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ProSource Sees Buying Group Definition Changing

9/19/2011 12:01:00 AM Eastern
INDIANAPOLIS – The definition what a buying group is in today’s CE industry is changing as the industry evolves.

That was the message that came out of a discussion between the media and ProSource executives had during the group’s reception during CEDIA Expo.

ProSource, BrandSource’s CE division, is made up of the Progressive Retailers Organization (PRO Group) and Home Entertainment Source, so Jim Ristow, executive VP of CE at BrandSource, and Dave Workman, executive director of PRO Group, have observed the changes for years.

Ristow commented, “We are no longer a ‘buying group’ traditionally. That definition needs to change drastically.”

For instance, Workman said that his organization’s reaction to the new BrandSource app “has been very positive. This is proof positive that what we have been doing to leverage the best of the both groups.”

Workman noted that buying groups have “always been about programs, programs, programs ... and marketing. The world has changed, and we need to change, look to find new solutions proactively. Logistics, business model changes, forecasting — all that plus advanced Internet tools, and make changes.”

Workman stressed, “You can’t program your way to survival anymore to get an extra 2 percent [of profit] for survival.”

Ristow added, “Different steps abound, involving e-tail, retail or maybe some sort of blend” should be involved.

Regarding Internet operations, Workman said that when it comes to his PRO members, “No other buying group has the core competency in Internet retailing than ours. We have several retailers in our group that are experts.”

When asked if an in-house brand may be part of ProSource’s strategy down the road, Workman said, “We had plenty of discussions about it with members, and we would like to work with our [supplier] partners. We would like to work with leading suppliers to come up with special derivative lines exclusive to us as opposed to our own private-label lines. Most private labels are usually low-end promotional items.”

Ristow noted that in TV at least, “They are usually tier-three products, $20 to $30 lower in price. The risks are price and if the market changes the risks for our members would be upside down” since ProSource members might be at risk for lower margins.

Workman pointed out, “At this point Vizio in TVs are squeezed. How could we do better with a house brand of TV than Vizio? Our group wants to work with our partners [on derivatives].”

Workman said that ProSource wanted lower-priced HDMI cables and worked with Monster Cable on an exclusive line “that they built for us. Members want us to back well-known brands.”

As for the Expert Warehouse II project, the CE operation has begun, according to Ristow, with shipments to customers “coming soon ... that is the next step.”

In terms of ProSource’s relationships with suppliers, Workman said that some of its members want “fewer, but stronger partners. That is what the talk is. We need more help from stronger partners is what they are saying.” Ristow did add that ProSource’s Signature program “will be stronger than ever in 2012.” Workman noted that members do want “a true, core partnership with key vendors.”

In other areas, Ristow said that a smartphone program via Expert Warehouse II has not been set as yet, but he acknowledged, “It is a high-volume business-within-a-business.”

Workman also addressed the 20,000-pound gorilla in the TV business — the pending introduction of Apple TV, probably in 2012. He commented, “Apple TV will change the user experience when it comes out” and stressed, “You must follow the breadcrumbs when it comes to Apple.” Workman commented that Apple is working with GameStop and asked, “Will they have a game function in their TV’s user interface? They will want the IPTV experience to be seamless, and have an easy user experience. They probably think that today’s IPTV is clunky. They think they can come in and get a major share of the market.”
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