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Brand Source Eyes Solid 4th Quarter

LAS VEGAS — Despite some economic headwinds, Brand Source remains optimistic about business in the coming months, senior executives told TWICE at the group’s bi-annual Convention and Buy Fair here last month.

Sales for the $9 billion buying organization have been “good for the most part,” said executive director Bob Lawrence, although some regions, including Florida and parts of the Midwest, are finding the going tougher due to a cooling housing market and higher gas prices and interest rates.

Going into the all-important fourth quarter, Lawrence expects that those macro-economic factors will likely have some impact traffic industry-wide. “Our categories are all replacement businesses,” he said. “When the economy softens, it has an impact on discretionary spending, including things like home theaters and appliance upgrades.”

Further impacting majap sales are the recent round of price hikes enacted by manufacturers in response to higher copper, component and fuel costs. Lawrence said independent dealers cannot afford to absorb the price increases as some big box chains had done in the past, and hopes that the steeper factory pricing is equitably “passed along across the board” to all distribution channels.

Nevertheless, white goods still represent “a great value” to consumers, he said, noting that the industry had gone five years without any pricing increases.

Conversely, Lawrence also acknowledged the recent round of price cuts in flat panel TVs. “While it “won’t affect dealers’ bottom lines,” he said, it will compel them to sell more units. Fortunately, flat panel sales remain strong, he noted, and availability, aside from “some spot shortages in 42- and 50-inch,” is fine overall. Easing the situation is Brand Source’s wide assortment, available to members through its Expert Warehouse fulfillment program, which allows dealers to readily switch from one brand to another in the event of a vendor shortfall.

Jim Ristow, general manager of Home Entertainment Source (HES), the group’s specialty A/V division, with the additional responsibility for Brand Source’s CE merchandising overall, believes the battleground between display technologies will be in 42-inch panels, where pricing is now comparable and LCD may even fall below plasma. As a result, “demand is growing for 40- and 42-inch LCD, and customers are on the fence as to which technology they want to buy,” he said.

Forty-two-inch plasma will surely be put to the test this October when Sharp begins shipping its new line of AQUOS 1080p LCD TVs, Ristow said. The platform, which made its trade debut at the Brand Source show, will include a 42W-inch model with a $2,299 MAP, in addition to 46W-inch and 52W-inch sets at MAPs of $3,499 and $4,499, respectively, he said.

Ristow added that the current dearth of 1080p content shouldn’t deter consumers from stepping up to the next generation of HDTVs. “Forget about content,” he said. “The first HDTVs sold before there was anything to watch in high definition.”