Ever since the hi-fi’s heyday, audiophiles have been searching for the perfect sound system. And, whether they’re performing onstage or just listening to some tunes at home, music lovers want their sound to be on point. That’s why speakers, headphones and amps are just as important to MI stores’ bottom lines as guitars, drums and keyboards are. Instruments might get the bulk of the attention, but the bedrock of the music-making industry is delivering sound.
With that in mind, The Retailer devotes a portion of our May issue each year to discussing the prevailing trends in the often-underappreciated pro-audio market. In a departure from our usual approach of sitting down for a powwow with a who’s who of manufacturers in the pro-audio space, this year we asked a select group of pro-audio dealers to participate in a roundtable discussion. Our participants include Alan Rosen from Bananas at Large, Howard Gittli from Mom’s Music, Frank Andrews and Erik Santos from Portman’s Music, and Ryan Clement from Grandma’s Music & Sound. All of them shared valuable insights into the day-to-day realities of selling pro-audio gear.
As is the case with just about any market these days, product trends in the pro-audio category are being driven by rapid improvements in technology. This has resulted in dealers moving a lot more feature-laden digital products than traditional analog products. According to Portman’s Music’s Santos, “Technology is gradually driving certain categories of products into obsolescence. Powered speakers, digital mixers and iOS-compatible products are all on the upswing.” He continued, “As a result, products like heavy, bulky, unpowered loudspeakers and large-format analog mixers are on the decline.” The takeaway from the discussion that was probably least surprising was the continuing ascendance of powered speakers, at the expense of passive speaker sales. Across the board, our participants identified powered speakers as a winning product category, whereas they unanimously described sales of passive speakers as being weak. In fact, a few of our respondents mentioned that they don’t even carry passive speakers in-store anymore.
However, as Santos alluded to, the digital over analog trend is not limited only to speakers. Digital mixers have been outperforming analog mixers, and analog amps have had more and more trouble competing against PA packages that include amp features and digital signal processing. Grandma’s Music & Sound’s Clement described the trend like this: “Analog mixers are starting to lose some ground to digital mixers, and signal processing has weakened, because the digital consoles have signal processing built in.” He continued, “I would say we noticed it beginning to happen about four years ago…around the time PreSonus came out with StudioLive. And, just exponentially over the years, the scale has tipped more and more into the digital world.”
Among the factors that seem to be driving the digital revolution in the pro-audio segment are the prevalence of feature-rich products and combination deals, as well as ever-shrinking price tags. “For a lot of my customers, it’s the convenience,” Mom’s Music’s Gittli explained. “It just makes more sense for a lot of folks. Rather than dragging around a rack with amps and things like that, you can buy one unit that has all that stuff built in. The products pack a lot of power, the price point has come down and the quality of the speaker sounds great.” Bananas at Large’s Rosen echoed those sentiments. “Customers want value,” he offered. “We believe they are tired of cheap, unsatisfying solutions. Passive speakers in both live and studio are all but dead, barring installation products. Most folks at this point want—and should get—digital mixers, as they are inexpensive, easier to use and built more ruggedly.”
The need for the occasional upgrade as better products become available at a lower cost, and as older equipment becomes obsolete, makes pro audio an especially ripe market for repeat business. “We see a higher rate of upgrades in pro audio, which is driven partly by technology, partly by wear and tear, and partly by vanity,” Santos said. This hints at another fundamental truth about pro audio: Everybody wants their sound system to be bigger and better than the next guy’s. And, with digital offerings that are more feature-rich hitting the market over the past few years, customers can now get a lot more bang for their buck. However, the increased value for the customer cuts both ways for the dealer. “As the products get cheaper and more bundled, including both software and hardware, the sales transactions are increased, but the overall sales dollars are diminished,” Rosen noted.
A great way for retailers to offset that dip in profits on the pro-audio side is by hiring knowledgeable audio salespeople. The overall economy has shifted to more of a service-oriented model, and a staff that’s more educated has more to offer customers in the way of service. And, because of the digital revolution in the pro-audio market, audio products have become much more complex. Therefore, skilled engineers are required to design sound systems that are worthy of their high-tech components.
One way a more educated staff can boost an MI retailer’s profits is by offering small-scale installation services. (Think small, local churches, schools and similar venues.) Those facilities often rely on sound systems, and they might be interested in an upgrade. However, they rarely have the budget—or the need—to hire a large audio integration firm. Those clients could be served by the local music store, provided the store has one or two people with a solid background in pro audio on staff.
Several of our roundtable participants have found success in offering integration services. “We are an audio integrator,” Portman’s Music’s Andrews shared. “This year, our installed sales had their best year since 2008, when our biggest install clients tightened their budgets until they understood what was happening with the economy. Now, those budgets for expansion and improvement are coming back.” Gittli likewise explained that installation services are an essential part of business at his store. “We have a small install team, and we do smaller, easier jobs,” he said. However, Gittli also pointed out the need for retailers to understand their niche and not to bite off more than they can chew when it comes to installation services. “For anything that feels like it might be outside of our realm—a big, theatrical setup or something like that—we have a company that we work hand-in-hand with here in town. They do more of the professional, high-end stuff.”
Rosen seconded the need for each pro-audio dealer not to overextend itself when offering services. “Don’t be what you aren’t or can’t be,” he emphasized. “Customers hate being disappointed and let down.” However, he was adamant about the importance of offering the types of services that can only be provided by salespeople with strong pro-audio bona fides. “Everyone from the beginner to the pro should be serviced beyond their expectations,” he declared. “Be ready to provide basic tech support, and offer upgraded tech support for a fee.”
Speaking of tech support, another way an educated pro-audio sales team can help an MI store make money is by offering training and support. “I think it’s good to have someone on staff who understands audio, because there’s a lot of opportunity to make some revenue by offering training,” Gittli stated. “Usually, if we’re installing a system, training is included in our package.” He continued, “However, there are always people who come in because they read some information online and bought a lot of stuff, and then they get it and they have no idea even how to hook it up.” Gittli explained that smaller venues with little to no AV personnel on staff, such as churches and schools, tend to buy equipment online and then come to his store for training. “These days,” he began, “with the convenience of ordering online, you’ll get situations where somebody went to another church and said, ‘Oh, they’ve got one of these digital consoles! We’re gonna buy one, too!’ Then they get it, and it’s like the Starship Enterprise to them.”
Providing installation services, technical support and training are all great ways to cultivate customer relationships, which remain an essential part of any retail business. If you have experienced, skilled people on staff, then customers will be more comfortable coming to your store for service. “The key is to ask a lot of questions and to try to find out what situation the customer is up against,” Clement explained. “Then, really help them make the decision so they don’t underbuy or overbuy.” He continued, “If they come in looking for a 20,000-watt sound system to play in a 100-seat club, you have to help guide them in the right direction.” Customers value an educated opinion when they’re shopping for products that are outside their areas of expertise, but it’s essential to earn their trust, too.”You have to skillfully manage people’s expectations,” Santos emphasized. “I spend just as much time talking people out of buying gear as I do convincing them to buy.” Andrews doubled down on the value of dealing with customers honestly and trying to manage their expectations. “When you talk a customer out of doing the wrong thing,” he said, “that often makes him a customer for life. He realizes you truly helped him. You didn’t just take his money.”
Another area of agreement between our roundtable participants this year was the importance of offering rental services as a way to further cultivate strong relationships and repeat business with customers. “It’s very important to offer rental services and try-before-you-buy,” Rosen said. “If you solve the customer’s immediate needs, they will be loyal when it’s time to satisfy their real needs.” Andrews and Santos piled on the praise for rentals. “We have a cash-and-carry rental department. It’s a good profit center, and it typically has current items that you can try before you buy, if needed,” Andrews said. “Our rental department is a cornerstone of profitability, and it deters the free-rental, buy-and-return mentality,” Santos remarked. “It also allows us to get a customer through a service/repair issue without unboxing new inventory, and it gives us a chance to showcase gear to customers when they are considering purchasing.”
Gittli explained his store’s generous rental policies. “If somebody buys a sound system from us, and a piece of it is under warranty and it has to go in for repair, we’ve always loaned our customer a unit so they won’t have to miss a gig, or a show, or an event while we service their unit,” he noted. “There’s never an added fee. That’s just part of our service. And, over the years, we’ve expanded on that. So, if someone had something that was outside of warranty, we’d make a special rental price for that.” Gittli continued, “We also have a backline rental company that does several big events per year. Some people don’t want to buy something, because they only have one event per year. So, they call us to rent a small, portable PA. We even have a rental program for customers who buy stuff online or elsewhere, and who then call us and say, ‘Oh, I’ve got this thing tomorrow night and I’ve blown up my speaker!’”
Although following product trends is an important part of the retail business, it is important not to lose sight of the overall trends that are driving the larger economy. The writing seems to be on the wall that the service model is in full effect across many different vertical markets. MI dealers would be wise to increase their training, support and installation offerings. And—no surprise—the rise of digital seems poised to continue in the pro-audio market, as in most others.