Brand Source Forges Ahead In Mixed Mkt.

By Alan Wolf On Sep 4 2008 - 6:00am




Brand Source, the $11 billion CE, majap and home furnishings buying group, encouraged its members to prevail amid the tepid marketplace and provided new tools to do so during its National Convention & Buying Fair last month.

The annual gathering of the group, held here last week at the Paris and Bally's hotels, was themed "Vision, Courage, Perseverance, Success," which underscored the economic headwinds dealers face. Some 7,000 retail stores are expected to close this year, executives said, the most in 15 years. CEO Bob Lawrence, in an open letter to the group's 3,400 member dealers, acknowledged, "We continue to see a very mixed business climate."

Specifically, appliance sales remain soft on the West Coast and in the upper Midwest, while some members are reporting their best year ever, Lawrence noted. Indeed, retail sales of white goods are up 1.5 percent for Brand Source, Lawrence said, vs. a 7.8 percent industry decline.

Business is even more robust on the CE side, which "seems to growing at a phenomenal rate" through the group's Expert Warehouse distribution program, Lawrence observed, with retail sales of electronics up 9 percent for Brand Source, compared with 3 percent for the industry.

The group's out-performance proves that "You're not willing to back down and you refuse to participate in the so-called recession," Lawrence told members.

Despite continued pressure from big-box chains and weakness in markets impacted by the housing malaise, Lawrence exhorted the rank-and-file to "never lose faith, never give up, never back down," and urged them to "put yourselves in our hands and take advantage of our tools."

Those tools include a completely redesigned e-commerce site that "will allow our members to have the platform to become the dominant retailer in North America in the home-furnishings category," Lawrence said. The site, which is still in the beta stage, was designed by and for women, who are Brand Source's primary customers, and comes as consumers continue to migrate to the Internet to research and shop, explained Mark Baird, founder/CEO of Brand Source Marketing.

The pages of BrandSource.com are populated with bright, colorful lifestyle photos, and easy navigation allows visitors to shop by product category or brand for some 20,000 SKUs. Consumers can also find promotional offers, owner's manuals, expert advice, tips and recipes, and nearby Brand source dealers, and can access a personalized organizer called My Source where visitors can save articles, rebate forms and other items collected from throughout the site.

All pricing and promotional offers are updated in real time by a dedicated Web team, Baird said.

The site also serves as a group referral service to help keep CE, majap, furniture and flooring sales within the Brand Source family. This "whole-home strategy," which positions the group as a "mega store" rivaled only by Sears in product scope, will also be furthered by a one-stop-shop Home Gallery display program that will allow dealers to offer products from all group categories within their stores.

Another new initiative is the strategic alliance between Progressive Retailers Organization (PRO) Group and Brand Source's Home Entertainment Source (HES) division (see TWICE, Aug. 18, p. 1), which will allow the A/V specialty groups to make opportunistic buys and to jointly plan, forecast, commit to and receive channel-specific merchandise.

Jim Ristow, executive VP of HES and CE VP for Brand Source, said the specialty groups' nearly $4 billion in combined buying power will "put us on a whole different plane in the vendor community" and allow them to make bigger opportunistic buys that only a handful of national accounts can handle.

More importantly, it will help ensure that TV vendors continue to provide step-up goods for the specialty A/V channel amid a trend toward commodity products, as even top-tier brands "are following the path of least resistance" and outsourcing manufacturing and accepting warehouse club-like margins, Ristow said.

"We have to band together," he told attendees. "The one with the biggest purchase order wins," and the PRO Group deal will help ensure that "we will be the dominant force left standing" within the independent channel.

Elsewhere, Brand Source is also offering its dealers an RFID platform developed by PositionSoft and OKI Printing Solutions to help members manage their inventory and stock more efficiently.

The show also featured an expanded roster of educational seminars to help dealers compete more effectively in the marketplace, including a session on making their businesses more inviting to their core female customers.

Lawrence added that convention attendance was up 5 percent, making last month's event the largest summer show in Brand Source history.

Additional coverage appears on p. 20.

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