i3 | May 07, 2019

ProSource Embraces New Tech, Changing Biz Models for Profitable Growth

Steve Smith

ProSource, the buying group of independent retailers and custom integrators, celebrated its fifth anniversary during its annual meeting in San Antonio, TX, earlier this month. Under the “Better Together” slogan, emphasizing growth, profitability and diversity, the group celebrated its ability to adapt in a changing marketplace and the willingness to share their expertise with one another.

The organization began in 1985, when PRO Group was formed, and a decade later when Home Entertainment Source (HES) was created as part of the AVB Buying Group. PRO and HES merged in 2014 under the ProSource banner, with industry veteran Dave Workman becoming president and CEO. The group, which reports $5.5 billion in annual retail revenue, predicts it should have more than 600 members by the end of the year.

The industry’s first buying groups were created years ago so independents could get the same kind of pricing deals as national chains. Today, price parity with national chains via buying groups is a given, along with the ability to sell products and services with good margins, so it was hardly discussed at this ProSource meeting. And business is still good for this group – which focuses on premium goods – even if the U.S. economy seems to be cooling off a bit.

In his “State of the Industry” presentation, Workman stated that the group’s audio sales this year should increase by 5%; premium TV will rise 1% to a 2% total; and custom integrator products and accessories should rise 5% to 10%. ProSource expects to increase its market share in these three categories during the year.

While Workman said ProSource is focusing “on existing relationships” when it comes to vendors, the phrase “business as usual” was not mentioned during the meeting.

In fact, during a roundtable discussion with the media, Workman noted, “The only constant is change.” The strength of ProSource is the diversity of its members, with the group having custom integrators who are small and large, power retailers and smaller independents. He added that today’s market does not represent “the traditional sales model we had five years ago,” and that in the near future “there will be categories where we make a lot of money now that will be virtually gone, and other new categories that will dominate.”

Workman and his team explained that the wealth of experience its members have in selling and installing today’s plethora of technologies – plus creating work groups to share best practices on the lighting and shade business – will enable them to eventually handle the challenges of selling 5G, IoT, AI and smart home devices and systems going forward. He noted, “It isn’t like you can herd [ProSource members] into one business model. There will be a revolution and evolution” in home technology and the group “will be in the center of that.”

Murray Huppin, president of Huppins/OneCall and chairman of ProSource, explained it this way. “The hallmark of everyone in the group is the willingness to change and embrace new business models. If it doesn’t work you move onto the next thing. No one at this meeting is doing business like they did two years ago, let alone five or ten years ago. We need to evolve and see what works within our business models for our consumers, our employees and our vendors.”

Not only is the willingness to change a core value at ProSource, but the ability to network and tap into fellow members’ expertise is vital. Walt Stinson, president of ListenUp, and vice chairman of ProSource, said, “No one member represents all the business models” that are part of the group. He noted, “There is a lot of innovation and creativity coming from the integrator business, which is not the only business that [ListenUp does]. Retail is still big in our business. But if you want to explore a new business avenue, there is someone in our group to talk with.”

Workman noted, “The cool thing about this organization is the willingness of members to share information. That is remarkable. You can spend months researching a new category or business plan such as recurring revenue streams, but here you can pick up the phone and call someone who is already doing that.”

To encourage and emphasize networking and the sharing of expertise, Workman explained, “One of our goals in this organization is that the larger we become the smaller we have to be.” There are committees on the lighting and shading business – which began last year – and audio. There are also plans in place to have “a majority of members in some type of a working group” based on best practices and grouped based on similar types and sizes of businesses.

Workman said, “Evolving businesses and growth itself is a challenge.” ProSource members can help members use mutual support to do it correctly, which will be great for the financial health of members, the group and the industry if it continues.

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