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Florida Heats Up As Buying Groups Vie For Dealers

6/06/2011 12:01:00 AM Eastern
NEW YORK – The nation’s two largest buying groups are going toe-to-toe in Florida following a decision by area dealers to switch allegiances.

Last month the board of directors of BrandSource Florida’s voted unanimously to move the chapter’s 34 members to the rival Nationwide Marketing Group (NMG) on June 1, following two years of discussions with the North Carolina-based buying organization.

The decision triggered an aggressive campaign by California- based BrandSource to retain control over its dealer base, and to reorganize the 11-year-old division under a regional manager.

The results remain unclear. According to Nationwide CEO Robert Weisner and Tom Jessup, owner of Jessup’s Major Appliance Centers and longtime president of the Florida division, 29 out of 34 dealers have formally resigned from BrandSource and signed new contracts with NMG. Of the remaining five, three dealers, members of BrandSource’s Home Entertainment Source (HES) division, are still undecided; one will remain with Brand- Source; and one will be unaffiliated.

But BrandSource CEO Bob Lawrence contested the figures, stating that only about half the membership is leaving. He said the remaining members, which include all five HES dealers, generate most of the chapter’s revenue and will be assigned a regional manger to help stem long-term attrition that resulted in the loss of two-thirds of its dealer base, making Florida the smallest BrandSource region by far.

Jessup said the decision to leave was prompted by philosophical differences over advertising expenditures, group focus, and by Nationwide’s more locallyoriented marketing programs.

The Florida chapter joined BrandSource in 2000 following the breakup of its former buying group, Key America. Under its latest affiliation it will be renamed Nationwide Florida, where it becomes NMG’s sixth regional division.

Jessup will remain president of the largely appliance- driven chapter, which he said has annual majap sales of between $115 and $130 million. Lawrence said the figure is much lower.

The differences with BrandSource centered on the use of marketing funds to build a national brand presence under the BrandSource banner, rather than allocating the monies to dealers for use in their local markets.

“It was one of the toughest decisions I’ve ever made,” Jessup said. “But it should be about the dealer and not the organization.”

He added that Nationwide is more streamlined and its resources are more dealer-focused, citing its video production facility in Atlanta that produces customized TV spots and in-store clips for members.

Lawrence responded that a creating a national brand is the only alternative to market share gains by Walmart and other big-box chains. The threat is even greater now that Walmart is testing sales of GE appliances and Amazon.com is expected to expand its white-goods assortment.

“It will only get tougher and tougher out there,” Lawrence said. “The old adage is true that united we stand, divided we fall.”

Weisner said new members will be transitioned to NMG’s back-office systems in less than a week, and can have new websites on the Nationwide platform up and running within 48 hours.

“The dealers aren’t coming to us because they can buy something for $5 cheaper,” he said. “It’s because we can help them sell $50 more to their customer.”
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