The Progressive Retailers Organization (PRO Group) held its annual spring meeting where the mood was upbeat and the usually low-key buying group took the opportunity to remind its consumer electronics suppliers what its position is in the industry.
During its meeting at the Hyatt Regency Scottsdale at Gainey Ranch earlier this month that attracted 130 vendor executives from 36 companies, the PRO Group reported it had annual sales of $1.7 billion.
While the group has had two changes in its membership recently with the closing of BrandsMart of Kansas City, Mo. and the acquisition of NOW! AudioVideo by fellow PRO member Tweeter Home Entertainment, executive director Roger Heuberger and his members were upbeat about PRO and cautiously optimistic about market conditions this year.
In dinner remarks on the first evening of the meeting, Heuberger addressed the issue of membership and the question concerning recruiting replacements. "With BrandsMart closing and Ann and Richard [Shachtman] selling NOW! AudioVideo to Tweeter, people have asked us 'Do you want to fill some spots?' We never had 18 members before [in the United States] and operated at 14 for a long time. We are not anxious to fill spots."
In his speech and later in an interview with TWICE, Heuberger said that the sales volume of the NOW! stores will not leave the group, since Tweeter will be running them. "Tweeter plans to increase inventory at each location that could increase NOW! stores' annual sales from $21 million to around $24 million."
In addition, several PRO members have either opened new locations or are planning to during the second half. The list includes Anderson's, which opened another store late last year in the San Francisco area. Other planned expansions in the next few months are from the following: Ovation, Fort Wayne, Ind.; Ken Crane's in Long Beach, Calif.; Myer-Emco, Bowie, Md. in September; Electronics Expo in Wayne, N.J.; and several new Tweeter locations.
"So our group is opening around nine new stores during a period of a downturn. That's not too bad," Heuberger said.
That being said, PRO will talk to potential new candidates because several retailers have contacted the group recently, but as Heuberger noted, "It is not a pressing matter."
Getting back to his dinner speech, he said that when PRO members spend time with suppliers in Asia each year, they do a presentation "with the factories so they know what niche we serve. We realized recently that we don't do this at home. We assume you know it."
So he took the opportunity to outline the position of the group and its members. Here are some of his points:
In Asia, factory execs "use the term 'PRO Group' as an adjective for a specific class of trade… specialty retailers with high productivity."
While the group has members "who are mostly low share of market in the cities they operate, we specialize in high-end carriage trade sales. (See story at right.) Yet we provide the highest profitability of any [CE] retailer per square foot."
"This group is not about getting the best deals. The dialogue we engage in between members and vendors turns into group leadership. And that group leadership enables our members to participate in industry leadership."
Heuberger reminded his audience that the Professional Audio Video Retailers Association (PARA) was "invented by PRO Group members and reinvigorated by them years later. Now PARA is within the CEA (Consumer Electronics Association) umbrella (TWICE, April 19, p. 1). We think that only good things can come from PARA moving to CEA."
Again in a separate meeting with TWICE, both Heuberger and group president Gary McCormick, who is also president of Ovation, commented on PRO's commitment to service. "We had meetings with suppliers about customer service. A supplier changed a policy on customer service and one of our members went out of their minds," Heuberger said. "The truth is we don't make money on service, none of us do."
But it is the right thing to do, McCormick said. "We keep doing it because that's how we differentiate ourselves from the big boxes. If you take service and customer 'hand-holding' away from us, that's a problem. If you talk to customers, handle their problems the right way, you have a customer for life. They will always remember and tell their friends and family."