The good times are rolling once again for the nation's major buying groups.
Buoyed by a resurgence in white goods, the propulsive growth in flat-screen TV, and their own coalescing branding strategies, the retail consortiums and their independent dealers are defending their turf and even taking share from national competitors.
As executive director Warren Mann noted about the fortunes of his group, the MARTA Cooperative of America, "We're growing faster in major appliances than everybody except Lowe's. We're growing faster than Sears and faster than Home Depot."
MARTA is also flexing its muscles on the CE side of its business. "In brown goods, we had a particularly good run beginning in the middle of last year, and we're outpacing the people we do business with," Mann said. "So I think that we're growing faster than almost anybody else."
Meanwhile, Mann continues to search out new digs in New Jersey as MARTA management prepares to relocate from Scottsdale, Ariz., and is working with manufacturers to make his dealers' service departments ever more efficient. His first order of business, however, is forging new vendor relationships in order to improve order fill rates amid continuing, "spectacular" product shortages, particularly in large-screen TVs.
Relocation is also on the mind of NATM Corp., whose midtown Manhattan lease is up in October. Executive director Bill Trawick has looked at several locations, and believes affordable opportunities still exist in New York's central borough, although house hunting won't begin in earnest until July. His more immediate concern, however, is the weather.
"We need some heat," he said, in order to kick start sales of room air conditioners, a key seasonal category for member dealers. "Texas has been fairly warm, and they're selling some air in Florida," but temperatures have remained temperate throughout most of his members' markets.
Overall, Trawick reports that "business has been pretty good, although a lot of people are trying to find some profitability, and can only find it in new, creative, upscale products." Fortunately for NATM, as he noted during the group's annual meeting in March, key high-service categories, including projection TV, home theater and premium appliances "significantly" outperformed the industry last year, while total CE sales grew 8 percent and white goods gained 7 percent.
White goods are also cleaning up for Brand Source/AVB, where majap sales are up 15 percent year-to-date. More important, says executive director Bob Lawrence, is that the mix of better goods is "way up" as well.
Helping to build Brand Source business is an eponymous branding campaign designed to give individual dealers the same name recognition as national chains. On the local level, a co-op program provides members with exterior Brand Source signage, while national efforts include a yearlong TV advertising campaign. The group is also a sponsor of the "Jeopardy" and "Wheel of Fortune" syndicated game shows, for which it receives on-air pitches. And during May, Brand Source TV spots have run during the CBS Evening News.
The program, says Lawrence, is apparently paying off, as Brand Source now ranks fifth among consumers in unaided CE retail brand awareness, and fourth in appliances behind only Sears, Best Buy and Lowe's.
Also spurring sales are the group's four specialty divisions, Sleep Source, Home Entertainment Source (HES), Mobile Electronics Source (MES) and Home Rental Source, whose memberships continue to climb. [See HES story, below].
Also completing a transition to a new name is Mega Group USA, formerly Best Brands Plus. According to executive director Pat Reed, the 625-member buying group for independent furniture, mattress, majap and CE dealers — which increased its ranks from 550 last year — has taken the new moniker to distinguish itself from its Best Brands Plus licensed banner identity program.
That effort, launched in 1996, provides uniform branding, colors, interior designs, signage and advertising and merchandising strategies to more than 100 members in 10 states.
Reed, who along with his staff was preparing for last week's national convention in Nashville, reported a solid first quarter for his dealers. "Retail has been good to our members," he said. "Right now I don't want to analyze it, just celebrate it."
But the party could be short-lived for some. According to Roger Heuberger, executive director of the Progressive Retailers Organization, a.k.a. PRO Group, April is traditionally a slow period for CE retail, and last month was no exception. While sales were firming up in several parts of the country, "traffic still seemed to be off, and sell-through varied quite a bit by category and by dealer," he said.
The good news is that while "basic over-the-counter merchandise is checking slower, the expensive stuff is selling." And for a $20 million retailer, all it takes is one $10,000 TV sale "and a nice couple of custom jobs" to make a bad month good, Heuberger said.
The big question for the $1.8 billion group is whether PRO can crack the $2 billion sales mark this year. "It depends on if the market can come back," Heuberger noted — and whether the addition of new storefronts can counter declining average tickets as the price of DVD players and other categories continues to fall.
When it comes to new storefronts, Nationwide TV & Appliance enjoyed a windfall in February when the 310-member Retail Dealers of America (RDA) joined its camp. As Nationwide director Ed Kelly noted during his group's PrimeTime meeting in February, the former Key America and AVB chapter, now known as BrandDirect Southwest, brought with it some 400 storefronts and $500 million in annual sales.