ProSource Targeting 10 Percent Sales Increase this Year

The exclusive vendor pacts take a variety of forms, ranging from events and marketing to product and brand launches and grew from a series of tests in the last few years, Co-President James Ristow said. Under the new ProSource structure -- formed by combining BrandSource’s Home Entertainment Source (HES) and PRO Group -- Workman also has the role of chief operating officer, while Ristow is chief business officer. ProSource is operating as a BrandSource division.

ProSource signed TV agreements with Sony and LG Electronics, said Workman, declining to disclose business terms. ProSource is planning a series of dealer events in major U.S. markets for the fall keyed to 4K TV that will have vendor backing, he said, but details haven’t been nailed down.

Harman’s Infinity brand also has given ProSource an exclusive on its new Reference series speakers and was demonstrating them in a private suite during the ProSource meeting, Workman and a Harman executive confirmed.

ProSource is moving to expand its member ranks. ProSource is split into three groups with a goal of growing the organization to more than 600 dealers from about 480 within 2-3 years, Ristow said. Its PRO segment, which consists of retailers with $10 million or more annual revenue, has 20 members with the recent addition of IQ Home Entertainment, Music Direct and SoundAdvice, and is targeting having 25. SoundAdvice is returning to PRO after re-emerging in 2011 with a Fort Lauderdale location. ProSource’s power custom install segment, consisting of dealers with $4 million or more in annual sales, has around 66 members with a goal of reaching 100, Ristow said. And its custom install group, comprised of companies with $1 million or more in annual revenue, has about 400 members and is aiming for 500, Ristow said. “I think we are in the unique position that for the last three years we have gotten some things done behind the scenes and done some things with vendor partners and now we are ready to go to the dealerships and bring in the right quality ones,” Ristow said.

While PRO members initially were reluctant to join forces with HES, the combination took on added importance as PRO’s ranks thinned with the closings of Tweeter and Ultimate Electronics, dealers told us. The ProSource board has eight members, split equally between HES and PRO. “I don’t think we had a lot of options initially” because of the loss of some larger PRO members, Modia Home Theater CEO Mihir Modia said. But during the last three years, the members have resolved any differences, dealers said. “Even though the focuses of the businesses are sometimes different, we really now have one single mindset” when it comes to working with vendors, said Rick Souder, a newly appointed ProSource board member and executive vice president-merchandising at Crutchfield.

ProSource Meeting Notebook

ProSource dealers suffered “mid-to-high"-single-digit declines in same-store sales in January and February, said Workman, blaming brutal winter weather across much of the U.S. But the downturn reversed itself in March and April on strong sales in audio and “pockets” of the TV category, including 4K, Workman said. ProSource also will post increased TV sales this year, reversing the 10-15 percent decline it suffered in 2013, Workman said.

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Crutchfield will move its 20,000-square-foot Harrisonburg, Virginia, store to a smaller, 5,000-square-foot location within the next 12 months as it builds on the interactive store format it debuted in Charlottesville, Virginia, last fall (CED Jan 6 p1), Souder said. The shift to the smaller format comes as Crutchfield dispenses with traditional AV merchandising of TV walls and rows of products, replacing them with 15 fixtures and 67 display stations that link products together so Bluetooth and Airplay-equipped devices can be demonstrated with smartphones. Crutchfield will update the software at the Charlottesville store in the coming weeks to add several features, including allowing customers to take pictures with Wi-Fi-capable digital cameras and have them displayed on a monitor near the product, Souder said. “We're still trying to figure out what is the dialogue” between sales staff and customers “with this very different shopping experience,” Souder said. “The whole point of this is, there isn’t much of a future for traditional audio video bricks-and-mortar stores and once you make that conclusion you have to see how much space you need."

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Modia Home Theater will open a new 12,000-square-foot store in Houston this fall that promises to deliver “a new shopping experience,” said CEO Modia, declining to give details. The store will be the chain’s sixth, including locations in the Houston and Dallas markets. Modia closed its Arlington, Texas, store last year after deciding the market’s demographics weren’t conducive to the sale of ultra-premium audio gear from brands like McIntosh and Rotel, Modia said.

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Bjorn’s Audio Video is revamping a demonstration room at its San Antonio store to better display wireless audio products, building on the Sonos store-within-a-store enterprise it formally opened in April, President Bjorn Dybdahl said. Bjorn’s also is reconfiguring its high-end home theater room, replacing M&K speakers with speakers from Klipsch, he said. The retailer put its 25,000-square-foot warehouse and former store up for sale, but hasn’t landed a buyer yet, Dybdahl said. Bjorn’s, which owns the property, moved to its current 25,000-square-foot location in 2000 and will seek a smaller warehouse, Dybdahl said.