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Are AV Retailers To Blame For Lofty High End AV Prices?

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Magnolia_Store_Front.jpgThe volume of people who will buy their audio/video components on the Internet is still a tiny fraction of those who buy gear at brick and mortar stores. "Big box" stores that gulp up much of the market share within the consumer electronics space have changed from the likes of Tweeter, The Good Guys and Circuit City to Best Buy, Costco and Wal-Mart. The landscape for where to buy your next pair of speakers, headphones and/or flat HDTV has changed completely in the last five years. Many suggest that the changes are not for the better and anybody who's been ignored as many times as I have at the Magnolia inside my local Best Buy would tend to agree that there is nothing "special" about the specialty audio that they sell, even if they have top lines like Bowers & Wilkins, MartinLogan and Klipsch on the floor.

Additional Resources
• Read more of our original commentary in our Feature News Stories section.
• See more AV dealers and installers news from HomeTheaterReview.com.
• Locate a quality dealer near you.

There are online sites that famously say that all high end is a fraud and that basically all (or many) products are the same under the hood, so why pay more than the minimum for gear? Go value or go home and forget top-level performance, because it's just a rip-off. While this outlook is overly simplistic, there are many companies that have their amps built at the same factory as those costing more (or less), but it doesn't mean they're the same. There are many speakers ranging from $500 per pair to $20,000 per pair that come from the same factory in China. I still say the Oppo players wouldn't be what they are today, reaping the rewards of the influence of Harman's Lexicon's BD-30 and its THX certification. Should Harman have upgraded the DACs and made the player less Oppo-like? Perhaps, but then again, not everybody wants an Oppo. Just nearly everybody. I know: I have two of them and have never looked back.

Brick and mortar specialty AV retailers are dropping dead faster than 27-year-old rock stars. One uber-high-end electronics company told me recently that they lost 180 dealers with the failure of Tweeter and another 80 with the failure of Ultimate Electronics, leaving them with about 100 U.S. dealers. Another speaker company that had the fortitude to leave the Blue-shirts and go it on their own has built a dealer base of about 85 dealers in the U.S. - that's it. Other companies have customers to sell to in cities like Las Vegas and Phoenix, but can't find a local dealer willing to floor their expensive products. Why is this? Dealers hold all the cards if companies won't sell directly to the customer. They tell the manufacturers a) we want huge profit margins, b) we want you to pay for the demos, and c) we will not guarantee that we will sell anything. If the manufacturer will not agree to the terms, another one will. These are good companies, too, ones that date back a generation or two. The marketplace is just that bad these days.

How does a high-end company that really engineers to the nth degree of excellence keep up? Online retailers allege that they sell "the same thing" for a fraction of the price and people want to believe them. Many publications say it's all the same, even when it really isn't. What the high-end companies do is raise the retail price. A $10,000 stereo amp that sells to a dealer for $3,600 at cost allows the dealer to make a huge margin on the floor model, but they don't tend to keep the floor models for very long. They sell them off and rake in short-term profits, while losing the future business that comes from the pending demos from new clients. Do the dealers invest heavily in marketing, advertising, cost-per-click, event marketing or other creative ideas? Rarely, and when they do, they shamelessly go back to the manufacturers with their hands out for more money for such a marketing plan.

Now, I'm not advocating that you or even high-end manufacturers abandon brick and mortar stores. I am suggesting just the opposite. You need to support the local dealer, but it's very fair to be open and overt with them about exactly why you buy from him and not online or used from sites like Amazon, eBay or Audiogon.com. They need to floor product. They need to show and actually stock the good stuff. They need to pay to calibrate their video. They need to offer special value to you, the enthusiast, or you are going to spend somewhere else. Then again, if they step up, you need to show them a little love, too. Spend on the small stuff and the big stuff with your dealer. Buy value products and buy investment-grade udiophile products from them if you have the budget. Let them know what products you want to see at the store. Have their reps bring over samples for you. Get involved and support your local dealer. They might not be the most efficient business - God knows, I was in their shoes 20 years ago so I know, but your best local store offers a hell of a lot better buying experience than going to the land of Blue Shirts or picking up a cart at Costco. Even Amazon, which provides a wonderful online buying experience, can't demo a pair of Paradigm speakers for you. Or a Rotel integrated amp. Or show you a THX calibration on a Panasonic Plasma HDTV. That's why local dealers are so important, but the broken relationship between enthusiast customers and dealers must be fixed, and soon. Value is key and people are spending on gear. The question is: going forward, will the gear of good value be at the local home theater store and audiophile salons? If prices keep going up on high-end gear, the answer will be a vehement NO.

Additional Resources
• Read more of our original commentary in our Feature News Stories section.
• See more AV dealers and installers news from HomeTheaterReview.com.
• Locate a quality dealer near you.
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