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Old 06-12-2007   #1
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Default Tweeter Files For Chapter 11 Bankruptcy

Tweeter Home Entertainment Group Inc. (TWTR) filed for Chapter 11 bankruptcy today. The mid-level AV and home theater retailer has been feeling pressure from big-box retailers in the HDTV market such as Costco and Best Buy. Higher up the food chain, Best Buy’s standalone and built-in Magnolia stores also eroded Tweeter’s marketshare.

In published reports, Tweeter’s CEO said they would look to sell off their assets which are reportedly worth $259 million. Their debts are listed at $190 million dollars.

Tweeter’s failure to compete is a serious statement as to the consolidation movement in the home theater and audio-video business. AV manufacturers, like many of today’s biggest U.S. companies, have recently been selling to private equity firms or are being bought out by bigger companies with an appetite to grow in this hot market. While AV manufacturers are getting bigger and more consolidated, independent, regional audio and home theater stores have been closing at an alarming rate. The audiophile business has moved to online retailers as well as being refocused toward the sale of used equipment. Custom installers also have taken marketshare away from more traditional retailers like Tweeter, as they have better ability to work with the construction and design communities.

Tweeter’s CEO is right when he said, “people don’t want to be left with Best Buy and Wal-Mart as their choice to buy electronics.” The fact is the CEDIA-type install community and Internet retailers also strongly factor into the options consumers have when buying their electronics in today’s marketplace. Without question, there is room for a more traditional retail chain such as Tweeter, but major changes are needed to be more competitive. The day of selling gear by the box needs to be left to the stores like Wal-Mart and Costco, who can succeed working on ultra-slim profit margins. In the world of traditional audio-video and home theater retail, the overhead, education and stock is simply too expensive to make it under the big-box business model. Going forward, anyone who would buy a Tweeter chain would need to look at selling fewer boxes – even easy to sell ones like flat, cheap HDTVs – and more toward the integration of audio-video, PCs and other electronics to today’s homes. This must also be paired with the lucrative labor that goes along with making those systems actually work. With that level of refocus both profit margins and relevancy to the consumer increase.

People all over the country are looking at “green” alternatives to their fuel consumption at home. Some of these options, such as solar, new windows, efficient HVAC systems and recycled insulation, cost well north of $20,000. Imagine if consumers could go into a Tweeter to see how their entire home could be automated, integrated and generally tweaked out to represent the cutting edge of home theater and convergence? They would find money to spend in ways that are far more significant than the dropping prices (and margins) at the big-box clubs and retailers.
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Old 06-12-2007   #2
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Default Re: Tweeter Files For Chapter 11 Bankruptcy

I'm from a small town with no audio video stores (except walmart and kmart)
i have to travel 40+ miles to get to a bestbuy (not magnolia) or circuit city and 60 miles to get to a tweeter. but never have had a problem with traveling that distance to tweeter when i was in the market for higher end gear than available at BB or CC. i only shop BB or CC when i know what i want and have no need for salesmen. at those places i always feel like i'm training the staff. i always liked the smaller atmosphere, less crowds, more personalized attention, knowledgeable staff and selection of product at tweeter. i think the impending loss of tweeter is a huge blow to the consumer desiring highly trained and knowledgeable sales people as well a place to view products not available at the big box stores.

Last edited by Strutter; 06-12-2007 at 02:16 PM..
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Old 06-12-2007   #3
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Default Re: Tweeter Files For Chapter 11 Bankruptcy

Tweeter closing is sad, and a sign of the times. Here in N.Y. Tower Records, (where you can just about find anything) is just about to close. Due to the downloading, copying, burning of todays market place. Sure, they were a little pricier than the rest, but if you could not find a piece of music, Tower had it. And just like Andrew and Strutter mentioned, Tower did have staff that knew the music, was polite, and engaged in conversation with you.

I have a couple of Best Buys and Circuit Cities around me here. And most definitely, with a few exceptions of the rare audio manager, the sales staff knows next to nothing.
I feel for Tweeter and stores like it. The Listening Room here in Scarsdale saw that the high end retail business was slowing down, so, they closed up the shop, rented a house, where now most of thier business is consultations and custom installation.
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Old 06-13-2007   #4
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Default Re: Tweeter Files For Chapter 11 Bankruptcy

I am not surprised by this. In fact, I have expected it for some time. The unfortunate truth is that we live in an increasingly hour glass type society where the middle of everything is getting sucked out. The top and bottom of our economy is doing just fine. The middle class is disappearing. I couldn't agree more about the state of the sales floor in the likes of Best Buy, et al.
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Old 06-13-2007   #5
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Kevin is right about the middle class these days.

Tax cuts for the rich are supposed to help the poor but they dont seem to be working.

In Los Angeles where I live you see the biggest disparity between the haves and the have not's. The LA Times reports that LA County has the highest number of millionaires with amazingly 267,000. We also have the most poor. Drive the streets of Brentwood, Bel Air and Pacific Palasades and you'd think money grew on trees. Drive through South (central) LA and its the worst ghetto you have ever seen.
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Old 06-19-2007   #6
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Default Re: Tweeter Files For Chapter 11 Bankruptcy

I'll miss Tweeter - I bought both my HD tvs from them - they price matched the lowest price I could find and gave me a better deal on service contracts than Best Buy plus they had quick delivery. I guess the service contract money is thrown away now though. The only stores we have left around here are a couple of single store independents plus BB and CC and who knows how long CC is going to be around.

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