News

Should You Partner With Big-Box Retailers?

What may have once been unheard of is becoming increasingly commonplace. Some CE pros are successfully working as subcontractors for large retailers.


Jason Knott · November 30, 2010

Red Sox vs. Yankees. Democrats vs. Republicans. Army vs. Navy. All fierce rivals that every once in awhile are forced to work side by side, whether it be during the baseball All-Star Game, on the floor of the U.S. Senate, or in the field of combat.

Likewise, it appears the economic recession has created another group of “strange bedfellows.” Across the nation, small independent integrators and large national consumer electronics retail chains are putting aside their differences and partnering to install electronics in homes. For their subcontract services, integrators receive a consistent flow of installation and service work - as many as 400 jobs per month in one case - from their old “mortal enemies.”

They also receive nearly instantaneous payment for installation services such as hanging flat panels, running wire and connecting A/V components. The same business model holds true for repair and service work: instant payment for checking loose wires, re-setting tripped power conditioners, etc.

And, perhaps most importantly, these jobs are not “going to the lowest bidder.” In many cases, the integrator has been selected by the retailer as a true partner. Moreover, there is a strong customer service element to these programs that includes surveying every homeowner post-installation on customer satisfaction. Of course, there are aspects that some dealers can’t stomach: You can’t upsell, and you are using your own brand name when you arrive at the home, which some dealers believe stains their reputation.

But is it still worth it? Some say resoundingly, “yes.”

Walmart, Costco, Sam’s Club, Sears … and You
Just a few years ago, many integrators would have snubbed their nose at the mere thought of working for a major retailer. But as the market has softened, some dealers have set aside those feelings to reap the reward of consistent business that keeps their technicians busy (and employed) and cash flow steady.

Finding new customers during the recession has become difficult, and most integration firms do not have strong marketing expertise or big marketing budgets to try to find new clients. In fact, most dealers have lived off referrals and new construction for years, spending little to nothing on marketing and advertising. Today, many of those companies have highly skilled technicians sitting around with nothing to do … “waiting for the phone to ring. ” In this poor economic climate, that has been a formula for disaster. The phones have been pretty darn silent.

Given that scenario as a backdrop, it is not surprising that many integrators have eagerly decided to become subcontract installers for large retailers, who typically possess the exact opposite skills: great marketing ability and poor technical/installation expertise. It is a match made in heaven for some dealers.

Of course, the retail subcontract business model is not for every integrator. Some dealers are unable or unwilling to change the way they receive and process jobs to accommodate becoming an installer for a big retail chain. Jobs are processed via Internet portals, not via a friendly phone call from the retail to the integrator.

Filling the Void Left by Tweeter
Wire Right Audio, Video, and Electric, Inc. in Baltimore is one integration firm embracing its position as an installer for big retail and warehouse stores. According to owner Joseph D. (Jay) Dibley, there is no denying the trend, which is primarily driven by consumer demographics. Wire Right itself was born out of the demise of Tweeter, according to Dibley.

“Having been in the consumer electronics business for almost 20 years, I saw a tremendous opportunity in filling the void created by [Tweeter’s] absence. Fortunately, my best technicians agreed and we partnered up to form Wire Right. The focus of Wire Right is singular: Provide an exceptional customer experience by consistently executing a high level of technology based and electrical contracting services. It may seem broad and simplistic, but the accumulated knowledge of our team has no demographic. Technology continues to permeate our homes and businesses and there is a demand for skilled contractors, like Wire Right, across every socio-economic level.”

Dibley believes the lower-cost installation solutions being offered via large retail and warehouse stores are well suited for today’s value-oriented consumers.

“People are looking for every opportunity to get the most benefit from their purchase,” he says, also pointing to compressed margins and increasing retail competition in his local market as big-box stores expanded to fill the retail gap left by Tweeter and MyerEmco. “The value for both the consumer and the retailer becomes the additional services the retailer can provide to their customer,” he adds.


  About the Author

Jason Knott is Chief Content Officer for Emerald Expositions Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at jason.knott@emeraldexpo.com

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