ORLANDO, FLA. – BrandSource outlined its CE strategy for the entire group at its Summit & Expo here earlier this month and explained how its affiliated group, Pro- Source, will help in making electronics/appliance members of the larger organization more competitive.
Dave Workman, CEO/president of ProSource, outlined some of the history on how he successfully merged his old organization, PRO Group, with Jim Ristow’s Home Entertainment Group (HES), which was created by Brand- Source.
“We established an alliance, checked our egos at the door and worked as partners. We took PRO’s larger retailers with HES’s smaller custom and specialty dealers and formed something that is greater than the sum of its parts,” Workman said.
ProSource, in its first year as a combined organization, celebrated $4.58 billion in sales, a gain of $1.5 billion, making it “without peer the largest CE buying group in the industry,” and making it “the national alternative” for manufacturers who want to sell upscale CE products and systems, Workman said. (See TWICE.com for a separate report on Pro- Source.)
He said the strategy to leverage supplier relationships forged by the ProSource organization can be implemented with the more appliance- furniture- and TV-oriented retailers at BrandSource. “It will be easier to do it a second time. … There is no question it can’t be done again,” he said.
Ristow explained that while ProSource remains a separate organization, BrandSource will have the opportunity to use Workman as a consultant on the areas of CE the larger group wants to work on, namely 4K and OLED TV.
“The 4K market is happening,” Workman said. “It is a profitable, money-making step-up product that has been good for ProSource” and should be good for BrandSource dealers.
The key is to center on these upscale TV categories, where the average 4K selling price was $1,512 during the holiday season, he said.
Workman told TWICE that while ProSource feared price erosion last fall, it was “not at a tipping point then,” now, or for the next couple of years.
He also said that there is “tremendous growth” in OLED TVs, with products from LG, Sharp, Samsung and others coming on board.
The strategy for BrandSource should be to “capitalize on dollar and unit growth in 4K,” as well as developing a clear merchandising strategy for multi-room wireless audio, home automation and security solutions, he said.
Based on the success of ProSource, “We have a seat at the table with key suppliers who now design products with us in mind.”
Workman noted that “As John [White, appliances executive VP] said of major appliances, the middle is gone. If you are going to merchandise your store for the middle, you put your bet on the wrong horse. It is great to hear that the upper 10 percent of the market is growing. That is a place [BrandSource and ProSource] can own and win.”
But he warned, “If you center on being stuck in the middle with commodity products and CE categories that are dominated by general merchandisers, you’re dead.”