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March 2015

Retail Tales

By Anthony's Blog

“The specialist knows more and more about less and less and finally knows everything about nothing.” —-Konrad Lorenz

Doubts about the future of retailing have become the bass note of the HiFi industry. We hear it everywhere, from other reps, from manufacturers and mostly from dealers themselves. Brands that, only a couple of years ago, were fiercely committed to brick-and-mortar are now selling online to maintain sales growth. What’s worse, Retailers are finding it increasingly difficult to justify the massive overhead that a brick-and-mortar showroom demands.

And yet, I feel overwhelmingly optimistic about the future of High End retailing. No, I haven’t been doing drugs (nothing worth bragging about, anyway), I’ve just seen a bunch of new dealers figure out ways to adapt the traditional retail model to the needs of their business and survive the spectre of ever-increasing operating costs. Although retailing will, I believe, remain healthy, I think the days of the ponderous, street level independents are, sadly, coming to an end.

Rents are skyrocketing in wealthy cities and suburbs alike. When Dylan and I were kids growing up in Bergen County, there were a FIVE independents on the highways of Paramus alone: Tech HiFi, Crazy Eddie (where Dylan and I worked), Leonard Radio, Stereo Circus and Stereo Warehouse. To those independents, let’s add the Chains. There was a Harvey, Sam Goody, Harmony House, Lafayette, a High End showroom inside Korvettes—itself defunct—and four or five Radio Shacks, all on a four-mile stretch of Routes 4 and 17. When Harvey closed in 2008, the high-end highway store disappeared, followed shortly thereafter by 6th Ave and Expo.

It’s not that customers don’t want to patronize high end showrooms and it certainly isn’t the case that brick-and-mortars can’t work; rather, the business model which has dominated since the 1950s is showing its age and needs a facelift or, more precisely, facelifts. Here are three dealers—each of whom conduct business in very different ways—who are “Getting It Right”

Bright Audio: when Kerry Bright’s CI business outgrew his basement, he started shopping around for a retail showroom. Kerry knows his customer: hipsters from the East Village, computer-savvy and possessed of disposable income but careful how they spend it. They’re also night owls! Kerry, a trained sculptor and former contractor, found a great lease on Avenue A and got his hands dirty–doing much of the Gut Renovation himself–and designed a gorgeous showroom that makes the most of the small sales floor. Since Kerry’s customers tend to party until “…the wee small hours of the morning,” the showroom doesn’t open until noon, which means a single shift can work the entire business day, thereby minimizing payroll. Saturdays at Kerry’s are reminiscent of “The Good Ol’ Days” of audio retailing, the store packed with locals and regular customers. Bright Audio focuses on “Low End of the High End” components and outperforms with tube gear, turntables and analog accessories, bookshelf speakers and Computer Audio.

Ears Nova: Joshua Cohn hasn’t had a street-level showroom since he closed his Great Neck store in the early 2000’s. He doesn’t need one. EN’s customer base is ferociously loyal (many of his customers have been with him for over 30 years) and his business model doesn’t require a flood of customers. Occupying the entire second floor of an office building off 5th Avenue, Joshua’s store is scrupulously clean, impeccably decorated and all his systems always seem to be in perfect tune. Unique among veteran dealers, Joshua carries as few lines as possible, thus fostering loyalty with his vendors and focusing his presentation. Joshua’s expertise in selling state-of-the-art systems enables him to operate with a small staff in a large space where the emphasis is on enthusiastic service and definitive demonstration. The fact that the store is brimming with rare gear, perfectly set up, is a big drawing card: making Ears Nova a “Destination” which connoisseurs will go out of their way to find.

Professional Audio Consultants: Ralph Tarnofsky had occupied his Essex Street showroom for 34 years. Back in 1980, he was strictly a high end, brick-and-mortar retailer—and hard-core audio aficionado–who needed to be in the center of Millburn’s shopping district, so he paid a premium for foot traffic. Once he locked his front door and became one of New Jersey’s first dedicated custom integrators, the escalating rent made less sense. Last year, Ralph found a new space: a freestanding building with more retail footage, a big basement and a parking lot…and the rent is substantially less than his tired old store. So, what did he give up? Ralph is no longer in the center of Millburn but on the fringe, about a quarter mile away. Not a problem for his customer base, since he’s still in town and the parking is now free! PAC’s new showroom echoes their ”Hybrid” business model, a mix of traditional performance audio, dedicated home theater and a panoply of “Stealth” products– that signify Ralph’s position as a top-notch custom house.

So, what’s the point? After all, I didn’t write this simply to provide free advertising for three of my favorite dealers! What I’m trying to illustrate is that, with the glory days of enormous, street level stores quickly vanishing in the rearview mirror, dealers need to find new business models. Plural. Here are three NY Metro dealers, all of whom are succeeding at retail, yet doing so in entirely different ways. Kerry has created a “Hipster Heaven”, a small store with reasonable rent in a high-traffic area, catering to entry-level audiophiles (as critical to our business as his) while supporting his growing CI business. Joshua has an immense space, but controls cost by eschewing street presence in favor of “Destination” status. Ralph has also become a “Destination” but he only had to move a few blocks to do so. These aren’t the only dealers in our territory finding new ways to succeed and, as I’ve said, there are vast and varied approaches to success. What these dealers all have in common are a deep understanding of who their customer is, the willingness reinvent themselves and the acceptance that retailers must become “Niche Players” in order to remain profitable. I hope more dealers embrace these principles…I need the money!