Best Buy and Magnolia to Enter Commercial AV Market. . .

So Best Buy is now doing commercial work. . .where do I even start?

The Motive-

Of course market opportunity is the main motive, and ultimately dollars.  Best Buy is copying the migration of many small integration firms from the home integration market into commercial environments.  But have they laid the ground work to avoid the same mistakes?  It doesn’t seem like they have.

The Exodus-

New homes ceased to be built, and existing homes were no longer great sources of equity from which to draw and do improvement projects like home theaters.  But the commercial market was still seemingly moving along.  Many integrators started supplementing their work with commercial installations and flooded the commercial integration market.

The Problem-

Residential integrators didn’t have the knowledge base or access to the correct products to do these jobs correctly.  Residential receivers were being thrown into conference rooms with microphone systems on the Zone 2 with no mixing and huge gain over feedback issues, 1000 lumen Home Theater projectors in spaces with high ambient light producing unviewable images, poor VGA transmission, etc.  No knowledge of building codes, plenum environments, riser management, etc added to the confusion.  They made a splash because they were cheaper, and gained some work, but usually at the cost of a lackluster system for the end client.  In many cases most of the gear they installed in these spaces was consumer grade and the warranties were made void as soon as they were installed in commercial environments. If you have read any articles on companies that have successfully migrated, they did the research, hired the proper staff, and established new relationships with the appropriate vendors to make that a success.

The Encore-

So is Best Buy up for a command performance of the problems above?  Yes.  They have stated that they are going to leverage their current base of residential installers, coupled with the stellar performance and skillset of the IT Geek Squad (http://easytechtalk.com/2008/05/04/dont-use-geek-squad/) to go in and take market share in the AV-IT centric world of Digital Signage, as well as corporate boardrooms, training centers, restaurants and the like.  If they have established commercial grade equipment relationships and recruited top commercial AV talent for system design and installation, then they are doing an incredible job of keeping it a secret.  In fact, they have stated openly that their commercial labor pool will not be separate from the residential group or specialized at all, although some technicians may have better skillsets than others.

The Result-

The result of Best Buy’s entry into commercial is all too apparent.  They will come into a market where their stated core strengths are buying power and a large but unspecialized and random labor pool.  They will sell equipment at low margins in large quantities, and send a revolving door of technicians to jobsites to rectify issues that they create along the way.

Many customers will want better service but will expect other firms pricing strategies to match that of Best Buy, and the net result is that many firms, as in residential, will find themselves unwittingly trying to win every job on price, and most of those will find themselves out of business or extremely diminished within a couple years.

The Hope-

No, it’s not Obi-Wan Kenobi.  Tom LeBlanc at Commercial Integrator expressed his hopes as well.  I believe he is right but I see the major hope for commercial integrators in. . .

Swimming upstream.  Look at specialized projects that require higher end skillsets and unique configurations of products in quantities where buying power has little impact on the cost.

Education.  Obviously to accomplish the above, integrators must take their staff to the next level, but they must educate their customers as well on what the advantages of their firm are.

Selling.  Learn to sell, not to quote prices.  Tell people what the cost of your systems are.  Best Buy may have a lower price, which is the initial investment, but the cost is the total amount someone spends in service, support, time, etc. over the life of the product that is purchased.

Service and Support.  Finish on time.  Finish Punchlists.  Finish Drawings.  Finish Manuals.  Cross the finish line consistently, and sell that to clients.  Down time costs money, make customers aware.

Relationships.  This won’t win you the job on its own, but there is an advantage to an executive to have a single point of contact he can rely on to help his business get what they need, and not deal with a revolving door of former Gap sweater folders.  Build your staff with the right people, with a long term mindset, so you can offer the stability that they won’t.

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