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MARTA Will Operate As  Separate Entity Under Brand Source

Orlando, Fla. — MARTA Cooperative of America is meeting for the first time this week, here, under its alliance with the larger Brand Source buying group, and the word is that MARTA will continue as its own entity, operating as a unit just like Brand Source’s Home Entertainment Source.

That’s the word from Bob Lawrence, executive director of Brand Source, who told TWICE Thursday that “for the foreseeable future MARTA will operate as its own entity. We see no reason to change that.”

What will change under the alliance is that Brand Source will negotiate programs with manufacturers for existing Brand Source members and MARTA. “But that doesn’t mean that Brand Source and MARTA plans will be identical. Some MARTA programs might be different than Brand Source,” Lawrence said.

For instance, Toshiba has been a major supplier to MARTA over the years and Lawrence indicated that won’t change going forward. Toshiba currently is not a Brand Source buying partner.

What Brand Source and its new partner will share will be the opportunity to become part of the Brand Source branding program and participate in the Expert Warehouse, Expert Financing, Expert Care (the group’s health care plan) and Expert Protection (extended service) programs, Lawrence said.

Another change will be that starting in 2007 MARTA’s meetings will be held during Brand Source meetings in March and late August. The scheduled MARTA meeting for August in Scottsdale (Aug. 20-24) is still scheduled, pending “contractual agreements” with the resort, Lawrence noted.

When asked about the morale at this meeting, Lawrence candidly said, “There was some trepidation on our part, opening up to all MARTA members and wondering how they would react. But the reaction has been great and the morale has been great. They are gracious partners. This should be a ‘win-win’ for both of us.”

This confirms comments made to TWICE on Thursday by MARTA members Roger Van Vreede of Van Vreede TV & Appliance, Mike Fischer of Nielsen’s Tire and Itchey Popkin of Furniture Fair.

When asked if there should be concerns among MARTA members that they might be now competing directly against Brand Source members, Lawrence said, “We’ve always had that with Brand Source. We’ve found that other independents in a market are not the competition. The competition is the big guys — Home Depot, Lowe’s and Best Buy.”

Popkin confirmed this and noted, “Brand Source has its eye on the big guys and gets the big picture.”

Lawrence reports that both CE and major appliance suppliers have applauded the alliance. “We work to reduce expenses. When we do we go back to our suppliers and say ‘Look what we’ve done. We want to share that with you.’ Suppliers have, across the board, said this is a great thing.”

He added, “All groups are facing dealer attrition. Manufacturers have told us that our alliance helps strengthen the independent channel. We can help curb dealer attrition.”

When asked about the problem of dealer attrition and the notion that it comes from the issue of family-owned businesses dealing with succession issues, Lawrence said that trend is more serious than competition from national chains. “When a retailer tries to pass the business to a son or a daughter and they don’t want it, then what do you do? We don’t have an answer yet.”

But Lawrence hinted at a possible plan Brand Source might pursue in the future. “We could take these stores over, go to campus where students might want to take over a business and make them an offer, like what some doctors do when they retire and get a younger doctor to take over.”

Concerning the meetings at the end of the year to create this alliance, Lawrence said, “When [the boards of each group] made the decision to make this alliance we had to work quickly. We met with our board on December 15. MARTA had a meeting on December 17. We wanted to work quickly to avoid rumors in the industry and to achieve this quickly because at the end of every quarter, every half and every year is when retailers consider changing buying groups.”

Currently MARTA has 90 members after the departure of three to Nationwide earlier this month. Sales for the group are $1.5 billion with 40 percent being CE and the rest being major appliances and furniture, Lawrence said.

And he added, “Watch for additional expansion opportunities” for Brand Source. Lawrence said, “With the changes going on at retail and with buying groups the industry now realizes that groups need an infrastructure to work with plenty of the resources [Brand Source] can provide.”