Evolution has grown through decades of massive change to become Canada’s luxury go-to smart home distributor. From the company’s automated 35,000 square foot head office and warehouse facility in Vaughan, ON, about 30 minutes north of Toronto, Evolution has continued to grow to become a powerhouse premium luxury distributor serving integrators across Canada with audio, video, smart home, and other related products.
You may be aware of Evolution’s anchor brands, like AudioControl, BluStream, Origin Acoustics, Savant, and Stealth Acoustics. But did you know that Evolution also distributes products like B&O Architectural, Dynaudio custom, ecobee, and Nest? Most recently, Artison was added to the select list of brands.
Evolution made a stride forward in efficiency to become an important part of the GemSen Group of companies in 2009, and that same year, acquired exclusive rights to distribute Savant in Canada. Distribution of Origin Acoustics was added in 2015, and BluStream in 2016. Progressively, Evolution’s sales, in-house tech support, management, and marketing resources, along with shared staff in accounting and credit, have grown as well.
Evolution Home Entertainment’s head office is located in Vaughan, ON, about 30 minutes outside of downtown Toronto.
As the integration marketplace has changed, so has the company’s strategy for boosting dealers’ success in the face of the latest technologies, like voice control, ongoing business challenges like price erosion, and changing customer desires.
WiFi HiFi‘s Christine Persaud sat down with Evolution’s National Sales Manager, Brad Middleton, to talk about the company’s growth, direction, and plans for the future.
Thanks for sitting down with us, Brad. Can you tell me, right off the bat, what makes Evolution unique?
First, Evolution has been through four decades of evolutions (pardon the pun) and stayed focused. We don’t have 30 brands. We have fewer than most distributors doing our volumes. So we have deeper knowledge on each brand and can add more value. We have chosen to work with brands with the right formula; high-line brands that are respected as leaders in each of their categories. We have added only the brands which we believe are desirable to the consumer, and which help earn our dealers money; but always with an eye on performance.
What’s a key challenge you believe integrators face in today’s changing marketplace?
System sales that used to be up here [Ed. note: Brad gestures above his head with his hand] have naturally and organically come down because TVs are cheaper, and the control platform is cheaper. Unless dealers can find a way to sell customers better products, they’re starting to become uncompetitive because their expenses haven’t changed.
Evolution frequently holds training seminars for dealers on a wide range of topics; the next will be on selling high-performance audio.
How do you propose dealers tackle such pressing issues?
More control is being sold versus high-performance audio and video. This is taking the business model into a service place that dealers never built the business for. An integrator’s business model makes 50 points on a customer who spent $200,000, but then sucks the life out of you for the next five years because some of the products are high-maintenance.
The number-one thing I hear from dealers is that they don’t have any more customers coming through the door. As continued downward pressure happens on products they sell, whether it’s speakers or Amazon Dots, the average system sales price is declining. By no fault of the integrator, they are not able to grow their business. Our goal is to help them learn performance audio and video selling so they can sell more per job.
But automation is what ties it all together, and it’s an important part of the business for dealers.
Absolutely. We want to advance the space of control for integrators. But we’re spending so much of the consumer’s money on it. A $50,000 project gets $20,000 of control, $10,000 of networking gear, $5,000 worth of wire, which leaves $15,000 for your audio, video, and everything else. A $1,000 home theatre receiver sells to a customer in an $8 million home. That person didn’t buy the $29,000 Hyundai Elantra. They’re driving a $150,000 car. If you look at what type of customer the integrator market serves, these people want premium performance. And often times, they aren’t getting it. That is so backwards. Distributors haven’t done a good job of helping dealers sell appropriately.
In the U.S., they focus on performance: the best speakers, audio, TVs, and video switching. They don’t really care if they sell you control. In Europe, selling high-end audio is so important. We flipped it so far around. Music is what matters in the end. Whether the front light turns on when you get home is irrelevant.
You mentioned Amazon Echo Dots earlier. Alexa voice control is the elephant in the room for integrators. How do you feel about that?
It reminds me of when the iPod came out. Our industry didn’t want anything to do with it. We’d rather sell $5,000 music servers. But eventually, we had to embrace it.
The new Origin Acoustics Valet is a multi-channel amplifier that works with Amazon Alexa. They built a balun that allows us to put an Amazon Dot in the ceiling, and become an invisible service in the room. You interact with it just as you would any Amazon product, including room-to-room intercom, but it disappears. Using our patented bracket technology, the installer cuts a hole, attaches the Dot, puts the grille on top, and Alexa disappears.
We’re allowing the dealer to participate in a category that they truly don’t want to participate in, which I think is the unique part. And it’s a category consumers are keenly aware of, and a branding everyone knows.
It’s no surprise that integrators might be reluctant to participate in the voice control market. How do you balance offering Alexa voice control-enabled products, and gear like Nest and ecobee, with offering Savant?
Savant is a premium luxury brand. We grew the brand 400% from 2010 to 2011 alone, and Savant is an integral part of what we do. But we also have dealers coming to us because their business model isn’t Savant. They want to provide these products that customers know, that are reliable, and that work and can be integrated into the things that they do.
Savant returning to the premium luxury space was the best thing they could have done. Luxury buyers will always require a product like Savant. When you start getting into large homes and commercial spaces with lighting, HVAC control with heated floors and such, this has too much voice command requirements to do all of the things a customer could readily do with a control system. It’s simpler to have a touch panel interface and/or keypads.
But Alexa allows you to be in control of your customer. If you don’t want to sell someone a control platform that you have to live with internally, it allows you to do that. By showing a customer Valet with Alexa integration, you’re not jumping him off control, but giving him a multi-room audio system and he can decide what to do beyond that.
It’s a new opportunity, and it’s incredible to be able to sell a solution that can incorporate with Nest, ecobee, and other such brands. I don’t think it will replace Savant. But I do believe some of the lower-priced offerings are going to feel intense pressure from this market. I’m not going to have 400 Savant dealers in Canada. But we’re gaining 2-5 per month now because dealers are realizing that they have to return to selling a premium luxury product.
Evolutions holds a recent seminar on Dolby Atmos technology
From a business perspective, what advantages are there in working with Evolution?
We have a Website, SAP, and full online ordering capabilities. Dealers can go online and buy products at any time. They don’t have to call up the order desk. We have next-day delivery in many provinces, and same-day and will-call in Ontario. We inventory a lot of product here, which makes it better for dealers from a cash flow perspective. They don’t have to order product well in advance and have it in their showrooms. We take all major credit cards, and have credit terms with Cantrex/Mega. And we have great shipping terms, including incredible freight rates and pre-paid shipping.
We have dedicated regional sales managers in Western Canada, along with other provincial reps across Canada, and dedicated reps for the MantelMount business. Dale Mackintosh is our newest hire, as a rep in Ontario. He’s very technical and can help dealers on a system design level and specify products. Plus, we have in-house tech support. You don’t have to call an automated number in the U.S. or overseas, and hope they understand your business problem.
Dale Mackintosh is Evolution’s newest hire, as a rep in Ontario.
Additionally, we work with builders, designers, and consultants to get consumers interested in the products; and participate in various home shows with dealers, like The Toronto Home Show and the Interior Design Show, as well as major trade shows, like ISE, CEDIA, and CES, to gain a full understanding of future innovations.
Our wide range of speakers, like Dynaudio speakers, Stealth Acoustics hidden in-walls, in-ceiling and in-wall speakers from Origin Acoustics, or design-conscious speakers from B&O Architectural, suit a variety of job types. And we offer a full-service plan for smart home gear.
Basically, a dealer can make a decision to do business with Evolution and have every category of product the customer wants to buy from them covered.
What can dealers, and prospective dealers, look forward to with Evolution in 2018 and beyond?
This year marks the 10-year anniversary of our annual CEDIA trip. At our first CEDIA event, five dealers participated. We anticipate that 60 dealers will participate this year. It’s a simple program based on sales from January to June, whereby top dealers get a free trip, including flight and hotel, to CEDIA. Last year, one of our largest dealers got six people on the trip through his sales. Dealers look forward to it every year. They have the luxury of spending their money on the courses and training to educate themselves. They buy products organically, so it’s not about Evolution once the trip happens.
We do technical training across Canada every quarter that are industry rather than product-specific. Our most recent one with BluStream was on video distribution, and was conducted by an HDBaseT certified trainer. The next one will be on selling high-performance audio. While we would love if you bought our brands, the training is meant to help integrators understand the fundamentals. We don’t just want to talk about our products and our business, we want to talk about business on the whole.
Evolution holds an appreciation dinner for dealers every year at CEDIA Expo.
It sounds like Evolution is on a great track. Thanks for sitting down with us, Brad. Any parting thoughts?
We are hyper-aware of the future of control and automation. Because we are a distributor, we will always go to where the future is going as a company. Our objective is to keep dealers relevant in this ever-changing space, so they’re profitable and successful. We’re not just focused on what our suppliers are doing, but also on what the future represents.
Sustainable and repeatable results are the only way you will succeed. We need to learn how to sell passion again for audio, and the things that really matter to people, evoke emotion, and become part of their lives. To provide an analogy, drywall is essential to a home, but Benjamin Moore is what makes it look good. And that is what we should be doing in our business. Painting an image of better sound and experience. And we’re a bit behind on that.
The integrator is premium luxury by nature. If you’re not going premium luxury, what do you represent to that customer?