From Showroom to Stripmall

Change is inevitable. Change in the age of the Internet, and its undercutting pricing format, however, has left many specialty dealers with a conundrum: Do they take the hit on the sales of products, only to make the difference up on install, or do they allow customers to get the best price and install only? Hybrid dealers became very successful around the late 1990s, and the savvier ones are actually thriving while many well-known entities have folded their tents.

Although the idea of shopping online for the best price on nearly everything is the de facto practice for the majority of consumers, dealers with well-appointed showrooms have been left wondering whether it was worth the effort and rental space to have done so. In fact, many dealers around 2005 started to move to industrial park-style office spaces, selling from a portfolio book as opposed to a showroom. The logic was then (and is today) inescapable -why pay for showroom space when the margins on equipment no longer allow such a practice? Adding in the fast-paced rate of equipment line turnover, and dealers that did not listen to the call and refused to lower their standing inventory without the product movement to support that course of action were threatened with closure. Many did.

Absent the problems faced with many consumers coming into showrooms to evaluate products never intended for local dealer purchase, custom-only dealers only had to deal with making sure their installation program would work with installing externally-purchased equipment. These dealers (and their hybrid cousins) spent enormous sums to up the install game of their personnel, ensuring their certifications in lighting, networking, and automation were able to stay ahead of the consumer curve. The best dealers managed to create fantastic profit streams, while being only as profitable as necessary on the gear. Concurrently, the reputations of these custom houses have made the idea of purchasing equipment elsewhere a less-savory idea, when the idea that a few of these places won't touch equipment not sold by them. In a turn of events unforeseen by Internet dealers, the better local retailers made their installation services such a draw, that the product they sold ended up maintaining better margins.

The future of custom retailers seems to be a drastic thinning of key lines that are absent online competition, and devoid of big-box presence. This is acceptable for a few reasons; namely, smaller dealers' draw is quality of services. Of course, they cannot compete on a volume basis with larger dealers, so it can't be reasonably expected that they compete tow-to-toe with every price-slashing dealfest every weekend. Although many custom retailers are members of large buying groups (like ProGroup) to help with buying power, if they do everything as expected, the quality and professional nature of what a great custom install dealer can do has more to do with the overall experience than getting the best price. To many consumers, it's well worth the money.