A lot of the thought leadership in the residential tech installation business comes from the top buying group organizations and their loyal manufacturer and dealer partners. Last week at the ProSource Summer Conference 2021 in San Antonio, the largest group in the U.S., returned to its first in-person event since hosting the industry’s final in-person event, held in Las Vegas, just at the start of the global pandemic shutdown in early 2020.
During a lunch meeting with invited media during last week’s conference, ProSource CEO and President Dave Workman led a wide-ranging conversation that touched on his group’s new entry-level employee training initiatives, how hardware sales numbers have remained up over the last two years despite labor and chip shortages and supply chain hiccup, and what product categories and tech trends seem to be driving sales.
Workman says that he benchmarks product category sales against 2019 and 2020, which were both high bars. “Mentally, my expectation has been that flat or slightly above is like a win at this point because I’m going up against those really high numbers, and then you put up all of the challenges of supply chain,” he said. “The numbers appear to still be growing from the last year, albeit the pace of increases has slightly declined. But our concentration of categories still seems to be holding up.”
ProSource consists of both higher volume consumer electronics retailers and longer lead time custom integrators. For the CI/installed market, Workman has observed “extremely healthy” project pipelines, despite unique obstacles.
“They have a lot of challenges with construction schedules, and they’ve had to look at their inventory or their product needs differently because you can’t get everything just in time, with all the supply chain challenges that we have,” he noted. “That’s going to be a learning curve for a lot of these guys.”
With production issues due to supply chain and chip shortage, technology product dealers are also managing through price increases. “As you talk to the vendors, you’ll hear a universal raising of prices at about seven percent by October 1,” Workman said. “If we don’t see unit demand destruction on the basis of that increase by the time you put the retail markup back into it, that alone will create about a 10 to 12 percent increase in revenue on the same unit sales, just on the basis of that inflation.”
Labor Shortage is a Problem
Workman’s team opened ProSource Academy to address the need for more hands-on entry-level technician training. “We went through a beta group just a couple of weeks ago. This will be the finishing school for [online] ProSource University where we, as a group, help sponsor dealer attendance,” Workman noted. “We’re starting small, trying to manage our expectations. Eventually, as time goes by, this, Academy will have entry-level technician finish work, to get the skills to be functional as a second technician in the field. From there, we will expand the classes to lead technician, project management, and all other positions. That will come probably in 2022. We do expect to increase the frequency of the classes, as well. At this point, I think we have, modestly, 200-300 attendees from a membership through this first period of time of the first six to 12 months, and then it will quickly expand and could expand actually in 2022, once we get things rolling.”
The goal, Workman says, is to use ProSource University to start building technical and product knowledge even for someone with minimal experience in tech, followed by the Academy finishing. “Our goal has always been to develop the pizza delivery guy into a qualified installer,” he said. “You have to look at the personality of the individual, their propensity toward competency and technical hands-on, and all those things. But the ultimate goal is that you’re not dependent on stealing your competition’s people.”
Ultimately, however, each retailer or installation firm needs so somebody in their operation who is focused on education goals for employees. Then you give them an instruction manual of how to take the University product and bring it into their business.
Trends Driving Sales
For ProSource, “home theater” in the broader definition of the category has been hot all year. “We can’t get enough of the a hundred-inch Sony panels. Very large panels are selling, as are projectors, and the reinforced sound products selling with them,” Workman said.
ProSource expects home theater to grow for a while, as direct-to-home digital releases of blockbuster movies continue.
“Content, in general, has always driven hardware sales, and you’ve got two things that I think have really helped us,” Workman explained. “One is streaming audio and video and the other is studios adding more day-and-date release movies.”
Speaking of hardware sales, Workman says that he sees drivers of growth in the home automation category being lighting and shades, with energy management to follow.
The challenge, however, is to stay focused on legacy categories like audio and home theater, which are still profitable and popular with clients, while adding new opportunities.
Within audio (and video), Workman says that outdoor installations have been very strong business drivers over the past year. “With the pandemic, everybody decided to create their own resort with an outdoor TV and outdoor audio,” he said. “We’re doing well with all of our outdoor brands. Last year we had a lot of challenges with backorders, but this year the supply is better.”
The buying group also experienced exponential growth in lighting fixtures through their partnership with Savant, which acquired GE Lighting. “We also have WAC, DMF, and American Lighting,” Workman noted. “Those are our partners in the category, and on the lighting control side, we have Vantage as out control partner. If you look at what DMF is doing, they’re broadening and making it easier for dealers to get into a retro, for example. It almost makes it so that anybody can get their foot into the lighting category.”
Top Performers – Manufacturer and Dealer Awards
ProSource members were asked to vote using the following criteria for selecting the Vendor of the Year:
• The vendor, through engagement with the group, that has helped our class of trade more than others in the category. The vendor that has shown a continued commitment to developing products for our class of trade. The vendor that has allocated the proper resources to our individual account and can be exemplified as a company that is responsive and easy to do business with. And, the vendor that has had the most positive financial effect on ProSource’s performance in the category.
The 2020 Vendors of the Year are:
• Video Vendor of the Year — Sony
• Specialty TV Vendor of the Year – Samsung (Frame/Terrace)
• Audio – Electronics Vendor of the Year – Sound United
• Audio – Speakers Vendor of the Year – Klipsch
• Headphones – Vendor of the Year – Focal
• Audio – Digital Content/Streaming Devices – Vendor of the Year – Bluesound
• Specialty – Accessories – Vendor of the Year – SurgeX
• Specialty – Custom Integration – Vendor of the Year – Origin Acoustics
• Specialty – Technology – Vendor of the Year – Savant
• Lighting/Shading – Vendor of the Year – Screen Innovations
• New Vendor of the Year – AudioControl
• Overall Vendor of the Year – Sony
The group’s 2020 Members of the Year annual honorees were selected based upon their participation within the group, support of group brands, conducting business in a manner that stands as an example to other members, and selection for industry awards and recognition. The common attributes of each of the 2020 honorees is the ability to evolve and adapt to the rapid changes in technology and market trends with an emphasis on investing in their people to create a culture of success.
The PRO Member of the Year is Electronic Express – Sam Yazdian, President and CEO and Abe Yazdian, Vice President of Merchandising
“Electronic Express’ foundational principles are based on customer experience and adaptability, and we attribute our success to the support and relationships with vendors, ProSource, customers and employees,” Yazdian said.
“Electronic Express has grown to be the largest independent retailer of consumer electronics in Tennessee and Northern Alabama, with 20 locations and 450 employees offering televisions, appliances, mattresses, computers, smart home lighting and security, kitchen electrics, furniture and custom installation services,” remarked Jessica Paskon, Vice President, Finance and Operations, at ProSource.
“They are one of the best examples of experienced retailing with a strong customer service culture.”
The Power Member of the Year is Lewis Audio Video – Dennis Lewis, Owner
“I am honored to be a part of ProSource and appreciate the many assets that the organization has provided to us for our continued growth and success. The single most important reason for success is ‘people’ – both our staff and the team at ProSource are awesome! This award is recognition of how great all of them truly are.”
“I am very proud to honor Lewis Audio Video as the Power Member of the Year,” said Rick Huggins, ProSource District Manager for the West Region. “The exceptional thing about our industry is that it is constantly evolving and growing new opportunities organically, and our future depends on how we embrace these opportunities. Over the past 40 years Lewis AV has molded their business model as the demand changed, starting as a satellite installation company, growing into an AV retailer and now to the custom installation company they are presently. We must not get so entrenched in what we are doing today that we miss what is happening in the marketplace, and Lewis Audio Video is a standout model of how to pivot and adapt with the times.”
The 2020 Members of the Year, listed by region, are:
Northeast: Audio Video Intelligence — James Shapiro, Founder and CEO
“I am honored to accept this prestigious Northeast Dealer award,” Shapiro said. “This would not have been possible without your amazing team at ProSource. Sherry keeps my company involved with her informative work groups and allow us to share and gather information with other successful dealers, and Robert continues to be a part of our company to make sure we are taking full advantage of all the group has to offer; they are both true partners to me and my company. Thank you again for all you and your team does for Audio Video Intelligence.”
“AVI has been in the forefront of the custom integration marketplace for over 25 years,” remarked Robert Dodge, ProSource district manager for the Northeast Region. “Jim’s systems have been sought after within the New England marketplace and beyond for his seamless approach. Designers, architects and builders all applaud the consistent theme of blending with the architecture and interior design of the project while complementing the space. Having a keen eye for design and staying current with ever-changing technology, trends and custom automation has become the company’s signature.”
North Central: Xtend Technologies — Tony Fabrick, Owner
“We are honored that we have been selected as Dealer of the Year for our region,” Fabrick remarked. “We always appreciate what the group does for us and try to contribute to purchasing all group brands when possible. We are very focused on our people and their training to sell solutions. We are excited to travel down to San Antonio come August.”
“When I called Tony, he told me that a key ingredient to his success is his team’s ‘never give up’ attitude,” said Nicole Riddle, ProSource district manager for the North Central Region. “Beyond the culture of hard work, Tony recognizes that our industry of constant change allows infinite opportunity to grow the business through innovation and consumer desire to acquire the new innovations such as lighting and shading. That is why the business has invested so heavily in a new showroom and design center to revolve around these two categories specifically.”
Southeast: Fusion Audio + Video – Aaron Cowden and Daniel Adair, Owners
“Thank you ProSource for the recognition,” Cowden commented. “Daniel, myself and our team are humbled and honored by the recognition. We’re really looking forward to seeing everyone in Texas!”
“I am very impressed with the Fusion Audio + Video business model that includes custom audio/video and commercial/managed IT services that focus on their direct relationship with the end user,” said Frank Marengo, the ProSource district manager for the Southeast Region. “Their focus on elevating their staff, creating a family environment, their integrity and being involved with the community has made them the integrator of choice in the Greenville, SC and Asheville, NC markets.”
South Central: Multimedia Solutions Inc – John Carter, Owner
“Our goal as a business in the CI industry is to use our entrepreneurial spirit to help homeowners and businesses realize maximum enjoyment and function at their home and workplace, it’s all about the experience,” Carter said. “As I look toward the future, I am optimistic because Multimedia has adapted to the changes in the industry so far and we have been successful. Attending ProSource and other industry events have greatly contributed to our growth and on behalf of our team, we are grateful for the recognition.”
“There is a fun, energetic family culture at Multimedia and this is because of the team that John has gathered around him,” said Samantha Summerville, ProSource district manager for the South Central Region. “Having their hands in so many categories and eager to learn more makes them one of my favorite members to work with. They learn from us, our members and vendors, and I learn from them. I’m thrilled to present them as my Member of the Year and can’t wait to see them grow even more.”
West: Brilliant AV – Matthew Walin, Owner
“You can’t make a profit without happy clients, and you can’t have happy clients without a happy team,” Walin commented. “It’s about people, product and processes. You can have broken products and process and with good people, you can succeed. You can have excellent products and process and with bad people be out of business. We focus on culture. We have that in common with the awesome leadership and membership of ProSource. We really appreciate this award.”
“Brilliant AV has made the pivot from a technology contracting company interested in customer transactions to a service and support company focusing on client acquisition,” said Rick Huggins, ProSource district manager for the West Region. “They have clients that have continually been serviced for 30+ years. Matthew told me that a client is worth thousands of dollars a year. Small service wins with new clients results in thousands of dollars in future business given the ability to deliver the ‘4 Rs’, Reliable Systems, the Relationship with Brilliant AV, being Responsive and focusing on Resolution.”