Sensuous Sound develops an antidote to CE category killers; one-of-a-kind store caters to Baby Boomers - consumer electronics - Sensuous Sound Systems - Company Profile

Discount Store News, July 15, 1996

TAMPA, FLA. - Independent consumer electronics and music stores have failed in record numbers over the past decade, victims of the expansion of megastores like Best Buy and Circuit City. But one independent, Tampa's Sensuous Sound Systems, may have found a formula that makes it virtually Best Buy-proof.

The single-unit operator combines exclusive representation of the prestigious McIntosh line of audio equipment and some 30,000 CDs priced at $10.99, along with home installation of advanced audio and video systems and a booming car audio business, to establish a mix that outflanks the superstores on music prices on the low end and exclusive brand names on the upper end.

According to president and founder Lahnie Johnson, he has made a career out of losing money on software-first on records, later on Cds and cassettes. But the rock-bottom price (on all regular CDs, excluding imports, special editions and multidisc sets) substitutes for advertising, generating word of mouth and keeping Sensuous Sound top of mind when Baby Boomers look to upgrade their systems.

And unlike most competing music operations, Boomers are the key market for Johnson, so much so that the store prohibits teens from entering without a parent.

Sensuous Sound grosses about $5 million a year, Johnson said, and much of that comes in the highly profitable installation and repair businesses. Johnson is an aerospace engineer by training, and he has assembled a team of engineers, certified by George Lucas Studios, capable of installing audio/video systems costing as much as $200,000 and requiring a year or more to complete installation. And the company has assembled a team that specializes in boat installations, a booming business in Florida.

Johnson has made a business plan out of doing almost exactly the opposite of his competitors. When CE chains like Circuit City and Sound Advice rushed into computers a few years back, Sensuous Sound never considered it. Similarly, as competitors like Sound Advice pumped up advertising and started competing on price with the national chains, Johnson actually cut back his advertising to a bare minimum and pared his brand selection to get out of brands like Yamaha that had shifted its marketing to the mass market.

The centerpiece of Johnson's business is the McIntosh franchise. As the only licensed dealer in the market, Sensuous Sound draws shoppers from as much as 100 miles away, and the exclusivity guarantees healthy margins.

"McIntosh is the Harley Davidson of the audio industry" Johnson said. "And like Harley, there's a great market in older units for the collectors market."

Although the store carries about a dozen brands, including Onkyo and Technics, the Mclntosh selection overwhelms the customer. The company's four showrooms feature state-of-the-art McIntosh installations, highlighted by a $30,000 THX home theater system that is the store's top seller.

The importance of Mclntosh, and of independent dealers like Sensuous Sound, is that the dealer network makes up the last source of consumer education, which in turn drives the audio and video industry. "lf the independent dealer disappears, so does the education of the consumer, and then its just a price game" Johnson said. "You can get the public to step down, but you'll never get them to go back to the high-end once they've been converted to price."

As more sophisticated and expensive technologies emerge, he noted, it will take a financially stable independent dealer to show them in their best light. "If I had my way, I'd love to drop my store right between a Best Buy and a Circuit City," Johnson said.

Johnson may get his wish. Circuit City has occupied the Tampa market since the mid-l980s, but Best Buy is scheduled to debut its first three units in the market early this fall. While Johnson has no plans to relocate his store, the inevitable format war is bound to raise the visibility of consumer electronics on the whole, probably more to Sensuous Sounds, benefit than to that of the price warriors.