At a macro level, it's pretty clear that audio component sales are dropping, while displays - flat panel and DLP rear projection sets in particular - are consuming the bulk of consumer outlays. So what is a company that specializes in selling high end audio components to do? Audio Advisor started out as a catalog retailer of high end audio toys (they're now on the Internet as well), and each catalog used to feature pages after page of amps, preamps, integrated amps, high end CD players, extremely expensive record players for analog lovers, and digital audio doodads that supposedly improved CD audio quality for digital lovers. At the other end of the catalog retailing price range, Crutchfield used to sell dozens of entry level and mid-priced receivers and DVD players.
With sales of these products down, these retailers could try to compete for video dollars and sell plasmas and LCD panels, but going up against big box retailers and PC-based online outlets (such as Dell.com) is a recipe for suicide - without incredible volume, margins on displays can actually be negative.
Crutchfield has instead decided to focus on the auto side of its business. Auto sound has remained strong, and auto displays - for movies or GPS navigation - have absolutely exploded. While local stores still have an advantage in terms of installation, Crutchfield's online store benefits from selection tools and advice wizards that simplify the process of figuring out what you can actually use in your car.
AudioAdvisor never sold auto sound products, so that route would be a significant departure. Instead, the company is turning to furniture and cables. Cables are high margin products that have always been featured in the catalog, but now more than a quarter of the catalog features at least one interconnect, speaker cable, or replacement power cable as part of the layout. The other new gear category is furniture. AudioAdvisor has a 16 full pages (out of 76) dedicated entirely to furniture - mostly stands for the video displays its customers are buying elsewhere instead of upgrading that preamp.
-avi
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