CEDIA: Retailing, New Construction are Growth Areas for Members

More members of the Custom Electronic Design and Installation Association (CEDIA) are doing retail sales than ever before, although not necessarily out of traditional retail locations, according to new statistics released by the organization. In addition, an increasing number of referrals come from builders rather than from interior designers and architects, indicating that home buyers see home theater and distributed music systems as valuable features.

The trends were revealed in a recent survey of the association's membership, to which 178 of CEDIA's 810 members responded. 49% of CEDIA members are retailers who do custom installation—a figure that has grown steadily from 45% in 1997. (The previous high was 48%, in 1995.) The remainder of the organization's members are custom-installation contractors who do not engage in sales.

Retail sales are growing, but traditional retail sites are not. Many members conduct business from their homes or industrial or office parks rather than from stores and showrooms, where rents are much higher. This year's survey shows that 33% of members work in traditional retail locations, a decline from 42% in 1998. Home offices account for 19%, an increase from last year's 15%. An identical percentage work in commercial/industrial locations, as opposed to shopping areas. The fraction of members working from showrooms declined to 31%, from 35% in 1995.

Members engaged in combination sales and installation businesses reported that 55% of their revenue came from retail—a big jump from last year's 45%, and reflecting a steady increase from the average of 35% in 1995. Average annual custom-install revenue has climbed to $941,000, and total sales now average $1.63 million. These numbers are encouraging, but are below the high marks of 1997, something CEDIA president Billilynne Keller attributes to the increasing number of small businesses jumping into the custom install game—an indication of a hot market. With the growing popularity of digital TV, home theater, and new audio technologies, the market should only get hotter. 91% of the CEDIA members who responded to the survey expect next year's revenues to grow by about 30%.