BrandSource Outpacing Industry Amid Weak Demand

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Las Vegas - BrandSource, the $14 billion home-goods buying group, is outperforming the CE and majap industries but is hardly in a celebratory mood.


CEO Bob Lawrence said the group's CE business is up double-digits year to date in unit volume, and its appliance sales are exceeding the industry in every product category.

Nevertheless, the last 60 days were the most challenging he had ever seen in his career, Lawrence told attendees at the group's fall convention and buy fair here yesterday, and all indications point to continued hardship for the short-term.

Compounding soft demand is rampant discounting, particularly in white goods, as big-box chains seek to stimulate sales and gain market share. "We've never had a period of industry weakness coupled with such competitive retail pricing," appliance executive VP John White told TWICE.

What's more, a glut of consumer electronics also portends an exceptionally promotional holiday season for CE, putting even greater pressure on margins, observed Jim Ristow, executive VP of Home Entertainment Source (HES), the group's specialty electronics division.

The good news, he said, is that overbuilt inventories have created unprecedented opportunities for those that can accommodate large-quantity buys, as can BrandSource through its Expert Warehouse distribution program.

"There are opportunistic buys out there that I've never seen in my career," Ristow told TWICE, citing at least six or seven "Stampede" specials at the convention that were more than 30 percent off.

White said he is similarly arming majap dealers for a hard-knuckled Black Friday that will likely begin after Halloween. BrandSource has matched a steady barrage of 20 percent to 30 percent promotions as the home-improvement chains battle it out with Sears, but the price wars have already cost retailers 5 points of margin, he estimated, and independents will require deft assortment management and attachment selling to remain profitable in the current environment.

Jim Campbell, president/CEO of GE Appliances and Lighting, told attendees that high unemployment and an ailing housing market have extended the recession beyond his company's projections, and urged independent dealers to remain price-competitive until a new generation of "smart" appliances can help revive retails.

"You have to be in the game, and you can't let one sale walk out the door," he exhorted dealers. "If you lose your shoppers they won't come back and you will lose to the big box guys."

Additional coverage of BrandSource's fall convention will appear in the Sept. 13 issue of TWICE.


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