Dressed in safari gear and sharing the stage with a live tiger, Brand Source/AVB executive director Bob Lawrence and president Bill Pleasants set an upbeat if cautionary tone for the buying group's annual convention and fair, held here earlier this month.
Using the jungle metaphor to depict a retail scene populated by larger appliance predators, Lawrence kicked off the four-day confab at the Marriott World Center by outlining a multi-pronged strategy to give his 1,500 member dealers industry parity.
Citing market share gains by national chains while independents lost 7 share points since 1999, he outlined an arsenal that includes a new Brand Source TV blitz, additional product-specific divisions, a robust e-commerce business and a brand-oriented approach to in-store merchandising.
Chief among the group's munitions is its Brand Source branding effort, designed to provide dealers with a national platform equivalent to the Ace and True Value hardware franchises while giving their stores a more uniform look. Since its inception three years ago, 92 percent of members have joined the program, and some 10 percent of consumers now recognize the Brand Source name.
To press those gains, the group will spend $10 million to broadcast five new commercials on network TV in November and December. The spots, which will include two generic Brand Source ads and one each that centers on majaps, CE and furniture, are aimed at women ages 35 to 54 and follow last year's campaign featuring actor John Ratzenberger of TV's "Cheers." Lawrence said the national effort would be supported by upwards of $180 million in local ad spending by members, who can tie their store tags to the network spots.
To further emphasize the moniker, the buying group is transitioning its identity from Associated Volume Buyers to Brand Source (although its corporate name will remain AVB), and has attached the word "Source" to each of its divisions. To that end, the group's Audio/Video Independent Dealers arm (A.V.I.D.), whose members specialize in custom high-end CE, has been supplanted by Home Entertainment Source, or HES.
The 200-member, $580 million HES joins Sleep Source, a turnkey, freestanding mattress shop concept, and two new sub-groups: Mobile Electronics Source, the organization's 12-volt wing, and Home Rental Source, a specialty rent-to-own division. What's more, another new sub-group, serving Brand Source's high-end white goods specialty stores, is set to launch during the first quarter of 2002, while a gourmet kitchen products division is under discussion.
Lawrence said the sub-groups were born of necessity. "We're a hugely diverse group," he noted. "Three hundred members are furniture dealers, 200 are CE-only. One size doesn't fit all. So we asked ourselves 'How can we serve these guys?'"
Besides tailoring category-specific programs to the needs of current members, the new divisions are also helping to recruit new ones without "going toe-to-toe with the other groups," Lawrence said. "These are categories that no one is serving."
But the bigger idea behind it, he said, "is that all of these marketing concepts are tied together by one word: 'Source.' We intend to make sure that Brand Source, through one or all of these concepts, is the source for whatever the customer needs, whether it is a washer and dryer, a home theater room, a GPS system in their car, a living room group to rent or a $5,000 mattress. We are the source, we are the place to go to find what the consumer needs."
To help consumers find what they need quickly and easily, Brand Source also introduced a Gallery merchandising concept that groups floor models by brand rather than product category. A mainstay of the furniture industry, the approach was inspired by data showing that six out of 10 consumers researched their majap purchases ahead of time online.
"Customers know what they're looking for, so why do we waste their time trying to step them through our array of products?" he asked. "Why not take the customer right to the product they are thinking of?"
Lawrence said a field test of the Gallery program in a retrofitted store in Charlotte, N.C., yielded sales increases of 17 percent in its first month and 20 percent the next month, while business at its five sister stores remained flat. The unit's sales staff also commended the concept, calling the floor arrangement "easier to work in," he said. Going forward, the group plans to retrofit one store within each of its geographic regions to enable members to see and evaluate the shop-by-brand concept.
Meanwhile, Lawrence also lauded the strides that Brand Source has made online, both in b-to-c sales and back office efficiencies. E-commerce majap revenue will top the $1 million mark this year, he predicted, a 250 percent increase placing the group second only behind Sears in online sales of white goods. That number is expected to double in 2002 as Brand Source adds CE to its Web-based mix within the next 30 to 60 days and furniture, specialty lamps and mattresses before the year is out.
Each order placed on the central Brand Source Web site is directed to a member dealer by ZIP code, who then receives 100 percent of the sale. Said Lawrence, "No other group has the ability to send customers directly into member stores."
On the b-to-b side, Brand Source is developing a direct order system that will allow dealers to place all of their orders simultaneously through their virtual back rooms. The system would then divide the orders out by manufacturer and price them correctly, making the buying and follow-up process faster and simpler.
Both online and off, Brand Source business has been solid, Lawrence reported. Following a "tough" first quarter and "exceptional" summer, 2001 sales are expected to top out at $4.8 billion over last year's $4 billion, led entirely by white goods. ("We're flat in CE, which we consider a victory," he said.)
"It's been a good year for us so far and we don't think it will change much over the balance," he said. "We're skirting the soft economy."
The sunny outlook was also sounded by individual dealers. "My business has been real good," said Yogi Baer of Sellers TV & Appliance in Chambersburg, Pa. "We've been busy selling high-end goods, mainly on the white side. Business is up in laundry, refrigeration, ranges and flat-screen TVs. People have the perception that higher-end means better quality. They're willing to spend a little more for reliability and a better product."
"High-end appliances are where it's at," echoed Brian Mortensen of Best TV & Appliance in Rutland, Vt. "Sell less, make more. We're up at least 20 percent over last year, and last year we were up over the previous year."
Elsewhere at the convention, which drew a record 2,000 attendees, GE, JVC and Simmons received Outstanding Supplier Awards; Olympic gold medallist Mary Lou Retton presented the keynote address; and The Beach Boys performed in a private concert for members.