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Gary
06-19-2005, 10:38 AM
Some of Best Buy's new Magnolia Home theaters stores were going to open this month. The stores are located in Baltimore, Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, San Francisco and Washington, D.C. These stores are located inside of the Best Buy store.

Has anyone seen them? What's the story?

djnorm
06-19-2005, 10:29 PM
I stopped by my local BB to pick up some networking hardware, and the MHT had just opened. Was wearing my uniform t-shirt, so I just looked through the windows of the sound rooms and took off. There was a 'vestibule' type area with a few plasmas and RP's , and two sound rooms which looked remarkably like many others I have seen in places more like where I work. I wasn't able to see the quality or brands of the merchandise in the rooms, or the install quality in the rooms, but the guys were wearing ties, at least. On the whole, I wasn't very impressed, but I also didn't really give them a fair once-over.

.02

Shoe
06-20-2005, 08:16 AM
I was in my local Best Buy/Magnolia a couple of weeks ago and it was visually impressive. The salesman I saw pitching a customer was going for a hard pitch floor sale and the customer was eating it up. It will definately cost me some customers. The had Klipsh, Def Tech and freakin Vienna Acoustics. Electronics were Denon and Pioneer Elite and they were showing the Sonos music syetm. Projectors were Infocus showing the 4805 and 7210. I didn't have more time to spend. My concern is that the customers that left Best Buy and came to me( which more often than not led to a sale) will be walked to the back of the store and be closed on the spot. I have no idea how they handle the pricing. Does this mean you can buy Yamaha receivers and Klipsh speakers in the "Best Buy" store and have Magnolia install them? I'm fairly confident they will F up the multiroom and automation part of the business but they seem well positioned to take a lot of media room sales.

just_program
06-20-2005, 02:43 PM
I caught the press release about the top 20+ markets but the funny thing is that I have seen Magnolia vans parked in front of both of our local BB's. I havent had the time to go check it out and see if they are here yet. I am not in one of the listed markets for immediate opening, so I do find it odd that the vans have been spotted on the road and in front of the stores. I am curious as to how much of the Magnolia linecard will end up in the boutiques. We already have to 'compete' with Tweeter on the Martin Logan, B&K and Crestron product lines. (By compete I mean we get 'price shopped' by consumers who have been quoted MUCH less than msrp on protected lines) I read in the press release that Martin Logan will be one of the product offerings, as well as Krell. I guess nothing is sacred anymore. What color was the shirt the guy was wearing? Just want to know what color shirt I will be wearing in about 8 years.

roddymcg
06-20-2005, 06:24 PM
Its still the same old corporate intstallers though. I just did a Pronto for a guy who had the Best Buy guys install and program his system. I got full price to reprogram the remote propererly and the install just did not look all that professional.

roddymcg
06-20-2005, 06:24 PM
Its still the same old corporate intstallers though. I just did a Pronto for a guy who had the Best Buy guys install and program his system. I got full price to reprogram the remote propererly and the install just did not look all that professional.

ejfiii
06-20-2005, 06:25 PM
What color was the shirt the guy was wearing? Just want to know what color shirt I will be wearing in about 8 years.

LOL!

Krell? Thats nutty.

AHEM
06-21-2005, 12:12 AM
Anyone here still think that Best Buy isn't a threat to our business?

Even though I'm not in a major market, I too have seen the Magnolia trucks rolling around up and down the major thoroughfares.

So where does the market go from here?

As soon as we allow the so called "exclusive" lines to be displayed and sold at Best Buy's sham of a high end boutique, we're totally opening ourselves up for the domino effect. Soon, these very same brands will be in CC or any other large retailer who inquires about them.

Oh, (ringing hands) but what can we do?

That's up to you, but not buying from the suppliers who sell them would be a start.

rhm9
06-21-2005, 12:55 AM
Just a little background for you all. I come from Seattle, the birthplace of Magnolia Hi-Fi. I worked there for 3 1/2 years before leaving to start my own business in 1995. I've had Magnolia right here in my backyard the entire time and I can attest to the fact that if you are established, they shouldn't hurt you. Here in Seattle they have a million+ dollar design center that I know has rolled a 3/4 million dollar system to a Mariner. They've always been formidable competition but somehow I've managed to keep a steady flow of clients for the last ten years anyway. I've also got another powerhouse around here called Definitive Audio... I've won some against them but lost more. I'm sure you all have (or are) formidable competition as well.

Magnolia was started in 1954 by a gentleman named Len Tweten and I actually felt good for him when I heard he had sold. He worked his whole life and built a great company that is constanly recognized as one of the best retailers in the industry. When I worked there it was like being part of a family. If anyone deserves a great retirement its Len.

I don't want to rain on Jeff Wagner's parade... I'm sure he's getting some good talent but the fact remains that they are kind of easy to sell against. Sure... they'll do a lot of business but BB and CC already do a lot of business... business to clients we wish we had access to. Unfortunately none of us small timers have millions of dollars in tv, radio & print adverising and big fancy stores full of instant gratification electronics. The way to sell it is that there is no way that the customer will get the attention of an owner on his/her project... they won't even get Jeff! I've had clients fed up with Magnolia because every day they get a new couple of installers who don't know the system. What little structured wiring and networking I've seen them do up here has been laughable and wire management leaves quite a bit to be desired. They also won't be carrying electrical licenses and advertise that signal cables for plasmas will be hidden but power cords must be external. Any of you who have the electrical cert or hold a General Contractors license can also use this to your advantage.

I'm more threatened by the myriad of new one man shows that open daily. They're the ones who trouser drop in desperation to get any kind of deal. The one thing you won't see Magnolia doing is dropping major trou (although I think their labor is a bit low priced from what I've seen).

I guess the last point is that we ain't gonna stop it from happening so we need to keep looking inward while looking out at the big picture.

Good Luck All

Kelly
06-21-2005, 07:35 AM
I see this as no more threat than Costco selling a year old Pioneer 43" HD PDP for $2,999.00. or a Pio HD5040 for $4,999.00 AND offering a third party sub-contracted install for $349.00.

If anything, the custom guys that are doing the sloppy work, around town, will finally be taken out....

Although, I do expect to see some of the guys that will drop trou to drop them even more as the pressure grows.

just_program
06-21-2005, 08:51 AM
What little structured wiring and networking I've seen them do up here has been laughable and wire management leaves quite a bit to be desired. They also won't be carrying electrical licenses and advertise that signal cables for plasmas will be hidden but power cords must be external. Any of you who have the electrical cert or hold a General Contractors license can also use this to your advantage.


Of course it will be laughable........to us but not to the consumer. I have yet to meet a customer on a 'go behind X company' service call that was willing to pay me to straighten out the 'rats nest' of wiring left by another company. The general consumer doesnt care about quality of work, only the price matters. That low quality of work will become the standard by which all work is done. I will also speculate that the Magnolia model will adapt to hiring a local electrician or even staffing one to handle plasma outlets.



I'm more threatened by the myriad of new one man shows that open daily. They're the ones who trouser drop in desperation to get any kind of deal. The one thing you won't see Magnolia doing is dropping major trou (although I think their labor is a bit low priced from what I've seen).

I guess the last point is that we ain't gonna stop it from happening so we need to keep looking inward while looking out at the big picture.

Good Luck All


I may be, and hope I am, wrong about this but I believe that BB/Magnolia are out to own the marketplace. As to whether or not they can or will do this remains to be seen. It is typical to find drasticly reduced pricing from a big box retailer on equipment but now we will also have to compete with lower labor rates. I dont believe for a minute that BB corporate wont sell the gear at just above cost and 'kick off' the grand opening of these new Magnolia stores with a "free installation' campaign. How will you compete with that? Sell your service? I do not feel threatened by this new business model that BB has adopted, nor do I see it as an immediate threat to my way of making a living. What I do see is that all the best intentions in the world, from people like Mr. Wagner, will not stop the corporate office from doing what they feel is best for the bottom line. I am sure that before each new store opens there will have been extensive market studies to determine the estimated amount of work available in each market. I would also imagine they know who in each market is carrying the same lines they will be marketing. What is to stop them from deeply discounting those 'protected' lines? Nothing that I can see. When our local Tweeter started displaying Martin Logan we were assured that we would not have to worry about them carrying product above a certain point in the line. I personally have gotten bids from this Tweeter location for Prodigy's, at a nice discount. They display product above the level that they are supposed to sell and discount regularly. We complain to the manufacturer and are told it will be handled but those displayed pieces are still on the show floor, a year later. I dont have any harsh feelings towards a manufacturer for doing this, after all they want to make money. Protected line equipment will quickly become a thing of the past as these new big box retailers roll out the 'custom' departments. As a manufacturer, would you shut off BB from your product line because they trans-ship product or discount your products, if they are committing to a purchase of 500,000 units? Of course you wouldnt. That is a nice chunk of money. It isnt just the roll out of BB/Magnolia that we have to keep an eye on but it is also Tweeter and now, in the near future that is, CompUSA/GoodGuys. The market is changing, maybe/maybe not for the good but I have a feeling that the a/v market we know and love wont survive that much longer. As the corporate entities take hold of market I think we will see a massive loss of product lines through distribution, as rep. firms wont be their anymore. Exclusive lines will only exist in two forms, internet direct or big box retailer-custom division. That is if the cell phone industry doesnt corner the market on personal entertainment technology first.

What color shirt will you be wearing? I dont know what color, if any, shirt I will be wearing. I feel its time for a revolution in our industry and with CEDIA around the corner, we have a perfect forum to air our complaints. Anyone feel like organizing a 'change' in our industry?

2ndRick
06-21-2005, 01:06 PM
We need to keep telling the story that good lines do not equal good design, and that dozens of vans do not equal good work.

I spent a short time as the person recruited in to build the custom division of a 12 store regional TV & appliance chain that had deep pockets. That was an eye-opener to the potential of what could be acheived if only a company with incredible marketing power were to take on custom...

Custom at this level of volume will not be easy to manage. They are seeking talent, but they will certainly be using a lot of green installers fresh off the street and going through the same kind of empolyee turnover and training/experience lag time that already plagues our industry.

I would expect that they will sell a lot, but they will also botch a lot of jobs while they sort out the learning curve.

With all of the threads here and on the CI Lounge at RC, we all know how much difficulty we face day-to-day. It will be a while before the install dept. sorts out the best methods and practices for their combinations of products, and probably a lot longer for their sales staff to realize that they cannot lay down on every sale and go for the lightning-quick close, but need to slow it down and direct certain purchases to ensure compatibility out in the install phase of the job.

Right now at BB, the blue flyer in the Sunday paper directs the sale, and the young kids are just there to put a face to the transaction and to clerk it.

I am watching this closely, but I am not really afraid of it.

AHEM
06-21-2005, 10:29 PM
As I see it, we're rapidly approaching another turning point in the industry.

Anyone who's been around a long time knows how this game works....

Manufacturere to CI at CEDIA: C'mon over here and I'll show you all of our new stuff that you're absolutely going to love!"

CI to Manufacturer: "Holy Crap! I can't believe that you're allowing your product to be sold in Best Buy!"

Manu to CI: "Hahahahah, well.... we've agreed to allow a limited number of SKUs to be sold at the Magnolia hi-fi stores, but they're selling everything at list! Most guys like you are happy because they realize that Magnolia will provide advertising that will actually HELP you 'custom guys.'"

CI to Manu: Well, I dunno, but the new product looks pretty good.

Manu to CI (quickly ending the Magnolia conservation): Soooo........how's business being going for you? Have a look at our new products. Help yourself to our martini bar!

CI thinking to himself: "Gee, these guys seems pretty cool and sincere"

Flash forward two years later and Brand X is now being sold on the regular Best Buy floor.

Rep to CI: It shouldn't come as a surprise because after all, they've been in the Magnolia stores for two years now.

idodishez
06-21-2005, 11:09 PM
As I see it, we're rapidly approaching another turning point in the industry......

.

Seeing your South Bend (Indiana) location reminded me of the article I just read in Custom Retailer. It was on Ovation, and their changes in the showroom floor/atmosphere. (Creating a "hearth" room, etc) Am I concerned that BB abd CC are selling the brands that used to be exclusive? Yes. Ovation and the likes however are the type that get me thinking. For now anyway, I have no problem out-performing the BB guys, as they still seem to be box movers. Ovation and the likes here in Indiana are skilled techs, and are more of a concern for me than BB. Catch 22. Sometimes I think it would be nice to be that big, then other times (most times) I LIKE the fact thta Im still small and have a personal contact w my clients

Coach
06-22-2005, 08:17 AM
I guess the last point is that we ain't gonna stop it from happening so we need to keep looking inward while looking out at the big picture.
Roland speaks to the sensible mantra "Don't spend too much energy on things you can't control".

The market will evolve, there is nothing you can do to stop it.

There is plenty you can do to adapt to it.

Honing your act -- with your customers, your employees, and your suppliers -- means developing and implementing practices that let you make meaningful promises, and then, reliably deliver (or better yet, over-deliver).

BB will make promises, and if they keep them they will succeed. Just like you.

You have to make different promises than BB (or Tweeter or, in Frank's case, Ovation, or in Roland's case, Definitive). This doesn't necessarily mean selling different lines, because you shouldn't be selling SKUs in the first place (that's what stores do). You should be selling the benefits of your products and services.

What's in it for the client is the only thing that matters to the client. Proposals redolent with makes and models and line prices promise nothing but easy comparison with somebody else's laundry list.

What's in it for the supplier is the only thing that matters to the supplier. They want numbers. Many, many of you don't even have sales budgets, how can you begin to provide vendors with projections?
(You want to have an impact at CEDIA? Go to your key vendor meetings with a sales plan for their line.)

What's in it for your employees is the only thing...

OK, I'll stop now.

Kelly
06-23-2005, 02:52 PM
[(You want to have an impact at CEDIA? Go to your key vendor meetings with a sales plan for their line.)



That reminds me of something that happened at CES years back.

I entered a speaker manufacturer's booth, wandering around looking at the various speakers they had on display. All this time, no one from the company ever approached me asking if they could answer any questions. I spent maybe 30 minutes standing there with my best "lost puppy" look, and yet no one paid any attention (sort of like how you get treated at BB/CC).

Finally as I was preparing to give it up for a lost cause, I happened to see the name tag on one of the gents in the booth. By what I could see, this guy was the head honcho.

So I basically went off on him. Mentioned that I had been interested in his companies offerings, but that apparently his company wasn't interested in mine, as was evidenced by the total lack of effort on his employees part.

As I was now being ESCORTED through the booth by the boss, I was getting some real attention.

And after replying yes to a series of questions (will you do 50k per year in purchases, etc.) I was given the line sans credit app, dealer agreement, etc.

Way cool, I was buying speakers for rediculously low prices...

Of course I didn't make the required minimums to sustain the relationship. But man, it was great for that one long year..... :lol:

Ever buy a pair of speakers for (guess how low) and sell them for the MSRP of $450.00 a pair?

Mark Thoman
10-07-2009, 10:53 AM
I've been in the MAV on Elston in Chicago a couple times, as MAV is a Genelec dealer and they have a full system on display.

The store is staffed mostly by ex-Tweeter/UA guys. I'm happy to see them with jobs; they're all good people, they're not price hounds, and most of the CI's in the Chicago market know at least a few of them.

The store layout is two sound rooms, a dedicated HT room, an office for meeting with clients, main floor space and lifestyle space in the back (kind of a kitchen-feeding into-family room area). The guys in charge of layout did a good job; fairly compact but a fully featured store. It does have a wide opening to the main BB floor as well as a separate entrance.

2ndRick
10-07-2009, 08:13 PM
I was in the Rockford Best Buy tonight, and they had an entire aisle of LPs!!!

Along side the Pearl Jam and Prince stuff I expected to see, I saw copies of the Cult "Love", multiple Wilco albums, the Band, and even Velvet Underground!!

We don't have a Magnolia out here... Which is just fine with me.