Retailer CompUSA to partner

with installers
Friday, August 1, 2003

Provides inroads between the home controls and the security market

DALLAS - Through a focus on home control technology, big box retailer CompUSA is delving into the home controls market by showcasing professionally installed products direct to the consumer and the new home construction market. To fulfill its total home controls offering, the company is also reaching out to partner with security installation companies to provide the missing security piece.
Under the company’s Digital Living initiative, CompUSA is providing home networking products and services to builders and consumers in the top 50 markets in the country.

So far, it has rolled out two in-store interactive product showrooms where consumers can touch and see products from home control manufacturers. New Orleans-based HAI and CompUSA in July signed an agreement for HAI’s security and automation products to be part of that selection.

But while HAI’s products and those from other manufacturers will become part of CompUSA’s offering, the items won’t be sitting on the store’s shelves. Because the products are designed for professional installation, CompUSA will rely on its in house Technical Services Division of more than 2,600 technicians across the country for the installation of most of its Digital Living products and services, such as home network products, lighting and appliance controls, home theater and whole house audio.

And where security systems are a requested part of that package, said Marc Lamb, national sales manager for CompUSA Digital Living, the company will call on an existing security installation company to perform that service. The relationship would function as either CompUSA or the security company acting as the subcontractor, and with the security company retaining the sale of the equipment and the service of the account, Lamb said.

“Currently security is outside of our normal operations,” Lamb said. “We are a retailer, and that’s not an offering that we currently have.”

Lamb estimates that between 60-70 percent of consumers that purchase a home network are also interested in security, making it a worthwhile venture.

Although the move into home controls and home security is a clear opportunity to capture market share, blending security with retail has always been a risky proposition, said Tricia Parks, president of Parks Associates, a Dallas-based consulting firm. The key is being able to keep costs low, something a retailer is always attune to, she said.

“People selling security have never been able to shake the fact that consumers buy only at different life stages, or at specific life occurrences,” Parks said, such as building a new home, after a robbery or a new job involving more travel than a previous job.

In years past, retailers Circuit City and Radio Shack have also attempted retail partnerships with security companies that didn’t take off, she said.

In many cases, CompUSA has already worked alongside builders with established relationships with security installers, or “many (security) companies are approaching us,” Lamb said. “We have more of a relationship based approach rather than a management type approach.”

While revenues of the Digital Living program were between $5 million and $7 million last year, revenues are expected to be triple or quadruple within the next few years, Lamb said.

For HAI, the inclusion of the company’s products in Digital Living centers will be a boon to consumer education of home control products and to the home control industry.

“CompUSA wants to help builders show their customers what kind of technology can be installed in the home during the building process, which includes security, home routers and high-speed Internet,” said Jay McLellan, president of HAI. The Digital Living Centers “will give these technologies an enhanced awareness to consumers,” he said.