ProSource Sees Buying Group Definition Changing

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  Indianapolis - ProSource, BrandSource's CE division made up of the Progressive Retailers Organization (PRO Group) and Home Entertainment Source, held an SRO reception on Thursday night during CEDIA Expo.

The group's leaders said during the get-together that the definition of buying groups in the industry is changing.


Jim Ristow, CE executive VP of BrandSource, commented, "We are no longer a 'buying group' traditionally. That definition needs to change drastically."

Dave Workman, executive director of PRO Group, gave one example, saying his organization's reaction to the new BrandSource app has been very upbeat.

"This is proof positive that what we have been doing to leverage the best of the both groups," he said. 

Workman noted, "Buying groups have always been about programs, programs, programs ... and marketing. The world has changed and we need to change, look to find new solutions proactively. Logistics, business model changes, forecasting -- all that plus advanced Internet tools, and make changes."

"You can't program your way to survival anymore to get an extra 2 percent [of profit] for survival," Workman stressed.

Ristow added, "Different steps abound, involving e-tail, retail or maybe some sort of blend" should be involved.

Workman said that when it comes to his PRO members and web operations, "No other buying group has the core competency in Internet retailing than ours. We have several retailers in our group that are experts."

When asked if ProSource would develop an in-house brand strategy down the road, Workman responded, "We had plenty of discussions about it with members, and we would like to work with our [supplier] partners. We would like to work with leading suppliers to come up with special derivative lines exclusive to us as opposed to our own private-label lines. Most private labels are usually low-end promotional items."

Ristow noted that in TV at least, these  private-label products are usually tier-three products, $20 to $30 lower in price. The risks are price and if the market changes the risks for our members would be upside down because ProSource members might be at risk for lower margins.

"At this point Vizio, in TVs, are squeezed. How could we do better with a house brand of TV than Vizio? Our group wants to work with our partners [on derivatives,]" Workman said.

Workman said ProSource wanted lower priced HDMI cables and worked with Monster Cable on an exclusive line "that they built for us. Members want us to back well-known brands."

As for the Expert Warehouse II project, the CE operation has begun, according to Ristow, with shipments to customers "coming soon ... that is the next step."

In terms of Pro Source's relationships with suppliers, Workman said that some of its members want fewer, but stronger partners.

"That is what the talk is. We need more help from stronger partners is what they are saying," he said.

Ristow added that ProSource's Signature program will be stronger than ever in 2012, and Workman followed up that members do want a true, core partnership with key vendors.

In other areas Ristow said a smartphone program via Expert Warehouse II has not been set as yet, but he acknowledged, "It is a high volume, business-within-a-business."

Workman also addressed the 20,000 gorilla in the TV business -- the rumored introduction of Apple TV possibly for 2012.

"Apple TV will change the user experience when it comes out. You must follow the breadcrumbs when to comes to Apple."

Workman said Apple is working with Game Stop, and wondered if Apple will they have a game function in their TV's user interface?

"They will want the IPTV experience to be seamless, and have an easy user experience. They probably think that today's IPTV is clunky. They think they can come in and get a major share of the market," he said.

As for Workman's PRO Group, sales are around the $1.6 billion area annually now, with most members doing better this year than last, except Sixth Avenue Electronics, which has closed stores this year and had a myriad of problems. For the industry itself, "The TV business is not great ... it is very challenging. We must adapt and take advantage of other categories."

Sixth Avenue Electronics executives, members of the PRO Group, were not seen at Thursday night's reception. When asked about the current state of the chain Workman referred any questions to the chain's management.

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