By David H. Kirkwood
COPENHAGEN–Two of the hearing aid industry’s Big Six companies–William Demant, parent company of Oticon, and GN ReSound—are taking steps to strengthen their retail distribution channels.
Demant announced yesterday (February 17) that it is negotiating to buy a majority interest in Audika Groupe, the largest network of hearing aid centers in France.
On February 6, GN ReSound issued a statement saying that it and Costco, the largest retailer of hearing aids in the United States, “have agreed to extend the current supply agreement and partnership.”
Like most of the six major hearing aid manufacturers in the world, Demant and ReSound, which are both based in Denmark, have long supplemented their sale of products to independent practitioners by acquiring or contracting with large hearing aid retailers, such as Costco.
For example, in 2000, ReSound purchased the Beltone, the oldest and best-known U.S. network of hearing aid offices. Among the companies that Demant has purchased are American Hearing Aid Associates (AHAA), a major hearing aid network in the U.S., and Otix Global, which owns dispensing centers in Australia and Germany.
AUDIKA HAS HUNDREDS OF OUTLETS
If, as expected, Demant and Audika complete their agreement, the world’s second largest hearing aid maker will pay 17.78 Euros (about $21) per share for a 53.95% share in Audika.
Based in Paris, Audika has more than 460 hearing aid centers in France and six in Belgium. Founded in 1976, it reported revenues of EUR 98.7 million Euros in 2014. Demant-owned companies have been a major supplier to Audika.
ReSOUND LEAVES UNANSWERED QUESTIONS
Ever since last March when Sonova, parent company of Phonak, began supplying Costco with a hearing aid model, Brio, built on the latest Phonak platform, there has been speculation as to how ReSound, which was already a major Costco supplier, would respond to its Swiss competitor’s bold move, which provoked strong objections from many independent audiologists and hearing aid specialists.
So, hearing industry analysts eagerly pored over ReSound’s recent announcement of the extension of its agreement with Costco. However, the vaguely worded statement told them very little.
ReSound said that “the new agreement builds on and further strengthens the partnership between the two companies, and signals that GN ReSound will continue to be an important partner for Costco’s hearing aid business.”
Also, according to the press release, Anders Hedegaard, CEO of ReSound, spoke of “the strong ties between Costco and GN ReSound… built on a mutual passion of providing high-quality hearing aids to more people with hearing loss,” and asserted, “This new agreement is an important verification and further strengthening of our partnership.”
The press release did not say explicitly if the extension of the agreement means that ReSound would continue to supply Costco’s Kirkland brand of hearing aid. However, the company’s response to my inquiry suggests that it does.
Michael Bjergby, VP for communications, replied, “GN ReSound has been working with Costco for many years, providing both branded and private-label products. The announcement confirms the continuation of that long-standing relationship.”
WHAT ABOUT LiNX?
Bjergby would not confirm or deny rumors that ReSound would make its heralded LiNX technology available to Costco customers. That would seem a logical way for ReSound to one-up Sonova, which has not yet developed a hearing aid that does what LiNX does—allow users to stream sound directly from a smart phone to their hearing aid.
That might be especially attractive to Costco since Starkey Hearing Technologies, the only other company that manufactures a product, Halo, that does this, has taken a strong stand against selling products through “big box” stores like Costco.
However, at least for now, neither ReSound nor Costco is saying if LiNX is part of their deal.
I would say it’s a certainty that the Linx will be supplied to Costco. This is a major part of GN Resound’s volume, and they only want to increase it. Naturally, those of us in private dispensing are paying the costs of the R&D and marketing of those products, so GN (and Sonova) can supply them at prices so low that Costco can sell them for little more than our wholesale costs.
The technology is important but professionalism and focus is the deciding factor.
Would you like to drive to a busy parking lot, walk inside past flat screen TV’s and children’s swing sets to be squeezed into an 8×8 booth for a ‘quick’ follow up/adjustment?
Many are attracted to the low cost…but soon realize why other options exist.
It should be noted that big box retailers have the highest return rates in the industry!
Thank You Costco for creating so many new hearing instrument users!