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BrandSource Outpacing Industry Amid Weak Demand

9/01/2010 08:49:03 AM Eastern

Las Vegas - BrandSource,
the $14 billion home-goods buying group, is outperforming the CE and majap industries
but is hardly in a celebratory mood.

 BrandSource's executive team of, from left, Mike Allen (furniture), Jim Ristow (CE), CEO Bob Lawrence, and John White (appliances)

CEO Bob Lawrence
said the group's CE business is up double-digits year to date in unit volume,
and its appliance sales are exceeding the industry in every product category.

Nevertheless, the
last 60 days were the most challenging he had ever seen in his career, Lawrence
told attendees at the group's fall convention and buy fair here yesterday, and
all indications point to continued hardship for the short-term.

Compounding soft
demand is rampant discounting, particularly in white goods, as big-box chains
seek to stimulate sales and gain market share. "We've never had a period of
industry weakness coupled with such competitive retail pricing," appliance
executive VP John White told TWICE.

What's more, a
glut of consumer electronics also portends an exceptionally promotional holiday
season for CE, putting even greater pressure on margins, observed Jim Ristow, executive
VP of Home Entertainment Source (HES), the group's specialty electronics
division.

The good news, he
said, is that overbuilt inventories have created unprecedented opportunities for
those that can accommodate large-quantity buys, as can BrandSource through its
Expert Warehouse distribution program.

"There are
opportunistic buys out there that I've never seen in my career," Ristow told
TWICE, citing at least six or seven "Stampede" specials at the convention that
were more than 30 percent off.

White said he is
similarly arming majap dealers for a hard-knuckled Black Friday that will likely
begin after Halloween. BrandSource has matched a steady barrage of 20 percent
to 30 percent promotions as the home-improvement chains battle it out with
Sears, but the price wars have already cost retailers 5 points of margin, he
estimated, and independents will require deft assortment management and
attachment selling to remain profitable in the current environment.

Jim Campbell,
president/CEO of GE Appliances and Lighting, told attendees that high
unemployment and an ailing housing market have extended the recession beyond
his company's projections, and urged independent dealers to remain price-competitive
until a new generation of "smart" appliances can help revive retails.

"You have to be in
the game, and you can't let one sale walk out the door," he exhorted dealers.
"If you lose your shoppers they won't come back and you will lose to the big box
guys."

Additional
coverage of BrandSource's fall convention will appear in the Sept. 13 issue of
TWICE.