The Distributor Dish
The distributor community talks about challenges—and remedies—for the CI sector for the balance of 2011.By Nancy KlosekApril 2011
CustomRetailer: What category this year will drive the most profit for your retail and integrator customers? How has that changed from last year?
Jim Annes, AVAD: For our customers, the greatest profit opportunities are located outside of the flat-panel television. As pricing pressures increase in the panel market, our dealers are adapting to an environment where the profit margin on panels are in the single digits and they need to add on accessories and services to augment their bottom line. Dealers who recognize that TVs get the customer in the door, but look to power, cables, warranties, audio, mounts and other categories to drive profit will likely be better positioned for success.
As an industry, if we took half the time we spend complaining about margin pressures in panels and used it to concentrate on creating better strategies around other categories, we would probably be better off. I think audio is one area that some of the more progressive dealers are really pushing in the market. In their minds, thinner TVs have less attractive audio performance, and it creates an opportunity to add audio to each panel sale. This could be as simple as a surround bar, or more specialized with components.
Jeff Kussard, Capitol: One only had to look at the main show floor at the 2011 CES to understand just how big an impact will be felt by the explosion in tablets and e-readers. Even though these categories offer limited margins, the market for high-margin accessories will explode with them.
John Alifano, D&H: Traditionally, service and warranty work is profitable. No hardware item that installers can stock offers the kind of margins that these categories present. In the hardware realm, cables and almost all accessories provide enhanced margin opportunities. Another word of advice: If a retailer is not in the housewares category, he or she should reconsider. These products have excellent margins, low returns, model life stability, and they increase the amount of checkout dollars.
David Kaplan, DDG: Our typical customer is the independent residential custom integrator. Flat panel—and attachment to flat panel—has been the business driver for many years. 2010 drove home the point that this is simply not the case anymore. The new driver is the retrofit integration and upgrade opportunity of attaching connectivity and interactivity to the broadband networked home.