Azione Unlimited's Richard Glikes Marks 5th Year Still Focused on Profits

Five years ago, some in the industry questioned whether Glikes’ model for Azione would work. But his vision for the group continues to focus on higher margins – not just for dealer members but its vendors too. Today, it has 176 dealer members (an increase of 39 in the past year); 93 percent are integrators; and 85 percent have never been members of a buying group before. According to an Azione release, annual “combined purchases” of the group are now more than $564.5 million. And Azione’s 48 vendor members, which include LG Electronics, Samsung and Sony, also include leaders in automation, audio and lighting.

Azione’s revenue is impressive when you consider most dealers – custom integrators – are privately-held companies around the nation that average around 15 full time employees. Glikes remarks that while some members have “100 employees and others have eight,” the average annual sales per dealer is around $3.5 million, or around $200,000 of revenue generated per employee, “which we consider to be pretty good.”

Historically, the focus of many buying groups is to increase the number of dealers each year, but Glikes says, “While we had a good year in dealer growth… our focus is on services and education. That is an ongoing process, coming up with enough services to [help] dealers. And then we have to get their attention to adopt them.”

He adds, “The primary focus is to create more business.” Azione has several initiatives planned for 2017. “Beginning March 1, using virtual reality we will have a 6,000 square foot home, fully decked out with our dealers’ brand mix, so they can go to clients’ homes and show them what they can deliver.” Glikes says that the virtual reality presentation can be adapted to feature a 65-inch or 80-inch screen or a 120-inch projection TV. “The point is we bring the showroom to our clients,” he says.

Azione has a vacation contest which began January 1 and ends May 31 to encourage dealers to sell more vendor partners’ products. Five dealer couples and three vendor couples will win a five-day vacation. Awards will be announced in June.

With vendor members LG Electronics, Samsung and Sony, Azione has created customizable videos for dealers for a nominal cost to put on their websites and explain to potential clients the key features of 4K Ultra HDTV, such as HDR and the like.

Dealer education and networking is a high priority for Azione, with Glikes commenting that in addition to semi-annual educational conferences for the group, 35 webinars have been set up this year by the organization for its dealers. There also is a middle managers meeting in Chicago, May 16-17, that Glikes says “is basically free for members to attend,” where key group and market issues will be discussed.

When Azione began five years ago its “core business was electronics” but now it has expanded to other areas. For instance Glikes says 20 percent of the group’s revenue is now in TVs, with control products about the same “electronics” – which he describes as amps, speakers, receivers, etc. – at more than 10 percent and “labor [revenue] which is 30 to 40 percent.” As a product, “labor” is not only installation for custom integrators, but service, follow up visits if the client has questions, etc.

Unlike regular retail, which Glikes thinks “is undersold” in terms of CT, “We get [clients] from architects, builders and word-of-mouth. And the average sale is $60,000 to $500,000.” He adds that industry associations should take a look at what custom integrators and Azione are doing to sell more profitably.

For instance, with 4K Ultra HDTV, which Glikes describes as “the quickest adopted technology ever,” sales have been great and margins will increase. “There is a panel shortage out there now, which is a good thing, because prices won’t decline rapidly.” And he noted in the past few years, when dealing with custom integrators and upscale retailers, “Vendors have finally learned it’s not about market share, it’s about margin dollars. They have realized that they may be making more money with a 25 percent share than if they try to get a 40 percent share” via lower prices and scant margins.

As for how 2017 looks for Azione, Glikes says, “Home building has been good and houses are still under construction. Our members have a good ‘pipeline’ of installations to be done this year.”

But Glikes is concerned about “presidential stability,” noting that he is worried with the drama in Washington “the stock market might get nervous, our high-end customers will clamp down [on installations] and our business will dry up. We must have a clear direction from government. I don’t think we need any more Executive Orders for another 100 days,” he adds.

Specifically about the industry, Glikes noted that, “If you would have told me five years ago that shades would be a major part of our [dealers’] business, I wouldn’t have believed it.” Another growth area recently has been voice recognition. And Glikes remarks, “We will have a lot of change coming, with products like Amazon’s Alexa. We think that Amazon, Google and Apple will flex their muscles and that will be the next thing we will have to adapt to.”

Another challenge for custom integrators and installers is, “The difficulty in getting skilled people in our industry to do installations. Government can help here, in helping to educate the workforce. We have more demand than supply of skilled people. We are constantly looking for qualified [technicians],” he says.

If more skilled technicians can be found, “They will work for someone else, and eventually own their own businesses. That’s a good thing. The spirit to open and run your own business is very much alive.” He says that Azione can “teach them marketing, how to run a profitable business and achieve part of the American dream.”