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BrandSource Focused On Dealer Growth

Orlando, Fla. – A pilot program with Costco and national in-house
distribution of major appliances are among a host of new initiatives BrandSource
is bringing to bear in 2012.

The $14 billion buying organization said the new and augmented programs
are designed to help member dealers grow their businesses and increase profits
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 this week at the Marriott World

Among the new programs is a five-dealer test of in-store
appliance kiosks at Costco. 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 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. Dealer names and logos can be inserted in the ads,
which will now be available on a quarterly basis, said BrandSource CEO Bob

Ireland also graces a line of BrandSource-branded food storage containers
and cutlery, and a new, private-label, sous-vide 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 this month appears on the
cover of a different magazine – Forbes – which reports that her more than
15,000 licensed products generate over $2 billion at retail, compared to an 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,

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 furnishing 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 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 higher that of big-box stores, he noted, “and if you can get customers in
there we win.”