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BrandSource Sets Variety Of Dealer Solutions

DALLAS — BrandSource, the $14 billion
electronics, appliance and home-furnishings
buying group, will continue to
provide solutions to some of the most
vexing industry challenges facing its
4,500 members.

Speaking before record crowds at the
group’s 2010 Spring Summit here at the
Hilton Anatole last month, BrandSource
CEO Bob Lawrence cited instant rebates,
inventory management and brand recognition
among the biggest obstacles for independent

Instant rebates, which are hard to
track, costly to administer and a drain on
cash flow, are nevertheless here to stay,
he said, as consumers, big-box chains
and vendors embrace the concept. However,
the promotions also represent “the
only way to keep you price competitive
without sacrificing margins,” Lawrence stressed, and pointed to
the group’s new instantrebate
portal, an online
tool that went live in
January, as a way to consolidate
claims and reduce
payment time to
15 days.

The portal will also
begin processing instant
rebates from major appliance manufacturers,
who began offering the promotions
in February. According to Brand-
Source appliance VP John White, the
rebates have given white goods a better
than 20 percent lift and “help us be
competitive with big-box stores,” which
continue to pummel the category with
aggressive 15 percent to 30 percent-off

On the inventory front, Lawrence reminded
dealers that the group’s Expert Warehouse distribution program, which
is rapidly approaching $1 billion in sales,
allows members to lower their overhead
and increase their turns by ordering
truckloads of mixed merchandise as needed.
BrandSource has also begun adding
900 major appliance SKUs from Whirlpool,
Electrolux and GE to its Expert
Warehouse distribution centers serving
the Northeast quadrant of the country,
and will expand the rollout to all states
east of the Mississippi by year’s end.

Ultimately, said Lawrence, the program
will also include furniture, making
it the ultimate one-stop logistical solution.

The group will also continue to aggressively
market the BrandSource brand
name and will press the 50 percent of dealers
that haven’t yet adopted the tagline in
their signage and advertising to do so.

“It’s the only way I know to gain top-of mind
awareness,” Lawrence said. “You
can’t name a hotel, a real estate office,
a gas station, a fast-food restaurant, a
weight-loss center or a health club without
a national tie-in. Why hasn’t our industry
done it?”

BrandSource remains the fourth mostrecognized
retail name in appliances and
ranks fifth in consumer electronics, he
noted, and plans to improve that standing
include extensive advertising on the
Scripps’ home-oriented TV networks
and a return to dealers of $1 toward local
advertising for every $2 they pay in
branding fees. The placement of Brand-
Source logos in each of the group’s 8,000
storefronts and ads in all members’ markets
would help compensate for the multibillion-
dollar advertising budgets of national
big-box chains, Lawrence said.

The branding effort is also expanding
online under former communications
director Bob Donaldson, who has
been named general manager of digital
marketing. BrandSource will soon add
a Twitter account to its Facebook presence,
he said, and dealers will be provided
with how-to guides for social-media and
email marketing. will
also feature contests and giveaways, including
a Ford Fiesta, refrigerators, flatpanel
TVs and BrandSource gift cards,
and site improvements now allow dealers
to show below-MAP prices within the
shopping cart.

In other BrandSource news, CE has
surpassed majaps as the group’s No. 1
category in dollar volume due to growth
and partnerships such as the alliance with
PRO Group, Lawrence told TWICE.
CE now represents about 40 percent of
total sales, white goods 35 percent, and
furniture 10 percent, followed by flooring
and other categories.

CE dollar sales were up 4 percent last
year, appliances rose 2 percent and furniture
slipped 2 percent, he said, with each
exceeding its respective industry and yielding
market share gains for the group.

In electronics, Jim Ristow, executive
VP of the Home Entertainment Source
(HES) division, urged A/V dealers to
evolve into system integrators as “the TV
wall is going away”. In the
meantime, he expects that half of the LED
TVs sold by independents this year will
be 3D, and has secured nationally offered
product bundles by Samsung, and Brand-
Source-specific bundles from Toshiba that
include a 46-inch or 55-inch LCD, Blu-ray
Disc player and free BD movie.

On the appliance side, White said
the good news is that average selling
prices for the industry were up $673 in
2009, the product mix improved in the
fourth quarter, and sales are expected
to grow 4 percent to 5 percent this year
as 70 percent of consumers look to remodel
their homes.

The bad news is that manufacturers
cut production last year in response
to weak demand, and the recent spike in
sales from Black Friday promotions, federal
appliance rebates and the improving
economy has strained supplies.

Also troubling are the aggressive price
promotions by big-box chains that are
eating away at majap margins in a traffic driving
tactic more familiar to CE. White
warned dealers to expect “Black Fridaytype
promotions” around major holidays
like Memorial Day, Independence Day,
Labor Day, Christmas week and, more
immediately, the week before Earth Day
as 31 states begin offering the remaining
$187 million in federal appliance rebates.

BrandSource is countering with
stacked promotions including delivery
rebates, financing offers and movie club
offers that can be a “tie-breaker” for dealers,
White said.

BrandSource will next convene in August
at the Paris Las Vegas Hotel, and
will hold next year’s Spring Summit one
month earlier, in February, at the World
Marriott Center in Orlando, Fla.