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BrandSource Focused On Dealer Growth, Profitability

3/12/2012 12:01:00 AM Eastern

ORLANDO, FLA. – A pilot program with Costco and
national in-house distribution of major appliances are
among a raft of new initiatives BrandSource is bringing
to bear in 2012.

The $14 billion buying organization for independent
dealers said the new and augmented programs
are designed to help its 4,500 members grow their
businesses and increase profits – its two main goals
for 2012 – by driving traffic, lowering costs, and providing
the tools to compete with online and big-box
competitors.

BrandSource executives presented the initiatives
at the group’s annual spring Summit and Expo, held
here last month at the Marriott World Center.

Among the new programs is a five-dealer test of
in-store appliance kiosks at select Costco locations
in the Northeast. John White, the group’s appliances
and services executive VP, said the warehouse
club’s high volume of traffic could generate substantial
leads for local members, and credited a dealer in
Washington state, where Costco is based, for suggesting
the idea.

White also announced that major appliances will
be available to members nationwide through the
group’s in-house logistics program, Expert Warehouse
II, by Oct. 1. Owned by BrandSource and fulfilled
by Ingram Micro, the distribution network can
deliver small, mixed-brand orders that allow dealers
to assort their floors like national chains, he said. LG
and Samsung are the two latest appliance manufacturers
to join the program, which includes products
from Whirlpool and other majap vendors. Majaps are
already available in the Northeast, and the national
rollout commences on April 1.

BrandSource is also preparing targeted credit
card promotions to help members glean customers
and market share from Sears as the national chain
continues to close stores and spin off assets. White
predicted the company’s “likely demise,” and said
that even the rumored closure of 1,200 Sears stores
would put “millions of units of volume up for grabs.”

Editors' Note: Sears said the rumored store closures were in fact the planned spinoff of its Hometown and outlet businesses and select hardware stores.]

Meanwhile, BrandSource has begun producing
customized TV spots for appliances, electronics
and furniture featuring celebrity “brand ambassador”
Kathy Ireland. Individual dealer names and logos can
be inserted in the ads, explained BrandSource CEO
Bob Lawrence, and the commercials will now be
available on a quarterly basis.

Ireland, who was scheduled to appear at the show,
currently graces a line of BrandSource-branded food
storage containers and cutlery, and a hot-water cooker.
Lawrence said his goal is to offer a complete suite
of co-branded Kathy Ireland products.

The former Sports Illustrated model and actress is
now in the second year of a three-year contract with
BrandSource, and last month appeared on the cover
of a different magazine – Forbes – which reported
that her more than 15,000 licensed products generate
over $2 billion at retail, more than double the estimated
$900 million for Martha Stewart’s licensed lines.

Elsewhere, BrandSource has added new features
to its mobile app for dealers and consumers, including
store-specific pricing, printable specs, and thousands
of additional SKUs, and will soon add a location-based
function that sends messages to consumers who are
within dealer proximity.

Other group initiatives include:

• bringing extended warranty processing in house;

• lowering dealer rates on extended finance promotions
under the BrandSource private-label credit card;

• building an in-house wholesale finance company,
and;

• developing a central point-of-sale system, a five year project.

BrandSource will also hold its first bedding symposium
Aug. 25 in Las Vegas, before the start of the
group’s fall convention. Home furnishings executive
VP Mike Allen said the group is doing more mattress
business than in any time in its history, and that its
turnkey Sleep Source bedding program “is what’s
keeping the doors open for some appliance dealers.”

Lawrence also pointed to high-margin opportunities
in ancillary products like the hot water cooker and
pureWash, a $399 water-treatment device that allows
consumers to use less laundry detergent in the wash
and provides dealers with a 45-points mark-up. “It’s
a no-brainer,” Lawrence said. “You can double your
profit from TVs.”

Jim Ristow, executive VP of BrandSource’s Home
Entertainment Source (HES) specialty electronics division,
also cited wireless audio, connected devices
and soundbars like the small-footprint ZVOX as easy
attachments for TV and appliance dealers.

Lawrence added that the purpose of a buying group
is not only to “drive the lowest acquisition price, but
also to provide the tools you need to get customers in
your store.” Close rates for BrandSource dealers are
2.5 to 3 times that of big-box stores, he noted, “and if
you can get customers in there we win.”