Re-Tales

Myriad distribution factors drive and affect the hi-fi marketplace. Ultimately, these can impact end customer purchasing choices. Recently I've written—including in the December 2024 issue—about evolving new distribution models and how the term's meaning has shifted somewhat: Some companies have been expanding (or in some cases reducing) the kinds of services traditionally provided to exporting international manufacturers.

That made me curious about how business is going for "traditional" distribution companies. That is, companies whose services typically include handling importation, warehousing, shipping, and working with retailer partners and dealers in other capacities. They support retail dealers with the inventory they need.

Lately I've spoken with a handful of sources from both (relatively) newer and long-established hi-fi distribution companies. Amid modern business landscape changes—and companies' adaptations—it became clear that some critical aspects remain the same: careful manufacturer selection, consistency, longevity of brands and relationships, and good, old-fashioned customer service.

In the current landscape, now more than ever distributors must select the brands and products they import carefully—with an eye toward long-term viability for both their dealers and end-user customers.

Sierra Sound's Michael Fajen, who imports AMG turntables and Benz Micro phono cartridges, said he approaches business "as a network of friendships." That involves trust, along with personal and honest communication. "This leads to happy customers who stick around."

There's plenty of passion and fun, but any business involves serious decision-making and some risk. What modern challenges are distributors facing?

A plethora of products have been entering a crowded hi-fi market, increasing competition. Sound Organisation CEO Stephen Daniels, who's been in the hi-fi business since 1978, pointed out that unlike, say, the automotive industry, there are essentially no legislative or other barriers to entry for hi-fi companies.

Because distributors aren't usually in the business of making or servicing products, they must be able to rely on the manufacturers they work with to provide good service to dealers and end customers. Some distributors raised concerns about new manufacturers' potential longevity and viability.

"Can you build a business with it? Is it a real, viable company?" Daniels asked rhetorically. For example, he mentioned that Rega—which his company distributes—can service turntables they made 45 years ago. "So, you wonder in 20 years, how many of those new companies will be around, and how many customers have bought products that can't possibly be serviced?" That said, he also believes there are no really bad products out there.

"It's all about being honest, making people trust us, which is the single most important thing. And coming back to do repeat business," said Scot Markwell, CEO of Elite A/V Distribution, importer of brands such as Kuzma and Furutech.

Building good relationships becomes essential. Antal Audio Group Sales Manager Frank Gazzo said he calls his dealers—rather than only emailing—to foster deeper connections.

"With all the chaos of social media efforts and endless emails, I try to speak to my dealers as much as possible on the phone," he said. "It can take more time, but the personal effort of a phone call builds trust and relationships."

Longevity and quality relationships and mutual trust are invaluable, Daniels said: "If you have a good rapport with a company, there's nothing you can't sort out."

Well, almost nothing. A couple of distributors mentioned they'd heard about instances in the industry where dealers or even end customers persuaded manufacturers to break their distribution agreement and sell their wares to them directly for a discount, bypassing the dealer and distributor. Obviously that breaches trust and causes broader damage and marketplace problems..

The manufacturers must believe in you and trust you and not sell behind your back, Markwell said. In some cases, distributing fewer brands can be preferable to taking on more. Daniels told me he made a conscious decision last year to reduce the number of brands they handle—from seven to four.

"I'm amazed at distributors who have 12 or 15 brands," he said. "I don't know how you'd even maintain the relationship with the manufacturer at that level and place orders and keep up with what the manufacturer is doing."

Markwell was more direct about not wanting to add new brands: "If it was any more, we'd go insane."

Reaching new customers is still another perennial challenge—especially as the buyer population shifts.

Harmonia Distribution President David Schultz and Vice President Jesse Luna shared their thoughts in combined email responses. "The average consumer buys differently, and the historical 'hi-fi' target audience is aging out or found their end-all system years ago," they said. "We must embrace not just the new demographic, but the experience the new buyers have come to expect. People like nice things."

Schultz and Luna believe that they and their dealers need to present hi-fi products not as an esoteric hobby, but as a solution that can enhance quality of life.

One aspect that every source extolled was customer service. An obvious point, but one worth repeating. Gazzo believes small gestures can have outsized impact—like marketing gold, he said. "Offering little customer support solutions, like sending a small part at no cost to a customer, is a great way to get word-of-mouth praise about you and your products."

Change in distribution in the channel is the number one issue affecting the dealers today," Rutherford Audio CEO Robb Niemann said.

Passion was another common thread through all the responses I received. Niemann emphasized maintaining passion even through hardships and market changes.

"Be passionate and do your best to keep smiling no matter what obstacles may come."

Good advice for hi-fi—and for life.