Thirty years is apparently a charm for Associated Volume Buyers.
The buying group, whose 1,100-plus members gathered at Bally's, Las Vegas last month for its annual convention and vendor fair, had plenty to celebrate along with AVB's 30th anniversary. According to executive director Bob Lawrence, a combination of consumer confidence, a strong economy, a new generation of step-up appliances, and the year-old Brand Source na-tional branding program contributed to solid gains for AVB's independent retailers during the first half of 1999.
How solid? As Lawrence told a crowd of some 2,000 members and 300 suppliers at the convention's outset, the group's major appliance business -- which represents 50% of its merchandise mix -- is up 8% for the period, while AVB's nationwide market share inched up 2%.
Demar Young, president of AVB and a principal of the three-unit Sure Appliance in Salt Lake City, Utah, said the gains came at the expense of the mass merchants and specialty stores, and he viewed them as a validation of the independent retailer.
AVB's nationwide market share inched up 2% against industry gains.
Meanwhile, growth in the furniture segment outpaced appliances with gains of 12% in sales for the first six months of the year. AVB hopes to further stoke the furniture fires with Sleep Source, a turnkey bed shop program unveiled in Las Vegas that was created to afford members easy entrance into the 38% to 50% gross margin bedding business. Furniture currently constitutes 25% of group volume by sales.
AVB met with less success within the consumer electronics sector, where the buying group's sales were flat for the first half of the year. Nonetheless, Lawrence interpreted the no-growth results as "a win," explaining that "we held our own" in a competitive marketplace, and that CE represents "a tremendous opportunity over the next few years." CE currently accounts for 25% of the group's assortment by sales.
Also holding tremendous opportunity for group members, said Lawrence, is AVB's web site, www.brand-source.com, which added an e-commerce function two months ago. So far, about three dozen sales have been consummated via cyberspace. "It's another huge opportunity for us," he said. "The Internet is almost tailored to our guys, because we have 1,800 places to fulfill online orders."
According to Eric Agren, president of AVB's Northeast Chapter and a principal of Agren Appliance, new features of brand-source.com include an online application process for GE Capital's private-label credit card and the creation of individual web sites and shopping carts for each member store. In addition, the members-only "back office" section of the AVB web site now provides a link to General Electric's customer network, where dealers can place orders, look up balances and check inventory.
But Lawrence saved his greatest enthusiasm for Brand Source, which was formally introduced at last year's confab in Florida. Since then, 65% of AVB dealers have joined the branding effort, which was developed to give members a national presence akin to what Ace, Century and True Value have done for independent hardware stores.
"Brand Source is taking on a life of its own," Lawrence told TWICE, predicting that participation in the program will "ultimately get to 85% of membership." Spurring that along will be a national advertising program, ostensibly targeting newspapers, that's set to debut in January. "We need a vehicle to get the customer into the store," he said. "The close rates of AVB members are 50% higher than those of the big-box stores, so if we get 'em, we can close 'em."
He continued, "Last year Brand Source was a concept, and today it's a reality, and it's working. Some manufacturers have already approached us about licensing the name, and I think vendors will come to recognize it as a national account."
An even more compelling case for Brand Source is the recent incursion of smaller-format superstores into AVB's once uncontested secondary and tertiary markets. But despite that challenge, Lawrence said that the biggest threat facing the $3.5 billion buying group is succession, as storeowners reach retirement age and children either assume their businesses -- or don't.
The issue was deemed crucial enough to merit its own well-attended seminar at the convention. Other sessions, meanwhile, included an update on the CE sector by JVC executive VP Harry Elias, who advised the independents to narrow their product lines and supplier pool, avoid over-expansion, and maintain a well-trained sales force.
JVC was one of scores of suppliers -- including Daewoo, Fisher & Paykel, Frigidaire, GE, RCA, Spring Air and Whirlpool -- to show their wares at the event, which was billed as the largest ever for AVB.
The good times at the show served to underscore the good year many member were enjoying in their businesses.
"We're doing quite well," reported Tommy Moxley, a principal of Appliance Land in Marietta, Ga., who saw his sales of white goods rocket 30%.
Moxley attributed the activity to new construction within his store's market, a thriving retail scene, and his mix of higher-end appliances. "People are ready to update their appliances, and they're replacing them a little bit sooner than usual," he noted.
Similarly, AVB president Demar Young, of Sure Appliance in Salt Lake City, marked his stores' 10% sales gains up to "lots of new products that are giving people a reason to replace their appliances even before they wear out or die out. You've got better-cleaning washing machines, quieter dishwashers, refrigerators with water filters, and more and more high technology coming to the appliance world."
He added, "I've seen more product changes in the last two years than the past 20 years combined. Appliances are starting to become exciting."
AVB is scheduled to return to Las Vegas for its national convention and buying fair, slated for September 10-14, 2000 at the new Paris hotel and casino.