Re-Tales

Traditionally in hi-fi, "distribution" refers to importing and warehousing audio equipment then delivering it as needed to a network of domestic dealers. In recent years, that model has evolved. Distributors have expanded the range of services they offer, and an increasing number of companies are skipping the distributor step altogether: dCS and T+A, among other companies, have established wholly owned subsidiaries in the US to handle importation, local warehousing, and other domestic duties. They and others have hired full-service sales and marketing agents, sometimes called "brand ambassadors." The goal, of course, is to make the practice of getting a product into the country and on the radar of dealers and customers as efficient and effective as possible.

Hiram Toro holds a master's degree in industrial management with concentrations in marketing and distribution. He has worked for Shell Oil, IBM, and Bank of America. More than a decade ago, he was the US importer and distributor for Koetsu, the Japanese phono cartridge company. He closed that company and another business during the economic downturn that arose from the 2008 financial crisis. Recently, he came out of retirement, motivated, he told me in an interview, by "a desire to do more good" within the industry by raising the bar for distribution practices.

His vehicle is a new startup company, Supreme Acoustic Systems, which in some ways looks like an ordinary distributor. Supreme handles importation and distribution for several overseas companies: turntable manufacturers Bergmann (Germany) and Bennyaudio (Poland); loudspeaker manufacturers Odeon (Germany) and Albedo (Italy); and rack/vibration mitigation manufacturers Music Tools (Italy) and Hifistay (South Korea). Toro said he has almost inked a distribution agreement with a major high-end electronics manufacturer, but it wasn't final at press time.

Supreme Acoustic Systems does what other distributors do, including handling marketing services and dealer support, yet Toro is hesitant to call his company a distributorship. He doesn't want members of our industry to draw narrow or wrong conclusions about what Supreme can do. "I prefer to use 'Brand Developers,'" he said. The hi-fi industry's notion of what a distributor does is narrower than in other industries, Toro told me.

According to a "manifesto" document Toro shared with Stereophile, Supreme aims to "realize a different vision for high-end audio distribution: an offering which improves the value a distributor brings to both manufacturers and dealers." A key to his vision is "to provide a service to dealers that [is] open, ethical and transparent."

Indeed, in any conversation with Toro about Supreme, this topic—ethics and transparency—is front and center. In his view, the biggest problem with hi-fi distributorship is when distributors also become retail dealers, selling directly to customers and competing unfairly with their own dealers. That's unethical and bad for business, and it's something he promises he'll never do.

What will Supreme do for its clients? Some specifics are still being considered, but one thing they intend to do is to take marketing beyond hi-fi magazines, "teaming with luxury and lifestyle magazines that tap into the right demographics for our top-shelf products."

A key component of Supreme's approach—and another thing that's unusual, though not unheard of (footnote 1), for a distribution company—is a facility Toro is building near the Strip in Las Vegas. Toro told me that this appointment-only "experience center" will be "like a store for dealers" where they can bring customers interested in high-end equipment not on display in their stores. Flagship products will be the focus—$500,000 loudspeakers, for example, the kinds of products dealers can't afford to keep in stock or maybe don't have the room to show off properly. Customers will be accompanied by a dealer and qualified in advance. The facility will also be used for events for media and the public—though no sales will take place directly from such events; all sales must go through a Supreme Acoustics dealer.

Perhaps the most unusual thing Supreme is doing—the farthest from the traditional distributor role—is working with a domestic manufacturer, Colorado-based YG Acoustics. It's an unusual arrangement, but it's not unheard of: YG CEO Matthew Webster explained in an email that his inspiration was UK-based electronics manufacturer dCS, which works with Absolute Sounds, a UK-based distributor (footnote 2). "Their experience has been very positive, allowing dCS to concentrate on products while the distributor manages the dealer network and supports customers," Webster said. "Each company could focus on their core business with exactly the synergies you see in international distribution."

The distribution process with a domestic company works very much as it does with international distributors, except for the importation part. "Supreme will manage our dealer network and their orders, they will run US shows, and they will help us market our products in the US. YG sells through conventional distributor-dealer tiering, so the first line of support is always with the dealer, and that applies for everything from technical support, maintenance, upgrades, and the very occasional repair. Distributors are the second line, and we step in as a third line," Webster continued. "This all sounds complicated, but with phones, messages, and emails, it all happens very quickly."

"I'm doing this to be an extension of the dealers," Toro added.

In his manifesto, Toro acknowledged that good distributors already exist, though the industry "suffers occasionally from bad practices." He simply wants to do better, with more services and—importantly—ethics and transparency. "Our goals are transparent pricing, faultless honesty in our dealings, superb after-sales care, and absolute attention to detail throughout."

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Footnote 1: At least one other US distributor, Monarch Systems, has a facility used for similar functions; Monarch's is in Santa Fe, New Mexico, Stereophile's home 1978–2000.

Footnote 2: Colorado-based YG's R&D lab is in Cambridge, UK.