HTSA to Mine Apple, Mobile Devices to Lure New Businesses
ST. LOUIS -- Amid forecasts that HTSA dealers’ total 2010 sales will drop below $400 million, after a 20 percent decline to that dollar figure in 2009, association executives are urging dealers to build solutions around Apple products, more-affordable home control and mobile electronics. “You need to have as many arrows in your quiver as you can,” Executive Director Richard Glikes told Consumer Electronics Daily.
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Eight to 10 HTSA members will meet the “strict requirements” for an Apple franchise, including an annual sales commitment of $100,000, Glikes said. Despite the iPad’s appeal for control apps -- and numerous iPad app announcements at the recent CEDIA show -- the tablet won’t be in dealers’ portfolios soon, because of limited supply, he said. Target and Amazon didn’t have the iPad until last week, he noted. “Apple does business by filling up channels,” Glikes said. “When one channel is saturated they'll fill up another."
Apple products, including the iPod and Apple TV, won’t bring in the coveted 40-plus point margins that Glikes is appealing for from vendors (CED Oct 8 p3). At eight to 10 points, “margin is terrible” on the iPod, he said. But Apple is “part of life, probably the most powerful brand in upper-end consumer electronics, and it will drive traffic,” he said. Dealers who sell an iPod will try to coattail a dock sale or music system with it, he said. Glikes hopes the relationship with Apple will help boost exposure for the integrators, which have a hard time attracting new customers because they don’t operate from storefronts but get business through referrals instead. “It used to be people came in to an audio store, took home a product and plugged it in themselves,” he said. “That just doesn’t happen anymore.” The hope now is that “people will look for Apple and they'll find us” as authorized dealers, he said.
A dealer counting on an Apple bump is Brian Perreault, general manager of Barrett’s Home Theater in Chicago. Barrett sees the Apple relationship as a ladder to the future. “In five to 10 years, younger customers are going to be the norm, and we need to find a way to build Apple into the sale,” Perreault said, “because the reality is Apple’s not going away.” Acknowledging that the store “won’t make money” on Apple products, he said it’s all about giving customers what they want. If customers now want Apple TV, they buy it at the Apple store, he said. “But if we can buy direct and make a little profit, I'll do it to leverage the Apple brand.” The Apple alliance extends to home control, and Perreault sees the Savant control system as another way to ride the Apple wave. The company plans to sell Savant automation “as an accessory to the iPad,” he said.
HTSA dealers aren’t in mobile devices now, “but I think we have to be,” Glikes said when we asked about the Android platform. In his career at Bryn Mawr Stereo and Video, Glikes steered the retailer into mobile electronics, and the chain grew into the third-largest mobile dealer in the Philadelphia area, he said. “You buy a phone for $300, you sell it for $99 and you still make $100,” he said. “I know how it works, and I need to get these guys into the mobile business because everything is going that way."
HTSA is also taking a fresh approach to home control, Glikes said. Crestron opted out as an HTSA vendor partner two years ago, he said, and that turned out to be “a blessing.” The group picked up Savant, Universal Remote Control and Control4, companies that don’t have the same exclusivity requirements as Crestron. Savant is a “natural tie-in” because of its Apple relationship. Because integrators “grab data” through drivers from Apple rather than “compiling data” with a system like Crestron, they can be more efficient by spending less time programming, Glikes said. Control4 and URC target the lower to middle range of home automation, he said, “where the customer has opted to trade down.” Both companies are benefiting from the economy, he said, because they've been able to capture dealers looking for more-affordable control solutions.
The economy has victimized HTSA’s Guiltless Green Home Theater initiative, which the group took up last year as a way to connect home theater to solar energy. HTSA put 23 people through training to be certified to sell solar panels, but only two have gone into the business, Glikes said. “The last 18 months haven’t been a time to take risks and delve into new areas.” Solar and energy management will offer tie-in opportunities, “but when you're firing people, you don’t learn new trades,” he said. “It’s not a good use of manpower.”