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Lawrence Launches BrandSource 2.0

2/22/2011 08:56:09 AM Eastern
Orlando, Fla. - The BrandSource Summit could be called "BrandSource 2.0" with the buying group's brand getting a demonstrable push by CEO Bob Lawrence in his presentation and the appearance of its newly named brand ambassador, Kathy Ireland.

Kathy Ireland, the new "brand ambassador" for BrandSource with (from left) with the group's appliances VP John White, CEO Bob Lawrence, and Jim Ristow, executive VP of Home Entertainment Source
In his opening remarks at the Marriott World Center, here, on Monday morning, Lawrence said, "BrandSource is the only industrywide initiative that will help the independent reverse a 10-year trend and create awareness to help independents successfully compete today and in the future."

The BrandSource concept was introduced at a meeting, here, in 2000, but was not fully implemented until 2002. Lawrence told TWICE that in its ninth year, "30 percent of our members use BrandSource signage on the exterior of their stores, and 35 percent use it in their advertising. With Kathy Ireland as our brand ambassador, there is no excuse anymore not to take advantage of the brand." In his presentation, Lawrence bluntly said, "I expect a year from now 100 percent of our members to use BrandSource" in signage and advertising.

Lawrence made it clear that he does not want BrandSource to be used instead of his members store names, but "use it as a tag line." He noted that BrandSource is the only recognized brand name for independents and it "is a complete sales, merchandising and marketing strategy."

Lawrence pointed out that, use of the BrandSource name or not, members have performed well in a weak economy.

In appliances, BrandSource did 1 percent better than the industry last year and did 3 percent better than all independents. In electronics, the industry was down 7 percent. "We were down 2 percent and other independents were down 15 percent."And, Lawrence noted, manufacturers "fully support the BrandSource concept."

But there are challenges that BrandSource and independents as a whole have to address. because "to follow the same philosophy and expect a different outcome is insanity."

Lawrence said BrandSource will be "price competitive in all categories with acceptable margins." He said the economy, which he thinks will improve by the second half, has created a "six-holidays-a-year" philosophy where the industry is "training consumers to wait for the next holiday to buy. What are we supposed to do, shut down the other 359 days a year?"

BrandSource said it will continue to back instant rebates, which are "difficult to track, but we don't know of any other way to be price competitive when the big boxes do 30, 40, 50 percent-off promotions." To ease the process, the group will handle instant rebates with "an online tracking system to make the process a whole lot easier."

Lawrence urged members to continue to back Expert Warehouse because "you own it." (BrandSource owns 40 percent of the operation.) Distributors have decided to match Expert Warehouse pricing on CE products, and Lawrence warned, "If you don't, all of us lose volume ... and the ability to get good pricing." He quoted Jim Tracy, a BrandSource member, who once commented, "Why buy gas someplace else when you already own your own pump?"

Since, in Lawrence's words, "Appliances usually follows CE," he urged members to back the new major appliance effort in Expert Warehouse "to be ready for the future." The program is initially being rolled out east of the Mississippi, but will eventually go coast to coast. "With a minimum order of $5,000 you can get delivery of CE, appliances and furniture ... with a significant difference to your bottom line. We are your warehouse."

Expert Finance is close to being implemented and will be offered along with BrandSource Finance to provide financing for all members "and it is wholly owned by you," Lawrence said. He added Expert Finance is close to being operational. "We are on the two-yard line and close to signing a deal, and once it is signed the program will be ready in 60 days."

But the challenges BrandSource and independents face are many, and they didn't just crop up since the Great Recession began in 2008. Lawrence used TraQline data from the Stevenson Group, TWICE's research partner in producing its Top 100 Retailer Report, to illustrate the problems.

In major appliances, sales by independents have been steadily decreasing for 10 years and "very soon Lowe's, which has been increasing share, will pass independents."

In CE, he noted, "Walmart's share is relatively flat in the past decade, which is interesting. Best Buy is up, and independents do better when a new technology is introduced."

In core appliances, Lawrence said, "We are golden with the 65 and older demographic. That's fine if we want to sell wheelchairs." The addition of Ireland to BrandSource should help the group's demographic not only with younger people, but with women, a key purchasing decision maker in CE and majaps.

 "Eighty percent of consumers shop in two stores and then make a purchase. We must be one of them," the BrandSource CEO noted.

In hammering home the importance of the use of the BrandSource name, he said, "Forty percent of all consumers move every five years, which represents five major appliance purchases per move. If I move from California to Kentucky, how do I know the local independent? I may go to the national chain I do know. Independents must have a national tie-in to be competitive with the big-box stores.'

The solution that Lawrence preached to his members is to "get serious about the use of BrandSource; increase visual awareness of it, with a greater use of BrandSource.com, the BrandSource app" and the logo; and increase key words and "significantly increase SEO."

There will be a greater increase of national advertising available to all members, probably with Kathy Ireland (see related story). There will be "stronger promotions with longer lead times for planning." The group will "partner with manufacturers to develop ‘branded' Brand Source strategies" and get "younger customers in the 34- to 55-year old demographic, and women," again, in part, with the help of Ireland.

Lawrence asked the question, "How do you know we'll have a national brand?" He answered by saying, "On the negative side, when we get calls to our offices in Anaheim complaining about bad service," but on the positive side, "When we get calls from consumers to find out where their local Brand Source store is located."
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