LAS VEGAS -- At its largest-ever convention and buying fair, held here at the Paris Hotel last week, Associated Volume Buyers (AVB) implored its 1,550 member dealers to seize the moment while a "chaotic marketplace" for majaps creates new opportunities for independents.
Despite new challenges from such Johnny-come-latelies as The Home Depot and Wal-Mart, members are well-positioned to build market share by embracing change and doing business differently, AVB's leadership said.
Specifically, dealers should begin to reap some of the same margin advantages afforded by Home Depot's 40-point, no-inventory business model once the group's 28 newly leased regional warehouses come online.
The move, which is similar to Nationwide/NECO's inventory strategy, will allow members to cut warehouse costs and other inventory-related expenses by buying merchandise as needed, rather than stocking their own goods. The first test order was shipped to AVB's Des Moines, Iowa facility earlier this month.
In a rousing address to the rank and file replete with laser light show and pyrotechnics, executive director Bob Lawrence assuaged big-box fears by reminding members that category killers "come and go, but it is we who are still here, who pay the bills and who drive profit margins."
To hammer the point home, Lawrence offered a musical homage to Highland, Silo, Sun TV, Campo and Roberds in the guise of Bob Dylan's "Knockin' On Heaven's Door." He then paid tribute to Circuit City's white-goods withdrawal with Queen's "Another One Bites the Dust." And to "those new players in the business, Home Depot and Wal-Mart," he offered the strains of Queen's "We Will Rock You."
Nevertheless, Lawrence reminded members that Sears remains AVB's "biggest and primary competitor," and warned that the No. 1 majap merchant can conceivably claim a bigger than 50 percent market share in the wake of Circuit City's exit from the category.
To further combat competitors both old and new, AVB will help dealers build traffic and trust by taking its Brand Source ad campaign to network TV, and will press ahead with its Internet initiative, Brand-Source.com. The e-commerce site has already registered 4 million hits this year through July, representing about 4 percent of U.S. households, Lawrence reported.
"Between the Internet and our advertising campaign, Brand Source is well on its way to becoming a major U.S. brand, which is key to independents' survival and success for years to come," he said.
AVB president Bill Pleasants also addressed the crowd, exhorting dealers to play their strengths in sales and service. "The most important consumer consideration is delivery and service," he said, adding, "We do one heck of a better job of closing [a sale] than anybody."
Lawrence noted that those areas "separate us from the big-box stores," and that delivery and installation in particular "are our keys to success," as national chains contract their fulfillment out to minimum wage-paying services that are prone to dented deliveries and scratched floors.
Dealers, despite concerns over changing majap distribution, appeared receptive to the message and upbeat about business. "Every time they open a new store it scares us," conceded Ron Coons of C&M Appliances in St. Joseph, Mo. "We're in a Wal-Mart economy: cheap and cheap," he said, although he thinks GE's new association with the world's largest retailer may come back to haunt it. "They'll serve a need, but GE will hurt itself by getting a reputation for making a cheap product and by losing the personal contact with consumers."
Coons said the best move for his business -- which is up across the board in white goods, particularly in refrigeration and air conditioning -- was joining AVB and Brand Source. "There's no way you can be out there and make a go of it alone," he said. "The next five years will definitely be interesting. There's going to be a lot of shaking out."
Other highlights of AVB's show included a keynote address by top Domino Pizza franchisee Frank Meeks and a concert by rockers Huey Lewis & The News. The group's next confab is slated for September 6-9, 2001 in Orlando, Fla.