Len Wallis on the Sound Market

It’d be easy to overlook amidst the flash and spectacle of the rest of the tech world but sound is an extraordinary phase of transition in 2016.

There’s been a shift by both music companies - and the consumers they cater to - towards high resolution audio.

It’s a transition that’s playing out both among the older traditional home audio customers and the younger millennial generation that’s growing to become a driving factor in the industry.

We spoke to Len Wallis, founder of the home audio retailer, about the shifts facing the industry.

He says that reaching out to that growing millennial audience is imperative for retailers and has “got to be done through social media type areas.”

“The product we’ve got is incredibly relevant to that

youth market, we’ve just got to get to them.”

“They’re not in the Sydney Morning Herald,” he says.

Len says JB Hi-Fi have done an incredible job at promoting themselves as the de facto retailer for millennial audiences looking to build a sound system.

“We’re not winning that war,” he says

In response, Len says his company has “moved away from areas that have been extremely well handled by JB Hi-Fi and moved things up another level” in terms of the quality of product they stock.

“That’s worked really well for us,” he says.

Len expresses his reservations about the effectiveness of online advertising and says the company is focused on information-based efforts online.

“The most successful thing we’ve done is our newsletter. We’ve looked at killing it twice and both times we’ve decided not to.”

He says the company is looking to rework its website in the near future.

The company recently made a return to print advertising through the Sydney Morning Herald but found that channel tends to reach the older audience - one that has lived through all the same big shifts in the industry that Len himself has.

“When I started it was all turntable based,” Len says.

He cites the introduction of CDs, the “marriage” of the sound market with home theatre systems and the arrival of networking and the internet as the major factors that have shaped the industry going forward.

As the sound market evolves, the technology that Len believes will generate the most growth is online streaming.

“It’s all going to revolve around that,” he says.

“Eventually, people are going to be forced to go into streaming and download modes,” he says.

Len has been in business for 38 years and says that the combination of millennials’ willingness to research and their lack of brand loyalty makes them unique to deal with.

“It’s a big challenge for our guys because we’re across so many different products and brands and parts of the market.”

“I don’t believe the millennial market will ever shop the way people of my generation shop,” he says.

While home installations remain a big part of the high-end home audio reseller’s business - it’s popularity among millennials is overshadowed by its popularity of the generation immediately preceding them.

It’s “the generation just having children and starting their own homes,” Len says.

For both these newcomers and long-time Len Wallis customers, wireless audio is in huge demand.

Len says he expects it to do very well over the Christmas period.

“I think Christmas is going to be very much a Bluetooth streaming Christmas - and vinyl, strangely enough.”

When asked if the resurgence of vinyl fits into the increased demand for hi-res audio, Len admits “it is part of that.”

“The whole vinyl thing is very strange. It shouldn’t be - I love vinyl and I love the way it sounds but it’s an entirely new generation that’s discovered vinyl.”

“I thought it would have gone by now,” he admits before jokingly saying “the interesting one for me is whether reel-to-reel takes off again.”

In comparison, Len expects CD to“be around for a long time. People have big collections they want to retain” but notes that it’s falling out of favour with the industry.

According to Len, there is a very large consumer interest in both vinyl and streaming services.

“However at some stage vinyl will plateau, but higher resolution on-line streaming from sites such as Tidal is still in its infancy.”

Regarding the high-res audio streaming service, Len advises “The concept is a sustainable concept until such a time as Apple or someone steps into the [hi-res] game”

“The livelihood of existing streaming services [will] come under extreme pressure once powerhouses such as Apple enter the arena - and I have no doubt that they will.”

He says the quality enabled by vinyl helps open the eyes of millennials to the experience of hi-res audio and to the world of Hi-Fi in general..

“When you buy an album in most cases great attention was paid to track sequencing and the overall theme of the record in its entirety. iTunes changed this with consumers randomly picking tracks, losing the intended structure.”

Unlike JB, Len Wallis is well equipped to help introduce younger customers to the benefits of high-resolution home audio.

He tells the story of “a young guy who came in looking for a sound system for his MP3s” who was introduced to hi-res audio by a staff member and found sobbing over the difference in quality from traditional sound.

He says “In many instances now we will design a client’s network before we design their system. If we design a good audio system and sit it on a lousy network the system is going to fall over, and the blame will always go to the system.”

When asked about how the trends surrounding the size of living spaces have impacted home audio industry, Len says “Not yet.”

“The trend is only just starting [but] it will have an impact. One of the things we are finding now is that “there’s a tendency for people to say ‘I will have my good quality system in one room and then I will have my streaming around the house’”

He attributes this to what he calls ‘The Sonos Generation.’

He says the retailer’s ability to physically demonstrate the difference between 24-bit audio and CD-quality audio gave them an advantage.

He says that this ability to engage and educate customers is something “JB and those guys can’t do. I think that they will realise there’s potential here as the market grows”

According to Len, “People have gone into Sonos and similar streaming products, put it around the house and found there’s nowhere in house where it sounds really good.

He says that realisation is a big driver for home audio businesses like his, and that the push for wireless born out of that experience with Sonos has very much shaped the kinds of product that is selling well at the moment.

It’s all very “network-related”, he says.

“Networking is a big part of it. Control is a big part of it.”

He notes invisibility and the rising popularity and challenges for stealth setups where speakers can’t be seen.

“You have to be able to get people in to try it,” he says.

He says the home installation part of the business had their budget grow 50% this year and are already exceeding it.

This growth has brought with it some massive changes to the business.

He also notes the influence of gender dynamics on the way that shoppers approach home audio, saying that men tend to focus more on how it sounds while women care more about how it looks.

“At the same time I believe women have better ears than men,” he adds.

In addition, it appears the divide between Apple and Android operating systems doesn’t play as big of a role in the space as one might expect.

He says iOS dominates the space, saying that when it comes to custom installations “at least 98% is Apple.”

Len says he has ‘no doubt’ the company have a gameplan for going high-res and says that, when they finally do, “the market will follow.”