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MARTA Members: Maintaining Their Margin Momentum

MARTA Cooperative of America will continue to press its value-added advantage as it builds on last year’s profit gains and fends off incursions by national retail chains.

That was the message imparted to members who gathered here late last month for the $2 billion buying group’s first biannual conference and show of the year.

In his opening remarks, executive director Warren Mann affirmed the renewed strength of independent dealers, who thrived amid the demise of retail heavyweights Wards, Heilig-Meyers and Service Merchandise, and now face lessened competition from Kmart and a white goods-lacking Circuit City.

“We expect that most independent retailers — not just our group — prospered,” Mann said. “Now let’s use the sturdy foundation built in 2001 to attack ‘price only’ national accounts that feed off our sales efforts.”

Building on a preceding presentation by NPDTechworld senior analyst Tom Edwards detailing the “specialist” direction that independents are taking, Mann emphasized the importance of selling floors and salesmanship while taking a few potshots at category killers.

“It’s puzzling why manufacturers are not correcting erroneous marketing decisions, considering their profit challenge and loss of retail sales power,” he said. “Manufacturers’ ten-year, headlong rush into self-service, discount mentality retailers has lowered profits for everyone in this room, lowered the standards once tied to brand representation, and soured the consumer’s taste for better quality products.”

Mann compared the situation to a church that requested only half of what congregates traditionally contributed to the collection plate. The church — “Our Lady of Fifty Percent Discounts and No Payments ’til Next Year” — might stir up some initial interest, he argued, but lacking a fiery preacher with a compelling message from the pulpit, it was doomed to fail.

“If the sermon is good, don’t give it away at a discount,” Mann continued. “In MARTA we think so highly of our product we like to see that plate go by a second or even a third time.” He underscored the point by noting that the group is second only to NATM in average dealer size. “We didn’t get that way by selling price only. We sell value.”

Moving from religion to retail, he described the difference between price and value proposition. “If you buy a DVD player from a MARTA member for $149 because you found out you’ll have picture quality and sound unlike anything you’ve ever experienced outside a movie theater, that’s value. If you buy the same item at Wal-Mart for $119, that’s price — plus a lost add-on profit opportunity.

“And when the customer returns it because they thought it played VHS tapes, that’s loss, for Wal-Mart, the manufacturer and the entire industry.”

At the buying portion of the confab the emphasis was clearly on order writing, as manufacturers arrived with volume targets driven by special product offerings and other program lures. Some exhibitors, including GE Appliance, Maytag, Sharp and Toshiba, presented elaborate CES- and Builders Show-type displays, and most were upbeat about business in general and MARTA’s ability to sell an upscale product mix.

“We put a much larger effort into this show to highlight the breadth and capability inherent in Sharp’s new products,” said Steve McNally, VP/sales for Sharp’s Digital Solutions Group. “Our ‘be sharp’ promotional campaign and the emerging technologies Sharp is introducing combined to present some very real opportunities for MARTA’s membership.”

MARTA chairman Elmer Karl, who operates 15 Karl’s stores throughout the Midwest, also cited the group’s renewed “spirit of cooperation and unity, which seems higher than in years passed, perhaps at historic levels. Outside challenges, like a predatory Lowe’s, do have a way of getting the membership to act together.”

In other MARTA business, the group announced that its second biannual conference and show would kick off Aug. 23 at the Princess Resort in Scottsdale, Ariz., and that the membership would also gather for coordinated activities at the Kitchen/Bath Show in April and CEDIA in September.

MARTA held its first such “orchestrated” trade show meetings during last month’s CES event in Las Vegas. The two-hour sessions took the form of dealer-only breakfasts that were used to direct merchandise committee efforts the first day, and to summarize activities at the next morning’s meeting. Some members received vendor or category assignments, such as scouting out new home installation opportunities or merchandising SKU selection for brands, and information that couldn’t be conveyed orally during the two-hour sessions was e-mailed as bulletins to the entire group following the show.