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.
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.”
