Shortly after CES, Sony of Canada Ltd. notified three major regional chains that it would no longer do business with them. Sony has terminated its relationship with Toronto-based 2001 Audio Video, Montreal-based Centre Hi-Fi, and Calgary-based Visions Electronics.

"It's strictly a business decision on Sony's part, and we respect their decision," Frank Annecchini, President of 2001 Audio Video, told Marketnews. "Sony wants to make a profit, and there's nothing wrong with that." Annecchini said Sony indicated to him that it prefers profitable sales over gaining marketshare. "We respect their decision and where they are going," he emphasized.

"This is not that big a deal for all intents and purposes," Annecchini added, echoing what Rocco D'Alimonte and Mike Sciscente, respectively President and VP of Centre Hi-Fi, had already told Marketnews. Visions, which allied itself with 2001 Audio Video and Centre Hi-Fi just before Christmas, did not return calls asking for a comment on this story.

Annecchini wasn't upset by the change. "We haven't dealt with Sony since our year-end of March 31, 2011. We've been waiting for their programs, from month to month. We've been 20 years with Sony, and things have been okay, but not great. They have never been our number-one or number-two supplier. In my opinion, this move is not necessarily bad for Sony, or for 2001."

The termination is part of an ongoing review by Sony of its dealer structure, stated Ravi Nookala, Senior Vice President Consumer Sales and Marketing for Sony of Canada Ltd. "We are constantly evaluating our distribution," Nookala told Marketnews. "Our brand is the most important thing for us, especially with regard to quality, trust, and reliability.

"It's a challenging time for the whole industry," he elaborated, "so we are looking at how accounts support our brand, and the way they position and advertise our products, and in turn improve their profitability. The CE market is not as big as it was, so it was time to rationalize certain accounts."

Nookala said the process began last year, and that Sony decided to wait until after CES to notify the three chains about its decision. He would not rule out further changes to Sony's dealer structure. "At this stage, it's just the three retailers," he said. "But we are always evaluating."

Annecchini believes that Sony of Canada prefers to ship container loads of product directly to the big boxes, rather than incur the cost of doing business with store having sales-assisted floors. "There is without a doubt," Annecchini mused, "a cost to serving a sales-assisted floor." However, in his view, manufacturers would be wise to have what he calls a balanced distribution system. "Panasonic has a huge independent base. We're a strong band of brothers who bring in a couple hundred million a year."

Nookala disputes the contention that Sony is focusing solely on big-box stores. "That is absolutely not accurate. Regional/independents are our backbone," he stated, citing Henry's, G&G Electronics, HD TV, Atlas and Lozeau as key accounts. "The independent channel is very important for us. They demonstrate Sony the way it should be demonstrated."

Article Tags:  Sony, 2001 Audio Video, Centre Hi-Fi, Visions, Canada, Nookala, Annecchini, D'Alimonte, Sciscente