With BrandSource's executive director Bob Lawrence proclaiming 2005 as “the best year we have had in 11 years,” the buying group emphasized its accomplishments and launched a new high-end appliance division during its annual national convention, held here at the Paris Hotel last week.
Following the success of its Home Entertainment Source (HES) specialty A/V group, BrandSource unveiled Gourmet Source, a high-end appliance specialty division. Created specifically for retailers of high-end cooking products, the group believes that about 250 to 300 of its 1,840 members will qualify to be part of the unit, although Lawrence said during the show that the actual dealer tally had not yet been determined.
To qualify, 50 percent or more of a dealer's business would have to be in upscale appliances, excluding laundry. Among the initial benefits will be specialized advertising, merchandising, product and promotions geared toward the high-end majap market. A 16-page specialized brochure distributed at the convention featured brands such as KitchenAid, Jenn-Air, Monogram, Bosch and Viking which “can be customized to a specific Gourmet Source member based on the lines they carry,” the group said in a prepared statement.
BrandSource, whose convention drew more than 4,000 attendees, has around $4 billion in annual sales. Sales volume is split between major appliances, at 50 percent, and 25 percent each for consumer electronics and furniture. The group claims it is the fourth most-recognized major appliance retailer and fifth most-recognized consumer electronics retailer, and that times are good for member dealers.
In his opening remarks Lawrence said, “If you aren't leading, the view never changes. What does that mean? That means in our business there is nothing as constant as change.”
He rattled off the many recent changes in the industry as rhetorical questions. One was: “Who would have guessed that in August 2005 Consumer Reports would survey 6,000 readers and recommend that the place to buy appliances is at an independent dealer store? Isn't that great?” (See TWICE, Aug. 22, p. 1.)
Lawrence said BrandSource's results in the past 12 months “makes this the best year [for the group] in the past decade.” BrandSource's major appliance sales were up 11 percent during the past year, consumer electronics sales were up 27 percent, and furniture was up 14.5 percent. “Let's compare that to the industry,” he said. “Appliance sales were flat, electronics sales were up 8 percent and furniture was up 1.5 percent.” All of that resulted in a 1 percent market share gain in appliances and a quarter-percent share gain in consumer electronics for the group.
Ever the BrandSource evangelist, Lawrence turned to what he called “My favorite subject, the BrandSource brand” — the concept that he kicked off in 1998. Some 65 percent of the group's independent retailers have embraced the co-branding concept.
The campaign includes BrandSource TV spots on NBC, ABC, CBS and HGTV; the group's sponsorship of the Wheel of Fortune, Jeopardy and Hollywood Squares television game shows; and branded tabloid inserts that number in excess of 100 million a year. Lawrence told TWICE that BrandSource headquarters spends $15 million a year in advertising and that “We know that our members spend an additional $180 million to $190 million on their own. We could be spending over $200 million as a group.”
Lawrence told his membership that using “the BrandSource tools, you can increase your business. And I can prove it.”
He said the group reviewed the business of about 100 members that participate in the BrandSource program, “including exterior/interior signage, truck signage, use of the BrandSource logo in advertising, the BrandSource jingle on their phone call holding, and other uses. We found that their business was 8 percent better than those that did not participate.”
Lawrence noted, “For a $1 million dealer this is an extra $80,000. For a $5 million dealer this is $400,000 and for a $10 million dealer, this is $800,000.”
He also emphasized other BrandSource programs that continue to build business: the Expert Credit Card program; the tab advertising program; and Expert Warehouse, which includes “our appliance Expert Cross Dock” distribution program.
In a rare knock of BrandSource's buying group competitors, Lawrence said without naming names, “Now, if copying is the sincerest form of flattery, I can tell you that today as we sit here, one of the other buying groups is scurrying, trying to catch up to us by creating a cross-dock warehouse program identical to ours. They realize the value of the offers and pricing we were offering our members. They know that if they do not implement a similar program, their members will continue to wonder why our programming is so much better than theirs.”
More from BrandSource, see p. 90.