February 2007 Issue


‘Watershed’ Year for PRO Group

After a year in which it added four retailers and achieved aggregate sales volume of $2.5 billion among its 18 members, the Progressive Retailers Organization’s (PRO Group’s) Executive Director, Dave Workman characterized 2006 as “a watershed year for PRO Group in its 21 years of existence.” His remarks were delivered at a 2007 Consumer Electronics Show (CES) reception for the membership and its vendors, at which he contrasted the group’s performance against “mixed bag” industry results that challenged profitability across the CE retailing board. “It was a robust year, a fantastic year, the best on record,” Workman told the crowd, “which is a reflection

“Here’s Why You Should Work Here—and Stay Here.”

Some scoff at the deliberately obtuse messages found in Chinese fortune cookies—even as they play the suggested lottery numbers on the back of the paper slips. One fortune I’ve seen in a clothing store comes to mind as a proven truism, however: “Keep your shop well, and your shop will keep you.” Life in the custom business these days certainly isn’t as simple as this Confucian-like slogan would imply, but “keeping one’s shop well” is more crucial than ever in keeping it open. The wellness of a custom business depends more than ever upon the wellness of its people—the sales staff, the installers,

15 Minutes With... Franklin Karp

After Franklin Karp resigned as president and CEO of New York-area C-tail chain Harvey Electronics in October, it was only a matter of time before an executive with such a high-caliber resume and wealth of experience landed on his feet. The lucky beneficiary of his services is Audio Video Systems, a longtime custom integrator based in Mineola, N.Y. Karp serves as the company’s chief operating officer. Nancy Klosek visited Karp at his new office and discussed his new mission, the direction of the industry, and the differences (and similarities) between retail and pure custom. Can you reflect a little upon your time at Harvey

A Foot in Every Door

Charlotte, N.C.-based Simonini Builders was looking to secure the simplicity, branding and reliability that it and its clients want when adding A/V systems into a new home. Local integrator Digital Home Systems wanted a contract for future business that it could take to the bank. Distributor AVAD wanted to capture more business and a bigger presence with the regional builder community. Through AVAD’s Dealer to Builder (D2B) program, everyone got their wish. Money in the Bank Digital Home Systems has maintained a relationship with AVAD for roughly three years and, since its founding in 2000, has served as a subcontractor for Simonini, a custom

Are You Really Making Money on Labor?

Most dealers with whom I speak are convinced they’re making substantial profits on labor. Some even go so far as to give salespeople commissions on selling labor. But that perceived profit just ain’t so. I decided to declare my views on this topic after a recent conversation with another industry consultant, who wanted my opinion on the amount of compensation a salesperson should receive for selling the labor portion of a custom installation. After hearing a lengthy explanation of why a salesperson should receive compensation, I asked if the dealer with whom the consultant was working had any idea of how much profit he was making on

CEDIA’s Take on Employee Satisfaction

What specific programs and incentives does CEDIA offer to help its membership convince their staffers to turn their “jobs” into lifelong careers? CEDIA is passionate about providing a clear career path for our members’ employees. Over the past five years, CEDIA has overhauled its education to establish a job-specific career pathway. CEDIA offers five colleges within CEDIA University, all addressing different positions one may aspire to in this industry: electronic systems technician, business, designer, customer relations and project management. How can a member know which programs would be the best fit for the unique culture that exists in his or her particular business? In addition to CEDIA University colleges,

Failure Is Acceptable

Something hit me this year at the Consumer Electronics Show (CES): I have an unsupportable expectation that electronics should operate flawlessly. Why is this a problem? Because they don’t. For instance, I was at the Microsoft booth at the show. Several kiosks operated by its industry partners were sporadically non-operational. A screen went down. A connection failed somewhere. The new software didn’t operate as expected. These are the pressures all exhibitors face. It’s tough enough to make your products work in the lab. Now move them to an inhospitable location. It’s amazing how many demos don’t fail under these circumstances. And yet, the technology was great when it worked. A

Format War Is Over, If You Want It

Ever since the late ’70s and early ’80s, when not one but two consumer video format wars erupted, the popular press has perpetually itched for “the next battle.” The original consumer video format wars pitted VHS versus Betamax, a battle everyone still remembers. (The other, much less-remembered squabble was between LaserDisc and RCA SelectaVision CED for supremacy in the 12-inch disc world.) In this decade, an audio format tilt between SACD and DVD-Audio showed promise but, in the end, a lack of consumer interest rendered that battle moot, no matter how much print was generated on the subject. For a while now, it’s looked

HES Plans 1,000 Store Visits in 2007

The Home Entertainment Source (HES) buying group enjoyed a 30 percent total increase in member sales volume for 2006, reported Executive Director Jim Ristow at a member breakfast during last month’s Consumer Electronics Show (CES). Ristow promised that the organization’s 2007 agenda will include a dramatic increase in outreach to retailers via zone manager store visits. “HES has over 700 members doing about $1.3 billion in business,” said Ristow. “We’re adding a fifth zone manager to help with these visits. In 2005, we visited 15 to 20 stores; since June 2006, there have been 130 store visits, and our 2007 goal is 1,000 store

More Than an Information Provider, We Want to Be Your Information Partner

Is it just me, or is this the time of year that feels like being shot out of a cannon? Check out our new calendar of events on page 74 and you’ll see what I mean. Every show, expo and conference is an opportunity to learn from the experts from a variety of disciplines. Every event is an opportunity to fuel your growth strategy. News comes and goes, but business and strategy information are timeless in value, and are what we strive to deliver. With that in mind, each issue of CustomRetailer is crafted like a management conference. The business coaching from our Essentials,

New Vistas in Home Entertainment

Every now and then, you witness something that represents such a clean break with tradition, such a transformative moment, that you make as enduring a mental note as you can of where you were and what you saw. On a blustery January day in midtown Manhattan, at one of the most revered and long-standing home theater dealerships in the Big Apple, pigs flew. Man bit dog. Harvey Electronics touted a souped-up Microsoft Windows PC as both “the future” and “the now” of a high-end home entertainment environment. Such an event was on par with finding out that your grandmother posts her own remix MP3s on her MySpace

Re-Acquire Your Previous Customers

While at the Consumer Electronics Show in Las Vegas last month, I realized just how outdated my own audio/video system had become. I also decided that my technology lapse wasn’t my fault. I bought a new house about six years ago. I had it pre-wired so I could add any new product that would come down the pike. A year later, I built a wall system and had a state-of-the-art system installed upstairs in my loft. The Sony 36-inch TV looked brilliantly bright compared to what I’d previously owned. I had a great surround sound system with a booming subwoofer and a center channel

Speak the Home Builders’ Language

I jetted down to Orlando, Fla., this month to attend a day and a half of the International Builders’ Show. (I know, it’s rough to leave phrigid Philly behind in February, but someone had to take one for the team.) Next year, I hope to attend at least two days of this huge show, because so much of interest to our industry was happening. Or not happening. I’ll get to that in a minute. Several companies from our industry exhibited— lighting control and home automation outfits, mostly. Most resided in a common area tucked away from the main action. Companies on hand included Lutron,