Shopping Cart
Your Cart is Empty
There was an error with PayPalClick here to try again
CelebrateThank you for your business!You should be receiving an order confirmation from Paypal shortly.Exit Shopping Cart

Business Intelligence for Custom Integrators

The Evolution of Custom – 30 Years Later, Still No Scale

Amidst a flurry of technology changes over the years, an industry still finds it hard to get consumers attention.

Part I – How We Got Here

One can trace the evolution of the Custom Integration industry back to the “hifi shops” of the 1970’s. Having flirted with quadrophonic surround sound in the mid-70’s (a bust), these stereo-centric retailers went on to add car audio, video (TV’s, VCR’s, camcorders, LD players), portable audio, digital audio, digital satellite, and digital video. Out of this polyglot grew a thing called “home theater”. Many added a “custom installation” department.

Along the way competitors such as Circuit City and Best Buy commoditized many of the specialty offerings, lowering price points and margins in the process. Specialty retailers responded by enhancing services, dropping categories that were no longer profitable, and adding new categories until those, too, became prey to the big-box competition.

As one of those retailers, I regarded this evolution as “scrambling to higher ground”. It was challenging to learn and sell the new categories, but that was the only way to stay ahead of the profit erosion of the old categories. “The harder it is, the better”, I used to tell my team. “As soon as it’s easy, we’re done.”

Of course, most all the electronics retailers are done now. If they haven’t yet evolved to Internet sales and/or CI, the remaining few wait futilely for customers to visit their stores.

CI companies today face a similar evolutionary challenge, one that began to take shape soon after HDTV became mainstream. Many CI disciplines (see: home theater, multi-room audio, touch panel control) have been commoditized and are now available from numerous non-CI sources. Savvy CI’s have been scrambling to higher ground – lighting, shading, networking, automation.

This has been a reasonable strategy for the past 10 years. But while technology will continue to advance, adding categories may ultimately fall short of ensuring CI prosperity. There are other, fundamental ways companies must change.

Barriers to Growth

CI’s have existed pretty comfortably as largely independent organisms, each having evolved in its own way to reach its existing state. But some 30 years since CI services began to evolve, no two companies conduct business in the same way.

Nor are CI companies widely known by consumers. This being a relationship business, each company is known almost exclusively to the clients and partners it has engaged in its past. If a would-be client doesn’t know one of these potential referral sources, chances are slim the would-be client will find the specific integrator. In fact, such “unknowing” potential customers may not even realize CI companies exist, at all.

These two characteristics – no standards for operating the business, no market recognition – are the earmarks of a highly-fragmented industry. Absent a change to a more scalable model and the emergence of branded national distribution, most customers will have no known options beyond the low-cost and/or DIY offerings of non-CI companies such as Apple, ADT, Xfinity, and Sonos (to name just a few).

Next time, Part II – What Needs to Happen Next click here for Part II