A few weeks back I got a call from a friend of mine who is 42, lives in an upmarket beach community in Southern California and is well employed in the financial services business. He and his beautiful wife (and two adorable young daughters) are renovating their house, including a new kitchen and many key modifications to their cottage by the beach. Smartly, they moved out while work was being done and now was the time to talk about the home theater needs of their much upgraded home.
My buddy found an independent "trunk slammer" installer (as the retail guys like to call them), who was willing to work at a very fair hourly rate and sell gear with a modest retail discount. My buddy sent me the installer's bid and the entire project was proposed at a modest $4,500. I had a number of questions including: Where's the Blu-ray player? You're an Apple household - why no $99 AppleTV? My buddy asked me about Speakercraft speakers and I said they were good, but this family is very into green living and I suggested Noble Fidelity speakers, which are only a few hundred more dollars per pair. I got unexpectedly bitch slapped. I heard from my friend: "A few hundred? What's wrong with these?" Ouch. I was told when I sold stereo systems back in the day, if you couldn't get your client up about 20 percent, than you weren't selling - but these times that we live in now are very different. A mutual friend of ours who is an uber-high-end installer, who only works on projects above $100,000 total cost, offered his brand new Samsung 58 inch 8000 series LED HDTV for $1,500 (below dealer cost) to our mutual friend and got a polite but similar response. Nobody understands the pressure (monetary and otherwise) of renovating his or her home like I do. I've been there. Hell, I lived through it while the construction was underway, but $99 for an AppleTV? $299 for a Harmony Remote? $199 for an LG Blu-ray player? An extra $500 for kick-ass "green" speakers? I wasn't trying to blow the budget for anybody in any way. I was just trying to highlight some of the best, coolest new toys that our industry has to offer.
Clearly things have changed in the market when it comes to specialty AV over the past few years. The value added upsell that was a part of the normal sales process, that helps people find out about the good stuff is meeting resistance like never before. High bang-for-the-buck products like Oppo Digital's Blu-ray players, NuForce Amps, Orb Audio speakers, Aperion speakers and Emotiva's $699 AV preamp are selling by the thousands while $20,000 plus LED projectors hang on ceilings with customers asking "Why would I ever need that?"
Specialty AV dealers are making decisions about what to floor in their stores based on value. Sandy Gross's (the co-founder of Polk and Definitive Technology) new line, Golden Ear Technology had 110 signed dealers lined up to sell their $2,500 audiophile-grade speakers before they could ship a pair. Brands like Bowers and Wilkins and Paradigm are also picking up dealers and market share as they meet the need of consumers with high value paired with unique new distribution models.
A college buddy of mine who is 36 and lives in Southern California just got a huge promotion from a well-known food and beverage company that he currently works for. Amazingly, the company is paying for the depreciation of his house, paying to move him and his family, as well as increasing his pay plus a title that will make him a Vice President and compensated well into the $200,000 range. The trick is: he has to move to Texas. He loves living in California but the lure of getting out of a poor investment of a home as well as inking a 30 year fixed mortgage at low rates on a home that is 300 percent bigger than his California home is without question tempting. In fact, it's too tempting to resist. He emailed me a review from HomeTheaterReview.com on an affordable Epson projector that costs about $2,200 and asked me what I thought. I love the Epson projector as it's a great value and it makes a fantastic picture. I did tell him about the $3,000 JVC D-ILA which is on display at many Magnolia stores around the country and that it was basically the new version of the $10,000 projector that I have in my theater and that he absolutely loved. I was surprised to find out that he wasn't that interested. "$3,000 is just too much" he emailed. I didn't push. Not one bit. But I did wonder whatever happened to the value added sale. Is it dead?
Stroll the aisles of Best Buy or any warehouse store and you will see clerks playing the role of highly trained salespeople. Displays and kiosks are pre-loaded with pre-produced content and the people "selling" don't really know much about what they are selling. Video is distributed poorly, costing resolution down from 1080p to God-knows-what. Audio is rarely even plugged in and there are often few (if any) places to hear a product that aren't noisy or poorly designed for an audition. For many consumers, that means that specialty audio lives more on the pages of websites like this one than in brick and mortar stores staffed by experts. Look at the success Apple has had in their stores with their "Genius" staff who can really answer tough questions. Can Costco do that? Can they upsell a little? Can they add value? Or are home theater components today sold as commodities just like a box of cereal or a 300 count bottle of Advil?In the end, the consumer has the power, as he or she votes with their wallets. Are you willing to pay a little more for something special in terms of a product - perhaps a 10 percent premium? Are you willing to allow for a specialty store to make more margin on a sale to get better support? Will you purchase a product locally and pay the tax when you could have saved 8 or 10 percent if you ordered off the Internet? Do you seek out commissioned salespeople because they have a stake in the game of selling you best products as compared to clerks who won't and don't care about the outcome of your AV investment? Those are decisions that we all can make that affect the specialty audio video market.