BrandSource Focused On Dealer Growth, Profitability

By Alan Wolf On Mar 12 2012 - 4:01am

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.”