Brand Source Goes On Offense Against Box Stores

By Alan Wolf -- TWICE, 3/30/2009

Dallas — Brand Source is ready to go toe-to-toe with the big-box stores on price.

The $12 billion buying group is unleashing an aggressive promotional program designed to take share from chains and drive traffic into members' showrooms. Once inside, those footprints are readily converted into sales, said CEO Bob Lawrence, thanks to dealers' assisted selling floors where close rates average 70 percent.

“We're directly attacking box stores,” Lawrence told attendees at last week's Brand Source Summit at the Hilton Anatole, here. “We didn't want to start a war before, but now we're ready.”

The group believes there is an opportunity to convert box-store customers to the independent channel, and was encouraged by the success of a Circuit City credit card program, in which the group offered consumers a $25 gift certificate and 12-month, interest-free financing in exchange for the private-label plastic. The promotion brought in traffic — and immediately prompted a cease-and-desist order from JPMorgan Chase, Lawrence said, which confirmed its effectiveness.

Besides the $10.7 billion in CE revenue now up for grabs in the wake of Circuit City's demise, Brand Source calculated that the chain's former customers represent $2.1 billion in potential sales of major appliances.

The group also sees an opportunity in Best Buy. There, sprawling software departments could prove to be the company's Achilles heel as consumers increasingly turn to digital downloads and video-on-demand for their content, Lawrence said.

To help its members do battle, Brand Source is providing its own version of the TARP Program. Unlike the Treasury Department's, this one stands for Total Annual Retail Promotions and includes more aggressive pricing, lower rates on credit promotions, more sales specials on a regular basis, more impactful rebate offers and a greater emphasis on gift cards.

The group will also employ email marketing, mobile commerce and traditional newspaper circulars to help get the word out, and will leverage its Brand Source Service division to drive customers to member stores. That unit, which is holding its own meetings here in conjunction with the Service & Retail Convention (SRC), has seen an increase in business as recession-wary consumers choose to repair, rather than replace, their old or broken products.

Lawrence said the group's biggest asset remains its brand name, which makes it the only national alternative to the major chains for vendors and consumers.

As the buying group enters its 40th year, it “stand[s] on the cusp of truly great things, of becoming the next great national retailer,” Lawrence said.