“We are just getting started,” BrandSource CEO Jim Ristow told the buying group’s electronics and appliance dealers late last month in a speech that underscored the retail changes and internal strengths creating strong, positive momentum for the organization this year.
Ristow, celebrating his first anniversary as chief exec, addressed members and vendors at the group’s annual spring Summit & Expo, which was at the Marriott Orlando World Center in Florida. He began with his audience’s largest product category, major appliances, observing that while white-goods sales will grow by 4 to 6 percent for the industry, “independents will grow by 6 to 8 percent and will grow share.”
Ristow cited growth in premium majaps for Brand-Source, fueled by contemporary styles and colors and by products made for smaller-footprint kitchens, but cautioned that, like CE, white-goods margins have gotten smaller over the past couple of years.
However, the changing retail landscape, especially in major appliances, will benefit BrandSource members. That landscape holds no changes at The Home Depot, Lowe’s or Best Buy, but it’s a different story when it comes to hhregg and Sears.
Ristow acknowledged the sales declines at hhgregg, and that analysts have said the chain “needs to reinvent itself,” but the question remains, “Can they do that?”
As for the future of Sears, Ristow commented, “No one has the answer,” citing an ongoing theory that “Sears will try to become profitable with smaller stores.” But, as with hhgregg, the real question no one can answer is, “Do they have time to reorganize?”
The BrandSource CEO also addressed the decision by JCPenney to re-enter the major appliance business. He explained that the chain noticed its large credit card holders “also buy at Sears, so it is the same demographic … and they shop at malls where both chains have locations,” so the department store wants to “capitalize on the opportunity.”
Given all the questions and conjecture, Ristow believes there will be a lot of things in play over the next six to 24 months. Some competitors may get smaller, and others may go away, but whatever the outcome, “we will get share,” he said, as the choice for many major appliance shoppers is the independent channel.
Indeed, while others center on “mainstream” white goods, BrandSource’s opportunity lies in its premium product focus, which delivers profits, he said.
Elsewhere, regarding the group’s BrandSource branding initiative, launched under his predecessor Bob Lawrence, Ristow promised a more “surgical” approach to marketing spend, without the national TV spots or celebrity endorsers of the past. His intention, he said is “to make the members money, not spend their money to build the brand.”
To that end, one of BrandSource’s goals this year is to “act like a big fish” by having one voice and by growing membership across the board in order to “be more important to consumers and vendors,” he said.
Indeed, the group gained added heft in January when three of the four chapters of the NECO Alliance, one of the country’s largest appliance buying co-ops, left the Nationwide Marketing Group after 20 years and formed an alliance with BrandSource.