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Best Brands Hopes Sales Will Rebound

Despite flat sales in the first half, Best Brands Plus members were hopeful of a turnaround and expressed optimism about the rest of the year, during the buying group’s annual meeting here.

Executive director Pat Reed said most of his 550-plus members’ sales so far this year were flat compared with the same period last year. “And flat’s not bad because last year was a record year,” he said. “We’ve had four or five serious growth years in a row.”

The group finished up year 2000 with $1.5 billion in sales.

The bulk of the those sales came from the furniture sector, which accounts for 65 percent of the group’s business, with the balance split between major appliances (30 percent) and consumer electronics (5 percent). The constantly expanding membership ranks saw sales volumes in every category grow last year, with furniture up 40 percent, appliances up 37 percent and electronics ahead 10 percent, Reed said.

But this year the group has been plagued by the slumping economy, as has the white goods industry as a whole. Indeed, factory shipments for all major appliances were down 8.1 percent during the first four months of 2001, compared to the same year-ago period, according to the Association of Home Appliance Manufacturers.

Within that context, individual members’ experiences seemed to vary, depending on their local economies.

“There’s a lot of new construction where I’m at, so sales are up from last year,” said Tom Walmer, retail manager of Flint Energy Store in Warner Robins, Ga., home to a military base that has grown in the wake of other base closings.

On the other hand, Jimmy Harper, owner of Ace Appliance in Douglas, Ga., said his business had been “slower than usual due mostly to our local economy and the mobile home industry being so slow.”

But “business is still holding up” for owner Ken Dudley of Tip Top Furniture in Freehold, N.Y.

The general consensus among the 300 members on hand for the annual meeting, held earlier this month, was that sales could only get better going forward.

“Given the tax cuts and Fed rate cuts, the psychology is in place for an improvement,” Reed said. “So, we think the second half is going to improve.”

“I think we’ve seen the bottom of this deal,” agreed merchandising manager Rick Bellows. “A lot of economic indicators show things are going to improve.”

To help get the momentum going, the group explored ways to increase sales. Among the most touted ideas was the “banner store” concept, which the management and many members see as the only way the group’s independent dealers are going to fight the national appliance and CE chains (see sidebar above).

Other strategies for success included paying attention to what the competition is doing; partaking in the group’s training programs, offered in such categories as A/V and sales/merchandising; and using technology to make certain business transactions easier and quicker.

“We’ve got a very strong Internet initiative right now,” Bellows said, adding that it is currently used for b-to-b transactions only.

With major appliance vendors on hand to display their new wares, the group responded positively to GE’s new Arctica refrigeration line, Amana’s bottom-mount refrigerators, Whirlpool’s pairing of the large-capacity Calypso washer with its Senseon dryer and Maytag’s Neptune washer and dryer.

“Laundry is our No. 1 category in major appliances,” both in terms of focus and sales, said Bellows.

Addressing the members during a general session, he said, “Laundry is the most critical category we have to focus on … to make sure you have the right mix in there. Mix can affect your margin.”

Plus, he said, it should be easy to sell some of these new laundry products because “you’ve got a lot of neat things to show the customer.”

One recurring topic at the show was Maytag’s recently announced plans to purchase Amana. “It’s always a concern if you go from five manufacturers to four,” Bellows said. “Competition is good. And I really don’t know how [Maytag is] going to utilize the Amana name.”

Some retailers showed concern about their status as high-end retailers if a cross-town big-box competitor is suddenly carrying the same Amana offerings. Others wondered if they would be allowed to sell Amana, but not Maytag branded products.

Amana territory sales manager George Blinkinsop said he did not know the answers to most of these questions, as the companies are still in the due diligence stage, but said he was pretty sure the Amana brand would remain intact because of the demand for its products.

The acquisition news, which broke the same week as the Best Brands Plus meeting, had not hurt orders, he said, adding that retailers remain very enthusiastic about the company’s bottom-mount refrigerators.

In terms of consumer electronics, members were leaning toward products and services for digital satellite systems and projection TVs, which is the group’s top CE seller.

Reed said CE “is a difficult product for independents” because “the customer’s making the decision to go to the mass merchant.”

However, the less than 10 percent of the group’s members who choose to focus on high-end specialty electronics and offer one-on-one service and product repairs are “still doing well,” he said.

“Our dealers who have taken the time to focus on home theater are doing well,” Bellows added.