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Brand Source, HES Bow Ordering, Marketing Plans

Brand Source, the $4-billion-plus buying organization, and its specialty A/V offshoot, Home Entertainment Source (HES), unveiled a series of new programs and initiatives at the groups’ spring summit and buy fair, held here last month at the Wyndham Anatole Hotel.

Topping the list of new Brand Source dealer offerings is a cross-dock program that allows members to place smaller white-goods orders of as little as 12 pieces direct with vendors, freight prepaid, using the group’s 18-month-old OMS online ordering system and HES’ three regional warehouses.

According to Brand Source’s executive director Bob Lawrence, multiple dealer orders will be consolidated into full truckloads and shipped to a cross dock, where they’ll be split into smaller orders and sent to their respective dealers. The system, unique to Brand Source, will give members a competitive advantage by lowering their costs, reducing handling and damage, and increasing turns without increasing inventory expense, he said.

The program also addresses the logistical dilemma faced by white- and brown-goods vendors who serve the “1,900 individual ship points” that Brand Source’s dealer network represents.

“The dealer will be getting all of the advantages of truckload buying, including expedient delivery, but with small quantity orders,” Lawrence told TWICE.

The new ordering process, combined with the group’s Expert Finance plan — a retirement/succession program that gives dealers shares in parent organization AVB Inc. — makes Brand Source “the most aggressive, customer-centric organization in the industry,” Lawrence said. “With these tools, we won’t just survive, but thrive and grow.”

Indeed, the unit value of Expert Finance shares has grown 75 percent to $140 per share year-over-year, Lawrence announced, “exceeding anything in the stock market.”

On the product front, Lawrence noted that Brand Source gained 2 percent in white-goods market share in 2004, and outperformed the major appliance industry overall.

“The independent dealer had lost share to the nationals, but that’s reversing,” Lawrence said. He added that last year’s majap momentum carried into January and February despite new industry-wide price hikes, indicating that retail sell-through can continue throughout 2005.

Majaps remain the group’s largest-volume category at about 50 percent of total sales, followed by CE and furniture at roughly 25 percent each, he said.

Nevertheless, CE represents the fastest-growing category for Brand Source, with the groups’ cumulative brown-goods business up tenfold in 2004 thanks to HES’ Expert Warehouse program. Given CE’s sales pace, Lawrence encouraged his hard-core white-goods dealers to consider adding microdisplay and flat panel TV to their assortments.

“Microdisplay is bringing an excitement and profitability back into electronics that we haven’t seen in a long time,” he told dealers. Under-the-counter LCD panels in particular represent a “huge opportunity” for add-on sales while keeping customers out of competitors’ stores.

“Sixty percent of homes have a TV set in the kitchen,” he said, “and the customer isn’t going to put a CRT TV on her new granite countertop.”

Meanwhile, HES announced that it will begin emulating Brand Source’s national branding program by offering HES store signage, price tags, point-of-sale materials and cobranded vendor print ads beginning with Samsung. (See story, p. 20).

HES’ general manager Jim Ristow said the program was inspired by a Brand Source survey of 100 member dealers showing that those who utilize the group’s cobranding program have realized sales increases of as much as 8 percent, while revenues were flat to down for those who don’t.

Brand Source will continue its national advertising campaign with TV spots on the CBS, NBC and ABC broadcast networks and cable’s Home & Garden TV, Do It Yourself Network and Food Network, much of which is supported by vendor contributions. This year’s strategic goal is to grow Brand Source awareness by increasing dealer compliance from 35 percent to 65 percent, said group marketing exec Mark Baird. The brand is currently the fourth most recognized name in major appliance retailing and the fifth most recognized brand in CE, the group indicated.

“Put a sign outside your store, put the logo in your ads, answer the phone ‘Brand Source,’ and explain what it means to your sales staff,” Lawrence implored his members. “Top-of-mind awareness is growing, and Brand Source is generating footprints.”

Lawrence also announced that Brand Source will establish a Canadian division, based in Montreal, in order to capitalize on the “huge opportunity” that market represents.

The Dallas event was the third biannual spring buy fair for Brand Source, following shows in Las Vegas and Atlanta. Lawrence said the group will continue to change the venue of its spring show each year to accommodate its far flung constituency.

Highlights of the Dallas confab included a series of interactive, hands-on educational programs, and a keynote address by retail expert T. Scott Gross, author of 11 books, including “Why Customer Service Stinks and What to do about it.”

Brand Source will gather again this summer, Aug. 28 through Sept. 1, at the Paris Hotel in Las Vegas.

Brand Source is currently comprised of approximately 1,950 independent dealers representing some 2,600 storefronts.