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Changing Role Of Buying Groups Takes Another Turn

When I started to write about how buying groups have changed I realized it is thirty years this spring since I attended my first electronics/appliance buying group meeting – the NATM Buying Corp. shindig at the Doral Country Club in Miami. (Ouch.)

I bring up that bit of ancient history due to two recent announcements from four buying groups:

  • Nationwide Marketing Group reached out to Home Technology Specialists of America to form a new joint entity: Home Technology Specialists of Nationwide, to be more competitive in the custom installation and connected home categories, and;
  • ProSource announced that at least six of NATM Buying Corp.’s 10 members have joined the group as “associate members” to gain access to ProSource’s specialty product lines, particularly high-end audio.

If announcements like these were made 30 years ago, or 20 years ago – heck, a decade ago – the heads of different buying groups would be spinning.

That’s because back then buying groups were all about beating up suppliers to get the best deal to compete against national chains, and getting exclusives and being hyper-competitive in getting new members.

Some of that is still true, but as two of the players involved with the recent announcements told TWICE, these two deals are not alike. Dave Workman, CEO of ProSource, told TWICE senior editor Alan Wolf that most of the six NATM members “have been associated with us since the first of the year and Abt Electronics since last year.”

Jerry Satoren, executive director of NATM, confirmed Workman’s remarks in a phone interview explaining, “Given the diversity of our members, who are leaders in their respective markets, we have members who are part of furniture groups, bedding groups and groups for other categories. Our bylaws allow members to do so.

“Remember,” he continued, “our focus is still TVs and major appliances. NATM members becoming associate members of ProSource helps increase that group’s volume and provides access to high-end audio product programs.”

Satoren also said that as associate members of ProSource, the NATM retailers do not have voting rights like full-fledged members of ProSource.

He noted that these two announcements “are part of the change in the role of buying groups” over the past several years, with ProSource, and for that matter Nationwide, enabling smaller dealers to “get bigger” on product deals and become more competitive in the high-end custom install and CE markets.

Discussing NATM specifically, Satoren noted that its ten members are “the No. 1 local alternative” to national chains in their respective markets.

NATM’s original nickname was “the group of 40 thieves,” given for its negotiating savvy. Getting the best deal is still important, but Satoren said it is not the only reason for NATM’s existence today.

“We still get the best deals. Today our members are elite retailers and they can get great deals too.”

Years ago, the NATM executive noted, “Our retailers had to develop merchandising and marketing plans on their own, but today much of that is vendor sponsored. Now many suppliers tell you what the Memorial Day or Black Friday deals are with these sponsored promotions.”

Satoren sees NATM today as “an elite club of market leaders.” That hasn’t changed over the past two or three decades.

But now the members share best practices on shipping strategies, customer deliveries and HR, and buy insurance at a group rate, among other things, to improve backroom costs, he said.

And while buying merchandise for the best price is essential, Satoren added a third area. “As a group we have to guide our members on the new way of selling at retail. Of course brick-and-mortar will never go away. People want to feel, see and touch our products.”

But, he noted, “We must combine our brick-and-mortar expertise with new online and social networking strategies to reach out to consumers, and adapt to the new way of life selling at retail.”

And forging alliances or sharing members between buying groups is now part of that equation.

Steve Smith is editor-at-large for TWICE and was its longtime editor-in-chief