Buying Groups Change Strategies, Broaden Benefits
By Alan Wolf On May 8 2012 - 4:01am
NEW YORK —
It’s been a busy year for the nation’s
The retail confederations, which provide merchandising,
marketing and business support services for independent
CE, majap and furniture dealers, have been
scrambling to stay ahead of the structural changes
sweeping the industry.
Some of those changes, such as consumers’ rapid
shift to online and mobile shopping, present a clear
challenge to the groups’ brick-and-mortar membership.
Others, including recent setbacks for No. 1 CE
and majap competitors Best Buy and Sears, may offer
new market share opportunities for local dealers.
Either way, buying group executives and
directors have been busy developing new
product categories, e-commerce services
and strategic alliances to better position their members for a brave new world of CE and majap
, one of the industry’s two largest
buying organizations, recently announced a raft of initiatives
to drive traffic, lower costs and meet the competition.
Perhaps the most innovative is a five-dealer
test of in-store appliance kiosks at Costco locations in
the Northeast, which could generate substantial sales
leads thanks to the warehouse club’s extreme traffic
Continuing its majap focus, BrandSource will also
make appliances available to members throughout the
country this fall through its in-house logistics program,
Expert Warehouse II, and will offer targeted credit
card promotions under a new private-label program
with Citi to help win customers and market share from
Sears, CEO Bob Lawrence told dealers at its recent
The group will also hold its first bedding symposium
this summer to help dealers enter and build the
high-margin category, while online efforts include new
features for BrandSource’s mobile app including thousands
of additional SKUs, store-specific pricing, and
location-based messages to nearby customers.
Meanwhile, Home Entertainment Source (HES)
BrandSource’s specialty A/V division, is guiding its
rank-and-file into the burgeoning mainstream control
and integration market, and is urging sales of wholehome
systems over one-off items. Both offer rich margin
and profit opportunities and shielding from “showrooming”
by mobile shopping apps.
Other categories that provide profits and protection
from online and big-box competition include commercial
automation, LED lighting, and premium audio,
executive VP Jim Ristow told HES members at the
BrandSource spring meeting.
HES now represents BrandSource’s largest division,
and a doubling of Expert Warehouse’s A/V inventory
over the past year has helped CE supplant majaps
as the parent group’s largest category with 40 percent
of sales volume.
Elsewhere, HES has forged even closer ties with
the Progressive Retailers Organization (PRO
, the 16-member A/V and custom installation
group with which it formed the ProSource alliance last
year and is holding
its annual meeting in Dana Point,
Calif., this week, May 8-10.
For its part, PRO Group is focusing
on online competition by
forging a separate partnership
with one of the world’s largest
e-commerce platforms. A joint effort
with eBay, first announced in January, is providing
PRO members with higher profiles, enhanced storefronts
and an opportunity to tap into the site’s dizzying
traffic, executive director/COO Dave Workman said.
In return, PRO offers eBay a collection of reputable,
authorized sellers that can lend it added gravitas with
consumers and vendors as it revamps its CE department
with MAP treatments and a new brand-focused
On the member front, the addition of J&R Music &
Computer World earlier this year as its 16th dealer
more than offset the loss of Sixth Avenue Electronics,
which folded in October.
The industry’s other 600-pound buying group gorilla,
the Nationwide Market Group (NMG)
sales volume parity with BrandSource last month with
the acquisition of a $2 billion Canadian buying group
from Sears Canada.
At its recent member meeting and convention, Nationwide
CEO Robert Weisner and his top merchants
exhorted CE dealers to tap into new opportunities in
tablets, computers, connected technologies, gaming
and digital imaging, made possible in part through an
expanded program with D&H Distributing, and to focus
on 50-inch and larger panels that can still provide
margin within the TV category.
Even more esoteric but high-profit categories like
lighting control are accessible to mainstream dealers,
said Jeannette Howe, executive director of the group’s
Specialty Electronics Nationwide (SEN)
while more mundane but equally margin-rich categories
like bedding and furniture can help tide CE and
majap dealers through lean times.
To help members level the playing field with etailers,
Nationwide has also begun providing eBay’s
Milo Local Shopping at no charge. The store locator
and shopping service allows consumers to search and
shop for local products online, and provides additional
attachment opportunities during the in-store pick-up.
In appliances, Nationwide is providing members
with exclusive, higher margin models and has developed
a program called “Draw, Escape, Sell” to help
merchandise and assort them. Based on the “80-20
rule” that 20 percent of SKUs do 80 percent of the
business, the tightly edited offering features three
SKUs per category from each participating
brand, and allows dealers
to select from dozens of popular
and profitable products, rather
than pick through thousands.
Appliances also remain a bright
spot for the $5 billion NATM Buying
, comprised of a dozen
of the nation’s largest regional CE and white-goods
dealers. President/executive director Bill Trawick told
TWICE that the category is performing quite well for
member dealers, some of whom are picking up market
share from Sears and Lowe’s.
To help supplant sinking TV margins, NATM dealers
are taking a cue from Boscov’s, Conn’s, R.C. Willey
and other home-furnishings members and are entering
the mattress business, as ABC Warehouse did
last year, Trawick said. Other members including P.C.
Richard, BrandsMart USA and Nebraska Furniture
Mart are finding higher profits in private-label step-up
products, and NATM is looking into direct-importing
goods that other members can merchandise under
their respective house brands.
NATM also recently welcomed its 12th member,
Southern California’s La Curacao to the fold, which
filled a void in the group’s geography.
Appliances and bedding are also the focus for
MEGA Group USA
, the $3.5 billion home-furnishings
group, which recently created a turn-key Whirlpool appliance
store-within-a-store concept to help furniture
dealers enter the majap business. Assortment, signage,
terms, delivery and training are pre-arranged,
and the 800- to 1,000-square-foot shops allow nonwhite-
goods dealers to tap into that category’s high
traffic, turns and sales per square foot, president Rick
MEGA is also offering members a new social-networking
service called Social Extend, which updates
dealers’ Facebook pages with news, videos, photos
and other vendor content, and continues to enhance
its five-year-old website development program for
Online marketing is also at the forefront of Home
Theater Technologists of America (HTSA)
63-member buying group for integrators, custom installers
and A/V specialty dealers. In his first HTSA meeting
as managing director, Bob Hana last month stressed
the need for lead generation through strong marketing
and social-networking efforts in order to drive traffic and
sales. To that end, HTSA is revamping its internet and
intranet sites and is developing a group database to
increase lead-generation efficiency online and improve
return-on-investment (ROI) for customer acquisition.
The group also plans special e-mail, direct mail and
online ad campaigns; negotiated specials from vendors;
increased search engine optimization (SEO) and
paid search efforts; enhanced content for its HDLiving.com
consumer site; and greater use of print and
other traditional media.
In addition, HTSA will create an outreach
program, developed by a member
committee, that will tap into other trades
such as architects, designers and construction
companies to find additional
sales leads, Hana said.
Beginning this year, integrators and
custom retailers also have another option
in Azione Unlimited
, the nascent
buying organization founded by industry
veteran Richard Glikes. So far volume
has surpassed the $100 million mark,
he reported, and the group is on track to
finish its first year with 150 vendor and
Glikes noted that nearly three-quarters
of Azione’s dealer members were
previously unaffiliated, suggesting that
“a huge hole in the market” exists for the
organization’s model. He said the group
is unique in its regional and national
conferences and low dues of $750 per
quarter, and by the inclusion of vendors
as members and board directors.
“This formula is win-win for everyone
involved,” Glikes said in recent statement.
“Azione Unlimited is poised to
deliver the best results to both dealers
and vendors.” — Additional reporting
by Steve Smith.