Like other A/V industry boards, PARA’s leadership meetings tend to focus on the formation of business education programs for its members. PARA board members, in fact, must examine the elements that go into their association in much the same way they would for their own, individual businesses. For instance, a problem that one board member might be facing on the West Coast, could very well be the same challenge faced a year later by his PARA associates in the Midwest market. It is one of the board’s missions to provide the management training and resources necessary to survive that challenge and the many others that lie ahead for specialty retail and custom installation.

“We call ourselves a billion-dollar virtual corporation because, with the buying power of our association of companies, we can provide services and discounts that a million-dollar independent could never afford on its own,” explained PARA executive director, Deborah Smith. “Early on, we would teach basics about a balance sheet and inventory turns and what ROI means. Now, if you ask dealers to name their main challenge, it’s almost always sales training.”

In response, PARA’s board developed a sophisticated sales training program formed from the Wilson Selling Model, which is a two-and-a-half-day business-to-business program, customized for consumer electronics selling. Among other things, the course helps dealers reduce their number of SKUs and understand other inventory management techniques.

“What we promise in that seminar is that everybody can reduce the number of SKUs that they sell by 20 percent,” Smith said. “Determining which 20 percent is really hard to do, so it’s a matter of first looking, very strategically, at your niche in the market and then analyzing your competition’s offerings. Then you look at your own lines and at your vendors to be sure that your long- and short-term goals are aligned.”

Association president, Charles Bock, said that as PARA enters its 23rd year, it also must continue to focus on programs and benefits that help dealers grow and prosper. As proof of PARA’s past successes, many companies that began as small, entrepreneurial members 20 years ago have grown to become the Pro Group, an exclusive industry buying group. Likewise, many smaller companies from just 10 years ago have already worked their way up to become the middle-sized members of PARA.

Deborah Smith, who was VP for the now ubiquitous Tweeter chain for seven years before her term at PARA, says that even as PARA’s membership has embraced custom installation in recent years, the retail strategies of marketing, advertising, store design and direct mail are just as viable as they have ever been for its membership.

“Following the ‘fat years’ that we’re just coming off of with custom divisions and hybrid retail/custom strategies, all of a sudden we’re back to a place where people are having to promote what they’re selling again,” Smith said. “Now, a lot of people are turning back to retail strategies that they sort of forgot about. You see a large PARA member like Myer-Emco now doing a lot of promotion again.”

Myer-Emco’s vice president, Gary Yacoubian, is also a member of PARA’s board of directors. As a result, he is well aware of the association’s specific plans for training its annual spring conference attendees in the same techniques that his company has been revisiting. His company is also focusing on the synergies between the retail and custom divisions of his nine Washington, DC-area stores.

“Because retail drives custom and custom also has the potential to drive retail, this is a fantastic strategy for us in a weak economy,” he explained. “It is also highly appropriate in an emerging competitive environment, because the big box guys don’t do custom.”

Yacoubian admitted that one of his secret reasons for joining the PARA board was for the privilege of working directly with seasoned professionals with business expertise. “These are the successful business owners who have wrestled with these tough issues and have come up with really great solutions,” he said.

One of those business owners is John Banks, a PARA board member whose experience spans 25 years at Audio Centre in St. Laurent, Quebec. Banks advises specialty A/V dealers to return to the basics, performing fundamental business practices well during increasingly competitive times. Banks is working with his fellow board members to help dealers keep a “heads up on technology, and what is happening with technology prices, sales strategies and inventory.”

Banks noted that basic ideas like these, that are often “born” at the board level, quickly disseminate down to PARA members. And even as an attendee at PARA’s annual conferences, Banks constantly learns about new business techniques.
“I generally go to a conference with a goal of learning something that will add substantially to my bottom line that year,” he said. “Many times, even a casual conversation with another dealer will provide me with a great idea that will have a massive impact on our business success.”

Most recently, Banks has been structuring his company to roll with the fluctuations in the economy. “We do a lot of really high-end custom right down to mid-fi,” he explained. “And if we feel that the top tier is not responding, then we have to move downstream, to where people are buying.”

The ability to share these concepts and others, is one of the benefits that board member, Nicole Langdon, has gained from PARA. Langdon, the director of operations for HiFi House in suburban Philadelphia, says that each PARA board offers their own market’s perspective to form a plan for the industry. “We all bring our own business ideas and different experiences,” Langdon said. “And because each market is different, we also try, as a group, to find things that benefit the entire organization. We want all of our members to find ways to grow and perpetuate more growth.”

For most, said PARA vice president John Flanner, adding value in the market is most important to a company’s long-term success. Flanner, president of Flanner’s Audio & Video in New Berlin, Wisconsin, thinks that dealers should put themselves in their customers’ shoes and determine how much worth they really place on the value that the dealer believes he or she is adding. “For example,” Flanner said. “I get positive comments back from our customers all the time about our delivery people, because they are polite, professional, mature and respectful of customers. So it’s important that we continue to charge for that service.”

However, Charles Bock points out that small independent dealers need to be concerned not only with what works within their own market, but also with what’s happening elsewhere around the country. “We need to see the trends that are coming our way,” he explained. “It’s nice to be able to say, ‘This is the trend in California,’ and then make a safe assumption that in two years it is what you’re going to be dealing with in your market.”

Being part of a group such as PARA, Bock added, enables a small, independent company with one or two locations to be part of a nationwide network of people from which you can learn and find out what is happening in other areas.

“That is critical, I think, for any small-business person in this industry today,” Bock noted. “Also, it is no longer possible to just open a store and wait for stuff to happen. If you don’t have a buying system, an inventory management system, a mapped-out marketing program, proper sales training and proper procedures in your business, I don’t know how you will survive.”

In today’s marketplace, Bock says, “little guys” are forced to operate like “big guys,” such as mass-market retailers.
“The big companies have a system for everything that they do, so we also need a system for everything that we do,” he said. “Another PARA mission is to provide independent entrepreneurs, who used to be able to run their business by the seat of their pants, with at least a place to go to get the information and the structure they need today to survive.”

Deborah Smith noted that even more established PARA dealers need to operate as “lean, mean machines” and remember the basics of a differentiation and upscale strategy in their businesses.

“Customers today are used to excellent organizational operations, and sales training is such an important part of this process,” Smith said. “Your people have to know how to talk to customers, and they have to be able to take them through the sale. Otherwise you’re just selling an appliance that you can buy at Best Buy. The value-added has to be obvious to the customer, and that takes a lot of training.”

Bock believes that companies that invest time and money on training, will be the ones to survive in the years to come. And despite the growing dominance of large retail chains and franchises, he is a strong believer in the long-term viability of small, independent businesses like those in the specialty A/V and custom installation market.

“Whether you’re a clothing store, a restaurant or an A/V specialist, there is still a reason for small, knowledgeable, independent businesses to exist,” he said. “Obviously there are not as many of us left as there were 10 years ago, but we’re never going to go away completely. Only the stronger and smarter, however, will survive.

“I’m very optimistic about our industry, because people want our products. We sell some of the most exciting stuff out there, and people want it and will keep buying it.”

Jeremy Glowacki is editor of Residential Systems.