The Coming Crush
Will Giants Take Your Business?
By Ron Goldberg
AVI Electronics, a small, New Jersey-based C-tailer specializing in custom installation for home and auto, had it nice for a while. Situated on a busy highway with enviable visibility, the single-store operation had the good fortune of not only serving a relatively affluent suburban market, but also of being nestled among a row of car dealerships, virtually guaranteeing a steady flow of mobile installation business. When the store began operations in 1992, the closest CE chain was miles away, CEDIA was a toddler and the custom-install market rarely extended past commercial work, or the occasional bigwig's parlor.
Eleven years later, the industry has changed. AVI's business has changed, too, but the landscape around it has morphed even more. Directly across the highway, a stone's throw away, there's 6th Avenue Electronics, a regional chain with a supermarket-sized retail location. Then Best Buy opened a location right next door to 6th Ave. Up the road, there's a large Circuit City, right next door to PC Richard, another regional chain. Both are just past a CompUSA, OfficeMax and Home Depot, and all of these stores are about a mile from the local mega-mall, home to Sears and Verizon.
Until recently, AVI Electronics, and thousands of C-tailers just like it around the nation, had little to worry about from these bigger competitors. As experienced custom installers, they and their peers were the only ones with the experience that could deliver the "last mile" of the consumer market. That is, to take the potential of all the technologies that are being offered to consumers and physically integrate them into the customer's home. Conventional wisdom in the custom business is that traditional CE big-box stores can't do that, and even if they could, they wouldn't do it well. But the emerging custom market is so broad and so tempting, the traditional players are looking to get a piece of it, even if by non-traditional means. And non-traditional players, like phone companies, are right behind them.