This is the story of a dealer in small town North Dakota who is making a killing because of a recent oil boom in the state and because of an outsized passion for great audio.
The shop is located in Dickinson, with a population of only 17,000 people. Then the oil boom hit, and companies began paying farmers for mineral rights to a rock formation just under the ground. The town population swelled to 40,000, and the state accumulated a $1 billion surplus in its coffers.
“When you drive to lunch you see license plates for 10 states, and what used to be a one minute drive to work is now closer to 10 minutes,” said Mike Wilkinson who owns Blue Hawk Audio & Video. He is one of the few dealers in the country for Utopia (very high end Focal home audio brand) and other home audio brands like Martin Logan and Krell. About 20 to 30 percent of his business is in car audio and he carries Alpine, Focal, Kicker, AudioControl and some RE Audio. He does NOT do remote starts despite the cold climate.
Disposable income levels in the town went sky high about 3 years ago, when the fracking and drilling began. Farmers became millionaires. “Rather than a guy saying he wants $100 door speakers, or $600 speakers for his house, we’re able to show him a better level of quality and step him up to $500 or $2,000 for the car,” said Wilkinson. Blue Hawk’s gross sales doubled to a current $2 million a year.
Before the boom, “my clientele still included some big hitters and we made a living, but it surged,” he said. But Wilkinson was clearly positioned for the high end customer, even before the oil boom.
“I’ve always separated myself from the competition by carrying premium brands,” he said. After working in sales at a local Toyota dealer, he opened a home theater shop on credit cards, and then moved into car audio in 2009. When he started, his hope was to gross $100,000 a year and net $30,000 in take home pay. He was a Boston Acoustics dealer and everything else was brought through distribution. Martin Logan wouldn’t talk to him, and thought he was crazy, he said. Now Blue Hawk is a top tier dealer for the brand with its $32,000 home loudspeakers on display in the sound boards.
“We started booming before the oil boom. My store excelled a lot further than anyone could believe because of my passion. I started figuring out that with passion and emotion I could show people and have them purchase better product. I would say ‘I just sold a pair of these $15,000 speakers’ and let them try the $3,000 model.
“What I’ve learned is that if you don’t have it, they ain’t going to see it. It takes balls to bring in high end inventory because you have to pay for it. So most dealers bring in the race to zero stuff. We shy away from that. We want to be the one known to have the good [stuff],” said Wilkinson.
Today a guy comes in with a $60,000 truck and no house (he may have recently arrived and may be living out of his truck) and he’ll drop $5,000 to $8,000 on a car stereo system.
“Now that kid is working in the oil fields at age 19 making $100G and in a year, when he builds his house, we’ll wire it,” he said.
He has one bay for car audio that is separate from the shop. “We’ll do Harleys, boats, cars, trucks UTVs and RVs. We just did a school bus; we put in speakers and flip down TVs.”
Five people work at the 3,000 sq. foot store and everyone is a “jack of all trades.” Wilkinson has been installing systems since high school and is self-taught.
By the way, on the side he’s concert promoter, DJ, he performs comedy stage hypnosis and promotes MMA fights. He’d like to open a second store in Bismark if he could find the help.
One drawback of the oil boom is that people with everyday jobs are quitting to work the oil rigs, so labor costs for retailers have gone through the roof. A few of his employees are making $40,000 to $60,000 a year with health insurance and retirement benefits. “When I first opened, I was paying myself $1,500 a month with no benefits,” he said.
He adds, “My competitors’ stores are sound bar after sound bar. Why do I want to display a $299 Samsung sound bar with 20 percent mark up that sounds like [junk]? He’s done a disservice to each customer because he’s taken that customer out of the market and made him believe that a sound bar is [great sound]. When they come into my store we’ll start them at a $20,000 system and they’ll say, ‘Wow, I didn’t know that existed.’ We’ll have him name a track on an iPod and play it for him on a $40,000 system. Now the $8,000 system looks good.”