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Industry Embracing Commercial, Retrofit Markets

Once "fat and happy" on the new-construction gravy train, CE pros are now feeding off the commercial and retrofit markets.

Tom LeBlanc · January 8, 2010

For me, as a reporter covering the custom electronics installation industry, 2009 was about two things: retrofit and commercial projects. It’s my job to ask CE pros what they’re doing. Almost to a man, they told me they are trying to ramp up their existing home and B2B clients.

You don’t need an economic guru (or even a reporter) to explain this shift. We all know the new-construction market tanked and nobody credible is saying it’s going to get back to normal in 2010.

That means I’ll likely spend 2010 talking to more CE pros about how they are attacking the retrofit and commercial markets. I welcome that.

We can, as an industry, learn from a valuable adage. If something in business seems too good to be true, it usually is. The new-construction gravy train many CE pros rode through much of the last decade shouldn’t have been incorporated into a longterm business model.

Dennis Sage, a Phoenix-based high-volume integrator, said it best: “We all knew in the back of our heads that the pace that homes were being built just could not go on. But we were too fat and happy to accept the reality of market shifts that have been going on for what, maybe 1,000 years?”

I’m not faulting Sage. We can all relate.

Greg Simmons, co-owner of Las Vegas-based Eagle Sentry, articulates why smart business people like himself and Sage had tunnel vision. “There was a time when I was just looking at, How I am going to finish these houses? That’s how it was.”

Many CE pros — like Simmons and Sage — were too consumed with cashing clients’ checks and paying their employees to focus on what would happen when the construction bubble burst. Both of those guys talked candidly to me for a March 2009 article on how they were diversifying their companies to insulate themselves against market shifts.

Both acknowledged the value of doing a portion of their business in the commercial market, and both cited an advantage high-volume dealers have in pursuing the retrofit market: a high-volume of existing clients.

Shift is On

It was satisfying that toward the end of 2009 dealers were talking about results, not just plans to attack other markets.

For the December 2009 CE Pro cover story, Jacksonville, Fla.-based Fultech Solutions told me about how it opened a commercial-dedicated showroom at the beginning of 2009. It then went from 15 percent of its business being commercial to over 50 percent.

Stillwater, Okla.-based Aspen Custom Electronics, a two-year-old company that launched after witnessing the industry’s mistakes, told me that about 40 percent of its business is commercial.

  About the Author

Tom has been covering consumer electronics for six years. Before that, he wrote for the sports department of the Boston Herald. Migrating to magazines, he was a staff editor for a golf publication and an outdoor sports publication. Now, as senior writer/technology editor of CE Pro magazine since 2003, he dabbles in all departments and offers expertise in marketing. Have a suggestion or a topic you want to read more about? Email Tom at tom.leblanc@emeraldexpo.com

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  Article Topics

News · Retrofit · All Topics
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