Mace to launch dealer program, acquire central station

During a shareholder's meeting today held over the phone and online, Mace's CEO Dennis Raefield laid out a direction for the company that includes a strong refocusing of its security business. The company, famous for the Mace brand of pepper spray personal defense products, has had a number of side ventures over the years, from car washes to online retail of consumer products. Now, says Raefield -- who built his security experience at Honeywell, ADEMCO, Rosslare Security Products and at Reach Systems -- it's time to focus the company on security and turn the company profitable. Raefield joined the company in the summer of 2008 after the previous CEO was terminated for "willful misconduct."

"We are in car washes, consumer products and we are in security," said Raefield. "This confuses investors. We will be focusing on creating a single image. Mace is a security company."

As a part of growing the security division, the company is in discussions which will result in the eventual purchase of a UL-listed central station for alarm and video monitoring. The company is reportedly looking solely for a monitoring business, and not a monitoring station accompanied with a sales and installation business.

That means the company buys an RMR business, but more importantly, it allows Mace to provide more services to their dealers.

"It will be a new direction, but only [available as] wholesale to our dealers," Raefield said. "We want to offer them traditional alarm monitoring, but more importantly, new video and access services that few of the existing central stations are equipped to provide." Remote guard tours and outsourced video are also integral parts of what Mace hopes to offer with a UL-listed station.

Along with the company's intention to purchase an alarm monitoring station, Raefield said they plan to build a better dealer program – one that can increase dealer loyalty to the Mace brand and Mace product line and one, he said, which better leverages the well-known Mace brand.

With the launch of a stronger dealer program and the acquisition of a central station, the company is also looking to revamp its electronic security products line. The company currently provides a variety of analog video surveillance components, and intends to delve into IP/networked video surveillance, as well as burglar alarm systems and access control systems. While he told investors that the company is not a manufacturing company itself – Mace currently specifies products which are produced in overseas factories – he does expect to be able to deliver unique products in these component areas.

"We need to refresh our product line," said Raefield. Security dealers and systems integrators might see that change as soon as the ISC West 2009 tradeshow, where the company plans to exhibit. "[At ISC West] they will see some exciting new products, but not a complete change. That will take longer."

Along with that, said Raefield, the company is working at shifting production of some existing products to new factories where they can get better quality control and thereby lessen the number of product returns related to defects.

In addition to the increased focus on the Mace dealer channel, Raefield said the company expects to be able to launch do-it-yourself (DIY) security products in 2009, but he makes it clear that his goal isn't to undermine the reseller channel. Even with this push into the DIY market, Raefield said he sees no need for dealers to be worried that security is going entirely in the DIY direction.

"I do not think the installer channel will disappear in our lifetimes," said Raefield. "Most of our industry solutions are too complex for casual users. But I also believe there is a segment of the market that will never call an installer, and wants something easy to install."

"Remember 10 years ago, when you needed a new printer for your PC, you called IT and they spent hours setting it up. Now you go to Best Buy and take it home and plug it in. That is a trend throughout our lives. Portions of the security market will respond to DIY, and Mace intends to continue capturing that part of the market. We also will vigorously support our dealers and installers with new products, and offer the same DIY products to them, with dealer margins protected in the pricing. We do not want to compete with our trusted channel partners, only capture market that is not easily identifiable."

To grow its security business, Mace is adding three outside sales representatives and has made plans to exhibit at four industry tradeshows in 2009. There are also plans in the books, he said, to expand the distribution channel and reach deeper into the government market where they have seen interest. A new product development director also was recently hired – bringing over experience from Sensormatic.

And in an entirely different direction, the company is planning to use the web-commerce skills inside the company and launch CCTVoverstock.com – a website where consumers and dealers could find overstocked items and discontinued items from a full variety of CCTV product manufacturers.

But even with the renewed focus on security, Raefield said the company still has other divisions to manage – including the sale of remaining car washes, the management of an existing consumer products retail model (which also uses an RMR model not unlike a central station), and the continued growth of its personal defense products unit and the Mace business unit focused on non-security related vision technologies like video conferencing and machine vision.

And while Raefield said he is cautious and protecting the company's cash reserves because no one knows how long the current economic downturn will last, he's hoping to use 2009 as a time to rebuild and make strategic changes toward profitability.

"We have a very strong brand but we don't use that brand wisely in the marketplace yet," he explained.

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