ProSource CEO Dave Workman Speaks Out

ProSource CEO Dave Workman Speaks Out During Virtual CEDIA EXPO 2020!

During CEDIA Virtual EXPO 2020 Jason Knott of CEPro held a keynote panel entitled, “Industry Outlook: Buying Groups Weigh In…”

Dave Workman

THE FOLLOWING EXCERPTS are from Dave Workman, CEO and President of ProSource.

JASON KNOTT: How do you see the state of our market for the rest of 2020 going into 2021?

DAVE WORKMAN: We have a perfect opportunity at this moment. Clearly over the last several months, there has been a renewed interest in the home environment. Interest rates are down, the travel industry has been shut down and those dollars have been refocused around the home.

The thing that has surprised many of us, has been the strength in home building. With interest rates so low, homeowners are taking on new properties and remodels, so our members have projects stretching into 2021 and maybe even into the following year. So there is plenty of work out there.

Now if those discretionary dollars start reallocating back into other industries, it could take some of the edge off of the business we are currently doing, but at the same time, we have the want and need for technology in the home. Not just in our legacy categories, such as entertainment, but some of our others such as lighting and shades, that have such huge growth potential. These newer categories are carrying us up to the next level of business.

Barring the wholesale collapse of the economy, we can see the CI business doing well way into 2021.

JASON KNOTT: The growth of new home building has really surprised me as well. How is this effecting guys in the trenches?

DAVE WORKMAN: We are seeing both ends. ProSource members are both big retailers and the CI side. The CI side is a little different…it is somewhat capacity controlled because CI can only go up so much because the profit is so heavily tied to labor. On the retail side we have posted the highest increases I have ever experienced in the month of July; the highest across the board increases were in June and then matched in July. Where the retailer can accommodate more of the surge demand, the CI guy is more of a steady stream upward, you are never going to get that spike.

What you are going to get is a forward backlog and so what we are seeing is the back logs are getting extreme for those dealers that are booked solid for the rest of the year and into 2021. continued on page 12

WORKMAN continued from page 11

JASON KNOTT: Was that in online sales, because the stores were closed down?

DAVE WORKMAN: No, I would have thought the same thing, of course online is really supreme, but it was across the board. Now online has taken a higher percentage, but most of the dealers have figured out a way to omni-channel their presence with the consumer. So the store experience is really evolving. With big brick and mortar regionals increased maybe five percent for June and July, but online sales were off the charts.

JASON KNOTT: So many integrators had ramped down in April and May and they were surprised by the comeback in June. Have those fears calmed down? [There are problems in the supply chain-Ed]

DAVE WORKMAN: It’s not across the board. I think it has improved… there are some outages in control, lighting, shading, but it is not as acute as audio and video. I believe we are going to be dealing with this through the balance of the year. I don’t believe the vendors factored in appropriately whatever product surge is going to occur in the fall. As the summer winds down and the focus goes even further back into the home. I think we are going to see a second Jason Knott, CEPro surge and demand for home entertainment products. This probably keeps supply as a challenge all the way through the end of the year. To give you a specific example and this is where opportunity was lost, people were really interested in outdoor audio and TV, especially in the Northeast where everything was so shut down and dealers were working hard to upgrade people’s yards, you couldn’t get outdoor TVs.

This is of course not to say it won’t be a huge growth category in the future.

JASON KNOTT: Are the commercial guys moving into the residential guys business?

DAVE WORKMAN: There is encroachment going on between a lot of industries. Many of our members have 25 to 30 percent of their business in commercial. Se we’ve got those guys moving around and alarm guys and lighting guys moving around and electrical contractors coming into the space.

We have a real mishmash of everybody going into each other’s spaces. Everyone is trying to find new opportunities. The result of which is continued on page 14

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WORKMAN continued from page 12 they are competing against new people they weren’t competing against five years ago.

JASON KNOTT: Where are our opportunities and growth areas?

DAVE WORKMAN: Lighting is taking on a huge focus within our group. We have partnered in an exclusive arrangement with David Warfel as our category expert and we’ve established our certification program and ProSource University. As far as opportunities are concerned, I look at shading and lighting as the right hand and the left hand. Both categories are interdependent in the way a dealer sets them up.

It is not unrealistic to think an average dealer can do a million a year in those categories. I can easily see lighting and shading as our second largest categories in the next five years, surpassing half a billion in total revenue. I am very optimistic.

With legacy products, we have an outsized share of the market in audio. We command a large share of the business and it has been a stellar category for us. What has been fun, is watching two-channel audio come back with some resurgence. Along with the resurgence of multiform wireless audio, step up sound bars and other products that fit our niche, but are more simple in their application. All of these have been doing very well. People obviously really want to bring theater home

“ As group leaders, we are trying to provide our members with the best tools, but we are only as good as the dealer taking advantage of the tools.”

DAVE WORKMAN, PROSOURCE CEO/PRESIDENT

right now and we are also seeing opportunities in wellness. It is still early, but it is important to remember the opportunities in new technologies coming up.

We started doing Town Halls about ten years ago and we started getting into networking. At that time, the dealers said, “I’m not a computer programmer and I am not going

to have anything to do with that.” Think about what they are doing today, much of their business is networking.

JASON KNOTT: Anything you would like to scold the dealers about..what do they need to improve?

DAVE WORKMAN: The biggest challenge for the CI dealers is they have to be able to step back from the biz and figure out for example, service. They are busy being busy. But if they don’t step back and embrace new tech categories, digital outreach, new recurring monthly revenue services and new hiring mechanisms, they are hurting their business.

They can’t just keep doing the same thing they have always done without growth and change. They have to grow their business to the next level and we have provided that for them with ProSource University and other tools. As group leaders, we are trying to provide our members with the best tools, but we are only as good as the dealer taking advantage of the tools. Let us help you grow to the next level.