PRICIER AUDIO, VIDEO CHAIN TESTS L.A. CUSTOMERS CAN SPEND $500 TO $50,000 FOR EQUIPMENT AT A MAGNOLIA SHOP.

Byline: Brent Hopkins Staff Writer

CANOGA PARK - Magnolia Audio Video has an interesting challenge on its hands.

With the premium electronics shop, opening today, a Seattle-based chain is trying to break fully into the Los Angeles market, one of retail's most competitive selling grounds.

From its spot on Victory Boulevard at Canoga Avenue, the shop sits surrounded by corporate parent Best Buy and rivals Circuit City and The Good Guys. Mega-store Fry's Electronics is a two-minute car ride around the corner. But while jumping into such a hotbed of sales rivalry, chain executives think the shop's high-end electronics will set it apart from its better-established neighbors.

The neighbors also sell stereos, but Magnolia's prices quickly put it in a far different league.

``The price to open at is 500 bucks,'' said Thomas Conrad, the chain's senior vice president and chief executive officer. ``But if you have an inclination and the ability, we can take you into six figures - no problem.''

While Conrad says the store has its share of those who generally shop at the more bargain-oriented Best Buy, Magnolia's shelves definitely appeal to the well-heeled. Stocking brands like Sonus faber and MartinLogan speakers, Krell and Primare electronics and InFocus projectors, Magnolia's appeal is to the luxury consumer who doesn't mind dropping $9,000 on a television or $10,000 on a set of speakers.

``Why would you pay for a Mercedes-Benz or a BMW over a Toyota?'' store manager Peter Nguyen asked rhetorically. ``You won't see that much difference between a $50 DVD player and a $300 one, but for the Mercedes-Benz people, it's all about lifestyle. And they'll definitely pay more.''

Though such high-end customers might not pick up new gear as frequently as the down-market shoppers at competing stores, they have the advantage of being relatively recession-proof. And when they open up their wallets, there's plenty of cash inside.

``This customer looks at it as a long-term investment, as opposed to an impulse,'' said Brent Butterworth, editor-in-chief of the Malibu-based Robb Report Home Entertainment & Design.

``They're not worried about the stock market, unless there's another Depression,'' he said about those likely to spend $50,000 for a new home theater.

Another issue the premium retailer faces is that the equipment doesn't break down or wear out as quickly as a cheap bookshelf stereo. But though customers who've dropped $50,000 on a new system might have enough products to last them a lifetime, salesmen can prey upon the rapidly-diminishing gee-whiz aspect of the equipment.

``Somebody who buys high-end stereos isn't someone who'll wait until they break,'' said Mike Wood, editor of Digital TV. ``Some of these guys will buy the components more often just to have the latest and greatest technology ... or to add things as the manufacturer comes out with something new. It's just like with a low-end consumer; only since it's more expensive, they don't have to sell these as often.''

With a nearly 50-year history, Magnolia had been well-established along the Northwest coast but was a fairly regional chain until Best Buy purchased it for $88 million in 2001. The corporate parent has been pushing Magnolia outward lately, opening six stores in fiscal 2003 to bring the current total to 22 stores. Locally, it opened in Santa Monica in late August, and a Torrance spot will open concurrently with the Canoga Park store today. Conrad also expects further expansion in the Los Angeles area.

Though Nguyen hopes to attract the mega-rich with $19,000 televisions - liquid crystal on silicon - he thinks he'll get customers with more modest budgets spilling over from his neighboring stores.

``The average customer is you and me,'' he said. ``It's just the regular Joe Blows. We've got financing. You don't have to pay cash for everything.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com

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Photo:

(color) Rick Wigen, a chain video buyer from Seattle, sets up a 42-inch Sony Grand Wega in the new Magnolia Audio Video shop at Canoga Park.

Tina Burch/Staff Photographer