Another audio dealer closes his shop


After being in business for 35 years audio and video dealer GNP of Pasadena, California closes it's doors. The owner told me he has to sell 30k a month in goods just to break even. He says it's not worth being in business just to break even.
taters
Damn Al Gore for creating the internet!!!
We have a high end dealer in my town, Summit New Jersey. They have been in business for a least 25 years. I doubt they do $30K per month, but I believe they own their own real estate, which provides a huge economic support for the business. I am sure they will leave the business soon as the opportunity cost of real estate will provide more profit. Most new dealers apparently have adopted the home/business model that cuts the overhead. Years ago I did inventory financing for some New York City dealers. While it was profitable for me, the dealers in most cases did not survive, and that was before the internet.
You don't think the prices of stereo equipment have anything to do with it, do you?
Audio dealers have to be able to change with the times , if they can't change quickly enough the outcome is inevitable . That applies to most businesses .
If only our wages kept up with our productivity. 40% more take home makes a big difference.

All the best,
Nonoise
My apologies to the exceptions but, in general, I have so little sympathy for audio dealers that I just couldn’t care less. In my experience, this industry attracts too many hustlers who see a potential for huge unearned profits, and have categorized audiophiles as sheep begging to be sheered.

Another problem is that there is no qualification process, other than the market place, to determine who can operate an audio store. With manufactures and distributors competing for locations where prospective customers can audition their products, it’s too easy for incompetence to find its way into the audio chain. Many dealers like to say that they’re in the business of selling music, not components, but too many don’t know how. They’ll sell you a 30k analog rig but cant set it up for optimal playback. Of course they get trained for set-up, but that’s no guarantee that they’ll make the effort or have the talent.

Arrogance, snobbery, condescending manners. After someone's been in this hobby for a while and has established a sort of pedigree, these attitudes aren’t as common, but for neophytes, they are way too common.

As I’m writing this post, I’m realizing that the opportunities for this industry to improve are daunting, but nowhere more so than at the first line of customer contact.
the customer base is shrinking, consumers are realizing that they can configure a stereo system without the advice of a dealer, consumers have finally realized that listening as a dealership is not a basis for purchasing, there are many manufacturers that sell direct and not all delaers have home trials--these are the reasons for the demise of audio dealers.
Nowadays, a pair of speaker can easily cost $5k. So what the shop owner said
was effectively he couldn't even sell 6 pairs of speakers in a month. This is
really troubling to hear.
Over the past 30 years or so in the Dallas/Ft. Worth area I have seen high-end dealers come and go at an amazing rate. Only a very few have managed to stay in business, and I believe the reason they have been able to do so is the expanding Home Theater market. There is still enough complexity and mystic surrounding the implementation of a first rate installation to warrant, in the customer's mind, the added expense of buying new and having professional assistance in set-up. Even so, these days may be coming to a close as you can hire expert installers who do not have an investment in 'bricks and mortor' and could care less what type of equipment you may have. High-end audio is a tough business and future for the traditional small business owner model does not look good and may in time pretty much disappear altogether. For myself, I consider it already 'six feet under'.
Unfortunately the bricks and mortar guys really have to differentiate themselves to survive. Back in the day, you got a location, got some inventory, hung a sign, went to a chamber of commerce meeting, sponsored a little league team, became a part of the community and people would shop with you as long as the cost of doing so was not way out of line. The idea of a major purchase made outside of your area was really out of the question for service and peace of mind reasons.

Today, product reliability is far superior and transportation costs are much lower to ship. etc. and availability of virtually everything is amazing. As far as this particular dealer, I don't know anything about them. BUT, if a dealer simply unlocks the door and expects a sufficient level of business to survive is naive at best and arrogant at worst. If you are located in the LA area, which Pasadena certainly is, and you aren't cultivating a good and sustainable customer base with a lineup of brands that people want to buy, you aren't trying very hard.
My first audio purchases 20 plus years ago were through audio stores. I found it to be a mixed bag so to speak.
Some audio dealers were helpful while others simply knocked down my current gear with the sole intent of selling me their gear. I started loosing interest in going to dealers and then the internet came along....Audiogon. I have not been to dealer since and do not plan to either. Times are hard and most folks are trying to figure out how to strecth their dollars. Buying used equipment through Agon... other websites only makes.

Years ago I had a neighbor who owned an audio store for 40 plus years. He's now retired. He mentioned carrying product lines that were more profitable versus better sounding. Makes sense from a business perspective. It made me realize I had to do my own research versus trusting a salesman at a dealership. I'm thankful for the internet and audio websites.
One issue is overhead. If the dealer owns the property they are on, (without a mortgage) then they can really ride out the lean times. Dealers who are renting have a hell of a time managing as the overhead is really high.
I know one dealer who moved to a bigger and better store, only to close after a few years. the 'bigger and better' store cost four times the rent. that really eats up a lot of money.
Phaelon,

"My apologies to the exceptions but, in general, I have so little sympathy for audio dealers that I just couldn’t care less. In my experience, this industry attracts too many hustlers who see a potential for huge unearned profits, and have categorized audiophiles as sheep begging to be sheered.

Another problem is that there is no qualification process, other than the market place, to determine who can operate an audio store. With manufactures and distributors competing for locations where prospective customers can audition their products, it’s too easy for incompetence to find its way into the audio chain. Many dealers like to say that they’re in the business of selling music, not components, but too many don’t know how. They’ll sell you a 30k analog rig but cant set it up for optimal playback. Of course they get trained for set-up, but that’s no guarantee that they’ll make the effort or have the talent."

I have to disagree with your post somewhat. It may be true in some cases, but its not always that way. As far as how the individual stores are run, its a mixed bag. Some, like you say, are just profit oriented and don't care. There are good ones, though, and if you go into the store and get to know them, a little, their easy to pick out.

"Another problem is that there is no qualification process, other than the market place, to determine who can operate an audio store."

On that quote, in particular, you are way off. If you are trying to get a dealership for a well established brand of high end audio equipment, they put you through hell. You don't just call these companies up offer them 25k, 50k or whatever as an initial order to get you going. You have to sign a very strict contract that will be closely enforced, show credit, have insurance, have an existing location that they can fly out and come see, trade references that include other high end brands that you currently sell and will use to support their brand and many other things that I can go on about.

The only reason I bring all of this up is that there is a lot more that goes in to opening up an audio store than most people think. To set a new store up today, with established brands, you are easily looking at over a million dollar investment; just for a small store.

Going back to your original point, I agree in that if they don't take care of their customers, they deserve to go out.
"consumers are realizing that they can configure a stereo system without the advice of a dealer”

To the extent that that’s true, it's because too many dealers offer the minimum in set-up help. I’m not talking about six figure systems, I’m talking about, first attempt, sub $5k systems that if well chosen and properly set up, can give a musically satisfying experience that will encourage further exploration.

We shouldn’t forget that there are music lovers who don’t participate on forums. Mrtennis, I am absolutely confident that if you were to visit the home of an average audio retail outlet customer, you would be appalled at what you heard.
We need bricks and mortar stores , where else can you hear and bring home gear before you purchase it ? Audio shows are only in a few cities , there's never been a show in mine .
Once you establish your self at an audio salon you usually get 20% off without even asking . If there's a problem you just take it back , they always had a loaner for me .
Zd542,
"It may be true in some cases, but its not always that way. As far as how the individual stores are run, its a mixed bag."

The fact that I offered my apologies to the exceptions means that I know that it’s not always true.

"On that quote, in particular, you are way off. If you are trying to get a dealership for a well established brand of high end audio equipment, they put you through hell. You don't just call these companies up offer them 25k, 50k or whatever as an initial order to get you going. You have to sign a very strict contract that will be closely enforced, show credit, have insurance, have an existing location that they can fly out and come see, trade references that include other high end brands that you currently sell and will use to support their brand and many other things that I can go on about.”

I’m not way off. Everything that you mentioned concerns the manufacturer/seller relationship. Where’s the part about satisfying the customer?
"Once you establish yourself in an audio salon they will give you 20% without asking"

I have been into audio for 30 years and not one time did anyone give me 20% off without asking. Sure I have gotten discounts before but I had to play hardball with the dealers and it's not a lot of fun.
Elizabeth made a good point. With rents continually going up it's really hard to operate any kind of retail business nowadays. I know a couple of dealers in the Los Angeles area that are doing well. They both own the property and are always expanding their lines because there not laying out huge sums of money for rent.
Hey Sudz. You made the exact same post last month.
The rich and super-rich already have 3-4 systems, if they even care about music,high-end audio prices are beyond 90 % of all american budgets, except for a few nuts like me.
Who needs them? High-end audio stores can only survive IF, their customers are CONSTANTLY buying and selling.

Other than that, the customer base is not large enough. We on this site, might be kool-aid drinkers, but the general public is not.

And lastly, the market place is always right. If you cannot survive in it, change your ways. Or change something!!

Cheers
Yes, competition is ruthless. I tend to think the manufacturer is a big part of the problem as well. It is difficult to draw more people into this hobby when the price of admission becomes more costly. For example an entry level preamp is $7000. For a shrinking market it is difficult to recruit new customers with that kind of cost.
"The rich and super rich already have 3 or 4 systems" It's funny you mention that. My sister lives in Beverly Hills so I've been in quite a few houses in that area. I did not see one house with a high-end audio system. Sure some people will have home theaters but not a dedicated 2 channel system.

I have found most people with high-end systems to be like me.
I'm middle class but spend most of my money on gear and music. I don't drive a fancy car or take trips to Europe. I'll never forget I went to look at a used TT some years ago and the guy had really expensive gear and over 10,000 records. The guy lived in a really small one bedroom apartment. For what he spent on equipment and records he could of owned his own house.
Phaelon,

I really wasn't trying to start an argument with you. As for the exceptions, were on the same page. Sorry if I wasn't clear on that.

"Another problem is that there is no qualification process, other than the market place, to determine who can operate an audio store. With manufactures and distributors competing for locations where prospective customers can audition their products, it’s too easy for incompetence to find its way into the audio chain."

I still say you are way off with regards to the above quote. I don't mean it to be a negative comment directed at you. I was just trying to show at the issue from a dealers point of view. When you say that there is no qualification process to becoming a dealer for a brand, thats simply not true. If you read my first post again, you'll see that I listed several general qualifications that most manufacturers require to become a dealer. Also, in your last post, you mention that manufacturers and dealers are not putting the customers first because of all of this. Again, I disagree. All of the above qualifications are put into place for the customer. They want to make sure their products are properly represented to customers, when they come into the store.
Zd542, No hard feelings here. We’re cool and I respect your opinion. But I still say no way on way off. What you've offered as dealer qualifications have nothing to do with insuring that the customer is getting expert service.

We both have experiences and observations that apparently differ quite a bit. I can live with that. Happy listening.
As taters mentioned about the super rich mainly having theater rooms but no dedicated 2 channel systems. Could this be the reason why dealers are doing better in the HT market. I agree with taters that everyone I know who owns high dollar systems would be considered middle class living in modest homes (me included). So perhaps the industry has their numbers crossed. They need to be charging outrageous prices in the theater market and come down to middle class prices in the 2 channel market :)
I have often wondered, if the High End industry were much better at marketing to the general public. Not just in audio mags, and nowadays audio websites. If things would be a bit better for them.I have been a newspaper press operator for over 30 years and have only seen one ad. I have been a fan of music ,musical instruments and nice stereos since I was a teenager. I never had a problem finding where to buy music and instruments.They always advertise ,and I always see the ads. Not so with High end audio.Im many cases Ive drove miles to out of the way audio dealers that I heard rumors about,or drove down a unfamilier street and out the corner of my eye caught the word audio or stereo.I would have started much younger if only I had known!I think more folks would get into the hobby were it marketed better.My two cents.
I think two channel audio is a shrinking market and the
higher end manufacturers need to charge more for their
products to cover costs and make a profit. And as costs go
up you push even more out of the market place. Ten Thousand
dollar amps, pre-amps and turntables have become the norm.
People simply can not afford or justify such purchases for a
hobby when usually only one family member enjoys. Home
Theatre in most respects is different as the whole family
can sit down and enjoy watching a movie and they prefer the
amazement of multi-channel listening.

And I certainly think the internet has changed the way we do
business and make purchases in this hobby. Some brick and
mortar places will continue and do fine as they have
probably changed their businees model to adapt while other
who have not will fold as we have seen. Cost Structure and
the way we do business has been and will continue to be
their demise
Oh well just my two cents and sorry for bloviating
Like Phaelon, I just attended the AXPONA show. For every room that
sounded excellent, there were three that sounded average. There were,
possibly, a quarter that sounded awful. Some of the better rooms were set
up by dealers, some of the worst by equipment reps. The reps seem more
like the general public with limited overall system knowledge. It's a shame
that dealers with skill and good customer service have to work so hard to
compete with the retailers Phaelon has described.
People go into the hi end audio business with their hearts, not their heads. I am thankful for that in I don't think we would have some of the great products today if the 'head' prevailed. The Chinese have in many ways given the business a new lease on life, driving down costs of both parts and finished products. Yes, I can't wait to buy my first Chinese automobile here in the States. Of course it will be ordered on the internet and delivered to my door by UPS. No bricks and mortar needed. I will be so thankful that I don't need to visit a 'dealership', where you are always subjected to one of the most unpleasant sales experiences of life.
At the end of the day it is sad to see any business close. I am sure the owner of this shop you mention could blame the internet and probably be correct in doing so. Some dealers never got out of the "snobbish" attitude and they really have become dinosours in the audio business. Some dealers feel that MSRP is the price and lose business to the internet by retaining 100% of the profit margin an sales never made. But the sad truth for any customer is that with a diminshing availabilty of showrooms to audition equipment has it's negative effects. First you really don't know what you are getting and second, service.
Although saving 10-20% through an internet purchase, the possibility of a loaner while yours is being repaired vanishes in the bargain. I don't feel that I should have to pay full margin in a competitve market, but I will pay more for the exact product to help keep a business viable to offer future service and problem solutions as well as sampling before buying. The trend seems to be the guy that operates out of his home and many good dealers have made that a successful transition. They reduce their overhead and can be more readily available plus they crate a more "homelike" atmosphere that I find friendly and comfortable.
Again it is sad to see any business fail.
""An entry level preamp is $7,000"" what exactly have you been smoking? entry level?
Try a few hundred bucks for a new entry level preamp.
Or used...
Elizabeth,

In the audiophile world an entry pre-amp would be about 1000.00. If you are talking mass market then 200.00 would suffice.
Now we’re arguing about entry level? :-) Entry level is wherever you can afford to enter. And as long as we’re on the subject, "high end" is any audio system that presents the music in such a compelling way that, like live music, it can capture and hold one’s undivided attention. IMHO.
'High-End' means obscene prices. Period! That's all folks! 'Entry-Level' is just not so obscene. Just run of the mill outrageous.

Cheers
A friend of mine said "entry-level" is the one you are using, "high-end" is the one you want but can't afford.
"I think more folks would get into the hobby were it marketed better.My two cents."

I agree Ray. I consider myself an example of someone who was always interested in music but was totally unaware of anything but mainstream audio with the exception of a few brands that virtually everyone knew of because they were well distributed, McIntosh comes to mind. The industry is and has been for many years an abysmal failure at promoting itself. Today's model is the biggest joke, with a few notable exceptions, keep on jacking up the prices with the promise of "greater audio nirvana" to as Rok2id notes, the kool aid crowd. It certainly isn't going to bring in new customers and seems more akin to killing the goose than any type of strategic plan to bring in a new generation of music lovers. Or is the audiophile just a 5% crowd that always was and always will be no matter? I have little knowledge of the industry but it is obviously a matter of little time before the remaining brick and mortars are all gone. The new model seems in home dealers, I know a few of those locally, internet, and audio shows. But again this appears real bad news for the industry, how are high end manufacturers going to discover the potential for their wares without finding a new base of customers that can't hear it first hand? I certainly welcome a more optimistic view than mine but the exponential increase in pricing seems to point in this direction.
Thanks! for sharing.