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Buying Groups Look Ahead – and Back

Margins and Q1 performance are addressed in these comments from execs at the major buying groups. Check out Dealerscope’s March issue for additional remarks on other topics.

March 26, 2014 By Nancy Klosek

DEALERSCOPE: What will be this year’s high-margin product or category for the group – and how high could that be? What will be the hottest category, if it’s not the high-margin category?

Tom Hickman, Senior Vice President, Electronics, Nationwide Marketing Group: There’s good margin to be made in higher-priced UHD, and that’s where our guys are going to do it – in some of the larger sizes like 84-inch.  I think you’ll see some premium audio sold along with that, too. There’s huge opportunity to add things, whether it’s an Integra amp or Paradigm speakers, or even a premium soundbar, and all those offer very good margin for us – to give more opportunity to add more margin dollars to the overall UHD sale.

 

Jim Ristow, President/CBO (Chief Business Officer), ProSource: Traditional product categories in the commodity prices is where the highest pressure is, obviously. The more luxury and the more integration-centric and the more of a solution sale the product is, the higher the margin is. That’s really where we’ve put our line in the sand, trying to help all member profiles in the last years. In wireless audio, we’ve seen great margins from the new companies jumping into the field. Control and automation has had not just growth but profitability. Even though the whole market is shrinking in traditional audio, our business, which is step-up product, specifically, is growing. We’re capturing huge market share and the vendors understand that we’re the place to go for legacy audio. Our membership is doing a great job showing, demonstrating and selling this product; their business in that category is going up, and it’s extraordinarily profitable. 

 

Dave Workman, President/COO, ProSource: Our traditional audio business was up a little less than 10 percent last year. You hear a lot of talk about margin, and with some of the recent reports that have come out, when you look at every product category in the industry, there’s going to be downward margin pressure. Our focus is we accept the fact that all products through their lifecycle become a commodity at some point, and there will always be downward pressure. But the history of this industry has shown that solutions generally do not commoditize. While dealers are dealing with downward pressure on individual items, solutions are the only way you can capture margins. Products become commodities; solutions do not. That’s really our focus as a group.

 

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