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BrandSource Looks To Bolster Margins, Drive Traffic

9/08/2013 08:00:00 PM Eastern

LAS VEGAS — BrandSource has laid out a multipoint program to help restore pricing and profits and to drive foot traffic for its 4,000 member dealers.

The initiatives were conveyed at the buying group’s Fall Convention & Expo, held here at Caesars Palace last month.

Citing price and margin deterioration as today’s biggest issue, BrandSource CEO Bob Lawrence, now in his 20th year at the helm, ticked off a litany of countermeasures in an address to attendees, and reminded members that the definition of insanity, especially in the current marketplace, is to expect different results from the same actions.

Some of the initiatives, like a service to help dealers foster positive online reviews, are new; others, like the group’s prescient SleepSource store-within-a- store bedding shops, predated the current rush to mattresses and Best Buy’s burgeoning in-store shop strategy.

To help restore margins, Lawrence said the group will no longer support manufacturers and programs that emphasize low prices over profits. Aside from targeted promotional programs, “we will no longer be the poster child for manufacturers that want us to promote low-margin programs to you,” he said. “We will bring you profitable programs to make you money.”

However, to make that strategy work, dealers need to act like a group and support those programs, which would put BrandSource on equal footing with big-box chains that can execute across hundreds of stores. “You don’t have to work in lockstep, but you have to work together,” he implored group members. “If you want to see margins go up, you have to take ownership.”

Lawrence also urged dealers to take advantage of the myriad tools offered by the group to help them compete in-store and online, including a new zero-percent financing program and $50 gift card incentive slated for October; BrandSource’s traffic-driving mobile app; and the new Expert Review online review service.

The latter, provided by Review Inc., encourages customers to share their positive in-store experiences online, and helps dealers find and ameliorate negative reviews. Lawrence said online reviews have become critical to businesses, as 86 percent of customers now use online ratings; 72 percent trust them as much as personal recommendations; 84 percent will likely buy from a five-star-rated business; and only 3 percent will try a seller rated two stars or less.

Similarly, Lawrence beseeched dealers to employ the BrandSource mobile app, as roughly half of majap and CE smartphone shoppers use their devices to find information in stores rather than engage employees. What’s more, smartphones are used in 97 percent of in-store majap shopping, the highest for any consumer product category, while 87 percent of CE shopping trips involve smartphone use. In addition, frequent smartphone shoppers tend to have a 40 percent larger majap basket than standard smartphone shoppers, while frequent users spend 34 percent more on CE, data show.

TV and appliance dealers should also take a cue from the striking turnaround at multiregional chain Conn’s, Lawrence said, which reversed its fortunes by expanding its assortment. For BrandSource dealers, turnkey programs like ShelfSource for cabinet remodeling and OutdoorSource for outdoor grills and other patio products provide easy entrée to high margin categories, he said.

Looking ahead, Lawrence predicted a coming resurgence for independent dealers based on a 10-year boom-and- bust cycle as tracked by GE over the past half-century, and announced the twilight of big-box retailing.

Citing a presentation dubbed “Sunrise and Sunset at Retail” by the Consumer Electronics Association (CEA) and TWICE market research partner The Stevenson Company, he listed store-within-a-store, brand stores, specialty stores and pop-up stores as growth opportunities, and big-box retail, price competition and commodity merchandising as fading strategies.

“We’re seeing the demise of big-box retailing,” Lawrence declared, pointing also to unprecedented “confusion” at national chains as Sears’ chairman/CEO Eddie Lampert sells off key assets, its Kenmore majap brand falls from first to third place, and Best Buy relinquishes control of its stores by “renting out real estate.”

“It’s never been a better time for independents,” he said.

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