Despite the increase in fuel and overall shipping costs, D&H Distributing will continue to offer customers free shipping and competitive pricing by consolidating product shipments, negotiating the best shipping rates with its suppliers, and creating more efficiencies in-house and within its supply chain
“We can only control what’s in our power,” said Dan Schwab, co-president of the Harrisburg, Pa., distributor when asked how it will protect customers from any major price increases spurred by inflation. “That includes giving our customers the best margin opportunities and providing them with the emerging technologies that help differentiate their businesses and drive traffic.”
Schwab spoke from D&H’s 10th annual Mid-Atlantic Summer Technology Show Tuesday in Hershey, Pa. About 150 vendors – including LG; Samsung; Panasonic; HP; JVC; Monster Cable; and several vendors making their first appearance at the show, such as Bankers Warranty, Slacker, Monsoon, Commodore Gaming and Pure Digital – exhibited and close to 1,000 IT resellers, custom installers and retailers roamed the show floor and attended a handful of presentations.
Schwab said the general feeling toward business among his retail customers is one of “uncertainty,” especially as reports of widespread inflation, manufacturing plant closings in China due to the Summer Olympics, and continued fuel price increases filter through the media.
Schwab and other CE industry leaders, though, said retailers and specialty dealers can do more than survive tough times by continuing to offer their customers solid and innovative customer service programs, creative bundled solutions that increase the average ticket prices, innovative merchandising and marketing plans that draw traffic, and knowledgeable sales advice that sets the independents apart from the big-box competition.
“Even if consumers have less disposable income, they will still buy CE products if those products meet their needs and budget,” Schwab said. “While they might not be taking a long drive for vacation, they will buy the DVD player or gaming console for entertainment. Consumer CE spending traditionally outpaces the overall market.”
To help small, independent dealers differentiate themselves and compete against larger players, D&H announced it will offer extended service agreements at various pricing levels from Bankers Warranty, which will cover most CE products D&H sells. Schwab said D&H’s involvement will help make the warranty process simpler for retailers.
“This is all about ease-of-use,” he said. “We’ve set up the plans so retailers can easily add them as attachments to almost any product they sell. In difficult markets, it’s important that they have new products that drive margin.”
Product sales from D&H’s gaming and home entertainment divisions, for example, provided significant growth to the distributor’s 2008 fiscal year, which ended April 30, Schwab said. Sales in the home entertainment division increased 41 percent in Q4 (February to April), while sales in the gaming division jumped 59 percent during the same period, according to the company. The company reported a gain of 1,500 home entertainment and 700 gaming dealers during the last fiscal year.
Jeff Davis, D&H’s senior vice president of sales, attributed the growth to customer demand for GPS, home media servers, Blu-ray players, hi-def gaming systems, new MP3 players, and digital imaging and storage solutions. Lower pricing on flat-panel TVs have also increased the mainstream adoption of home theater installation services, which has driven overall gaming and high-definition video solutions, he said.
Besides customer demand, Davies and Schwab also attributed the increases to a sharper focus on emerging technologies; long-term consultative sales, and stronger customer service by both D&H and its retail/specialty dealer customers.
“Small, independent dealers are very resilient and nimble and will remain so as long as they continue to differentiate themselves,” Schwab said.
Despite all the doom and gloom surrounding the economy, Shawn Bechtel, an AV specialist at The Harrisburg Radio Lab, Harrisburg, Pa., said his retail business is strong, mainly due to lower flat-panel prices, which has driven more floor traffic, tax rebate checks and a seasonal uptick in car audio sales. He was at the D&H show in search of smaller MP3 players with more capacity and advanced features, and digital photo frames, which the company does not yet sell.
“People are really starting to ask for digital frames,” Bechtel said. “With prices coming down to respectable levels and screen sizes and feature sets increasing, it’s a category we have to start looking at.”
Bechtel, as well as other dealers across the country, are also eagerly awaiting new shipments of Blu-ray DVD players, which manufacturers and distributors say should be coming as the fall selling season approaches.
“Blu-ray has been big for us, but you can’t get the new ones,” Bechtel said. “We buy direct from Sony and they say every week or two that we’ll be getting them. But nothing has been set in stone.”
Meanwhile, Don Sweger of TVforMyRV.com, a specialty dealer of video solutions for recreation vehicles, hit the show floor in searching of wireless solutions, something he said many of his clients are looking to add to their RVs. Many of those clients are also looking to replace small, CRT TVs with larger-screen, digital flat-panel sets.
“The approaching analog cut-off date is helping us sell upgraded TV solutions. And one thing that goes with that new TV is a full Wi-fi solution,” he said. “It’s difficult to compete against the Wal-Marts on price, so we have to differentiate ourselves with any product and service that we can.”
