Originally published in Business Digest, March 1998

High Fidelity

by Craig C. Bailey

[Rick Scott] Rick Scott of Audio Video Authority in South Burlington says digital versatile disc (DVD) is "the true cross-platform format" with a bright future in the audio, video and computer realms. (Photo: Jeff Clarke)

While some business people lament the arrival of the big-box stores in Chittenden County, Rick Scott seems comfortably at ease with the notion. The arrival of Circuit City Stores Inc. in Williston was an event he had planned for from the day he founded Audio Video Authority in South Burlington in 1993. By choosing an area of the country that allowed him to stay ahead of national trends and away from regional competition, and by positioning his store to appeal to the higher end market, Scott feels he's secured a niche for his business.

His confidence might be founded in the fact that Scott has more than a passing knowledge of the inside workings of the Richmond, Va., chain: He spent the first several years of his career managing Circuit City stores in Virginia and North Carolina. His attitude toward the electronic giant's arrival in Vermont is at once direct and initially puzzling: "It's a good thing."

From the acoustic isolation of one of the listening rooms at Audio Video Authority's Shelburne Road store, Scott, 38, is soft-spoken yet enthusiastic about the field he entered in 1980 as a 20-year-old "with no prospects." After graduating from high school in Canton, N.Y., spending a year in college and another working for his uncle's auto dealership, Scott and his fiancée, Robin Walcott, moved to Virginia Beach, Va. Almost immediately, he joined the sales team at a Circuit City store, and the couple were married soon after.

Scott spent the next several years managing stores for the chain in North Carolina, before ending up in Raleigh, in his words, "isolated by layers of management." Disenchanted with losing touch with the product and customer side of the industry, in 1987 he and Robin moved to Boca Raton, Fla., where Scott worked for Sound Advice, a 20-store regional chain.

By the early '90s, the entrepreneur in him became restless. "It's one of those seeds that's in your mind from the beginning," he says of the urge to establish a business. "In some respects, this is the ultimate challenge: to do it on your own."

He began developing a business plan his final year at Sound Advice and searched for a location. "Burlington came out on top when we did the demographic research," he says, adding that the Queen City's three-hour proximity to his hometown helped his choice.

Scott recruited Ron Lennox, a co-worker at Sound Advice, to join the business, "because he's one of the most knowledgeable audio guys -- car and home -- I've ever worked with." Audio Video Authority opened in 1993 with Scott as president and majority stock-holder. Lennox is a stock-holder in the company as well as vice president/general manager. Salesperson Ed McNeil and nine other friends and family members have also invested in the business, which has experienced constant growth. Last year the company grossed $1.5 million. "Last year was our smallest growth year," Scott says, "but the industry as a whole is down."

"You can define my key demographic as upper-income professionals," Scott says. He adds that "it cuts a much wider swath than that," citing the car audio end of the business that has a considerably more diverse clientele. Audio Video Authority's facilities include two auto installation bays headed by mobile electronics specialist Rob Warrell.

Product performance, vendor support and value are Scott's key criteria in choosing which lines to carry. "We sometimes encounter a perception that we are the high-priced guys," he says. "It's true that we carry some pretty esoteric stuff. We also have some great lines that are not far at all above the commodity product price points. It's just like anything else: You get what you pay for."

Browsing the components in the 12,000-square-foot facility, more than half of which is used for warehousing and office space, the brands Audio Video Authority offers might not be immediately recognizable to the average consumer. Samplings include Rotel, Classé, Proton, Vidikron, Eclipse and JL Audio. Part of Scott's niche-building plan is to cater to the "performance-driven customer base" with stereo, video, home theater and car audio products not found at superstore types of outlets. "We won't sell anything we wouldn't own ourselves," he offers. "We try very hard to appeal to a customer who appreciates quality and understands there's a difference in price for it."

It's this distinction that Scott believes helps insulate Audio Video Authority against competition from the likes of Circuit City. "You've got to hand it to them. They're the cream of the crop when it comes to big-box electronics/appliance operations," he says. "But like all others, they've failed to show competitive store growth in over two years. Their corporate growth has been accomplished by adding more outlets."

Applying an optimistic twist, Scott considers the market improved, with the chain in town stimulating growth. "They spend a ton of money on advertising. And the more they get out there and tout DVD," he says, referring to the latest video craze (see sidebar), "the more that's going to supplement my advertising budget."

Scott shies away from calling himself an audiophile. He admits he "doesn't fall under the fanatical tweeky subcategory of music enthusiasts," and says his home stereo isn't quite the hot dog system one might expect of a man in his line of work. "I can't afford it, for one thing!" he says.

Scott recently built a house in Fletcher -- "That's a suburb of Fairfax," he jokes -- where he and Robin live with their two children -- Richard, 16, and Amanda, 15 -- and a 2-year-old foster daughter, Elizabeth. Building the house gave him a chance to integrate his stereo system into its construction. This newer trend in the home audio and video field, often referred to as "home automation," especially when it's taken to the extreme of incorporating lighting and security systems, constitutes an increasing portion of Audio Video Authority's business and of Scott's efforts. He says home automation product offerings, education and awareness are catalysts. "Residential construction has boomed in the last few years, too," he adds. "That's a big portion of it, too."

John O'Brien says such custom home installations are the future of home electronics. O'Brien, vice president of Gregory Supply Co. in Burlington, is an enthusiastic Audio Video Authority customer who hired the company to perform an installation while he was building his home. "I deal with the who's who of builders in Chittenden County all the time. I have recommended him to a lot of people, and I have yet to hear anybody complain," he says, adding that Scott's "reputation with me is impeccable."

"I think we're very fortunate to have found Rick, and are certainly very pleased with what he did for us," says Kirk Walters, executive vice president/chief financial officer at Chittenden Bank in Burlington. Walters and his wife hired Audio Video Authority to perform a custom audio/video and intercom installation on a house the couple built last summer. "Rick was a pleasure to deal with," Walters offers. "The whole crew was just top-notch."

Scott says, "The primary difference between us and any other electronic entertainment retailer are the people you'll encounter here. We're all passionate about music, movies and electronics. It's like Christmas when UPS shows up."

Mike Trahan, president of Paydata Payroll Services Inc. of Colchester and a repeat Audio Video Authority customer, describes his experiences shopping there as low-pressure. "They'll spend as much time with you as you need," he says. "You don't feel like you're being pressured to buy anything. A lot of times you go into those stores and you're slammed as soon as you're in there. I just don't feel that way at all when I go in there."

"We run on the lean side," Scott says, citing the search for highly qualified staff as one of his "toughest challenges." In addition to a handful of sales people and a car audio installer, the business employs John Batchelder, a full-time custom home installer. Robin Scott works part time as the company's bookkeeper.

"It's easier to take an audio guy with a great personality and train him to sell, than it is to take a power salesperson and make him passionate about audio," he says. "That prerequisite for success has made it hard to find qualified people, and in some respects slowed our growth. But being patient has been worth it."

Scott considers himself well-suited to his business. "It really fits my personality. Stuff changes so rapidly that if you get bored with the technology," he says, "there's always a place to turn to get excited about something new."

What's that format?

Rick Scott of Audio Video Authority says a number of ever-evolving audio and video formats propel the electronic entertainment industry by creating new customer interest and providing motivation for enthusiasts to upgrade their systems. Here are his thoughts on a variety of formats. Some are destined to be the wave of the future -- others are destined for the dustbin.


Long-play record (LP): A vinyl resurgence is under way in the form of collectors' dealing in used albums and new LPs. "Some people swear that vinyl is the true sound. It depends entirely on production quality: There are some albums that sound better on CD, and some that definitely sound better on vinyl."
Cassette: Scott says the number of cassette deck model offerings from manufacturers are trimmed each year. He believes the cassette format will become a relic, probably within five years.
Compact disc (CD): "The CD has a long life ahead of it. I don't see that going away for a long time. DVD has the opportunity to offset that."
Mini-disc: Scott says the industry's efforts to market mini-discs as the replacement for cassettes shows promise with mini-disc players approaching the price of cassette decks. "It really is destined to be a recording format. I don't think you're ever going to see Strawberries with a wide selection of mini-discs replacing cassettes." He adds mini-disc car decks will make a splash this year.
Digital audio tape (DAT): "DAT has pretty much become relegated to a pro format."


VHS: Scott says the VHS format won't "go away soon for a lot of reasons -- number one being saturation: Everybody's got a VCR." He believes digital VCRs just beginning to ship will eventually replace conventional units.
Laser disc: The format Pioneer invented is still hanging in there, but "will most likely go away. Laser disc has a 1 percent penetration nationwide after a decade. It's not a mainstream format."
Digital versatile disc (DVD): Primarily a video format, Scott says DVD is "the true cross-platform format," primed to work in computers like CD-ROMs and in audio systems like CDs. Recordability is just down the road. Its massive storage capacity allows several films to be stored on a single disc, making it possible for distributors to press one disc containing several language versions, alternate camera angles, or various ratings and the like of the same film for about $20 a disc. "It's pretty cool stuff."