High-Frequency Headphone Sales

Why retailers are taking the category more seriously

The groundswell in consumer interest for headphones has spurred high-end, high-touch audio retailers to take a fresh approach to displaying and merchandising the product. During the last year, headphones have become increasingly important as a lead-in to conversations with clients about achieving better sound from their portable players. And in a skilled sales environment, that engaged customer can easily turn into a high-margin component or loudspeaker sale.

For Definitive, an A/V specialty retailer and custom installer with three stores in the Seattle area, the recent spike in headphone sales has been "a kind of wakeup call," said Craig Abplanalp, vice president.

"We'd been selling headphones since our company began, but just over the last couple of years, we noticed there was a big segment of customers for us to reach who would benefit immediately from having a higher-quality headphone experience," he said. "And there are more reasons than ever to want to own a good headphone." 

These include sound quality and comfort. Definitive is able to maintain headphone margins, just as with loudspeakers. But it's more than margins that motivate the company to get more proactive in headphone merchandising.

"There are no new audiophiles entering our community any more," Abplanalp said. "For young people experiencing music, the art of building a stereo has lost its cachet. So selling headphones is a very important part of introducing music lovers to different performance levels. If we can get our foot in the door with someone just starting their appreciation for music with their computer or iPod and show them a higher level of experience, we feel that as that person matures, it might carry forward. It creates another opportunity for us to meet a new customer."

Definitive has typically displayed headphones on a wall and is now designing dedicated headphone areas in its showrooms where they can easily be hooked up to higher-performance amplifiers.

"This will allow us to make a huge improvement in presentation of their sound quality," he said. "We can cover the category in more depth and not just stop at selling the headphone but also other products that maximize the experience."

These new areas will be dedicated, rather than isolated, and situated in a comfortable spot in the showrooms. Customers feel a little bit weird about being dragged into a room just to listen to a pair of headphones, Abplanalp said. "Our primary interest is in attracting new customers, and that's of greater value even than the revenue generated from headphone sales," he said.

Definitive's headphone sales jumped more than 160% between 2009 and 2010. "It's still a small number as a total percentage of our overall business but clearly a growth opportunity for those who make the effort to effectively display and promote the category.

Thanks to Apple

New York City's Stereo Exchange in downtown Manhattan carries only a few lines of headphones. The SKUs are kept behind the front counter and the headphone sale is strictly a one-to-one conversation. While everyone who walks into the store with an iPod is a potential headphone customer, a successful sale is based on taking the time to talk to the customer about their budget, as models here can range upwards of $200 to $300, said Alan C, one of the store's longest-tenured sales associates. His approach isn't subtle, but it is effective.

"If I see someone come in with those little white Apple headphones, I might occasionally say, 'Why don't you take those stupid things out of your ears and try a real 'manly men' headphone?' I might add, 'Because it came free, is that Apple headphone worth the price of nothing? They're worth exactly that.'"

If the customer doesn't have their player with them, Alan C will play a CD he uses for speaker demos through the headphones. Demos aren't possible with in-ear models but clients of Stereo Exchange take it on faith that what Alan C suggests is the right choice. "In all my time here, I've only had one in-ear headphone return," he said.

Further uptown, at Manhattan's Park Avenue Audio, company principal Dennis Yetikyel said he has noticed a tremendous boost in headphone sales, especially to a much younger demographic of kids around 16 or 17 years old, as opposed to the store's typical age range of 28 to 50.

"We never got a lot of the teens, but all of a sudden that trend is starting to pick up," Yetikyel said. "Our business in the whole category is up about 20%. Part of it is Apple. It has added a tremendous value to headphones."

Yetikyel pegs the sales upswing to efforts of companies like Monster with its Beats By Dre, which has helped heighten awareness of the category for all brands.

"We carry their whole line. It's hit a major wave," he said. "It's amazing how that, and things like seeing headphones on TV shows and in movies, attracts attention. It has made people more aware, when they see some famous person's name on the headphone."

Yetikyel shows off his headphone lines in a display counter, but he plans in March to add a second location-a concept design/lifestyle center directly across the street from his current location-that will include a dedicated area with hanging headphones, chairs and a computer audio setup with iPads and iPod Touches.

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