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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.”