Buying Groups Providing Fresh Ammo For Independents

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NEW YORK — As the nation begins to recover from the deepest recession in memory, the industry’s buying groups are helping their members dust off the past year and reposition themselves for a changing marketplace.

New programs and initiatives, including price promotions, product bundles, rebate solutions and turnkey entrées to the promising whole-home control market, are designed to help independent dealers stay ahead of the curve and compete more effectively against national chains and e-tailers.

The following is an overview of the most recent efforts by the largest CE and majap groups on behalf of their members.

AVB/BrandSource:

The industry’s largest CE, majaps and home-furnishings buying group, with 4,500 members and $14 billion in annual sales, is focused on what it said are the biggest hurdles facing independent dealers today: instant rebates, inventory management and brand recognition.

To address the former, the group recently launched an instant- rebate portal that allows members to consolidate their claims and reduces payment time from two to three months to 15 days. Accessible through the Brand- Source dealer site, the portal will soon accept instant rebates from major appliance manufacturers in addition to electronics vendors.

On the inventory front, the group’s Expert Warehouse distribution program, operated by partially owned ArchBrook Laguna, allows members to order truckloads of mixed merchandise as needed, which helps lower their overhead and increase their turns. The program is nearing $1 billion in sales, group executives said, and has begun adding major appliances to the mix for the first time.

AVB, through its BrandSource marketing effort, has been a longtime proponent of a single, go-to-market brand strategy that would help its members collectively compete with big-box chains. Only half of the group’s dealers participate in the program, which includes store signage, local and national advertising and a BrandSource.com consumer site that refers shoppers to nearby members.

Apart from its regional divisions, AVB’s major affiliates include

Resource Plus

, the former MARTA Cooperative of America buying group comprised of larger independents, led by managing director and general manager Robert Thompson, and

Home Entertainment Source (HES)

, the group’s specialty electronics branch. HES, like its strategic partner The PRO Group, is advising its 475 members to morph into system integrators that can provide A/V, gaming, IP, IT, and home-control products and services as margins continue to erode within the group’s core A/V categories.


Home Technology Specialists of America (HTSA):

The $450 million buying group for system integrators has 60 members with some 100 storefronts located throughout 37 states. The group recently changed the second word of its name from “Theater” to “Technology” to better reflect its membership, which designs and installs high-end audio, video, automation, lighting and climate systems for an u-market clientele, and has more than 800 installers in the field.

To survive the recession, members have cut costs through staff and inventory reductions, and have focused on new categories like high-performance networking and LED lighting fixtures that helped supplant slower sales.

Recent group initiatives include a new search engine-optimized Web site template for use by HTSA members.

More recently, the group added its 60th member, Dallas Sight and Sound, a system designer and integrator started in 1984 by David Rogers, a founding member of CEDIA. On the manufacturer side, Dana Innovations joined the HTSA vendor roster with its Sonance, Trufig and iPort family of brands.

Progressive Retailers Organization (PRO Group):

Likes its strategic partner HES, the specialty A/V buying group is exploring new margin opportunities in control automation, energy management, subscription services, mobility devices, and even gaming and IT, as its traditional A/V categories continue to commoditize.

Indeed, margin declines, instant rebates and the extended recession took a toll on the channel and the group as longtime members Anderson’s and MyerEmco closed shop and Ken Crane’s downsized, prompting the PRO-HES “Alliance” to also consider direct-sourcing opportunities and private-label programs.

The move toward system integration and turnkey solutions was ref lected in the addition this month of custom-install supplier SpeakerCraft, which brings to three the number of custom suppliers in PRO. Other recent initiatives include a redesigned Web site at

www.progroup.net

, while on the member front PRO recently added its 19th dealer, former HES president Bob Cole of World Wide Stereo in Philadelphia, and Paul’s TV announced plans for a national presence through in-store CE shops located within regional furniture chains.

NATM Buying Corp.:

The group, which caters to regional big-box CE and majap chains, quickly recovered from the loss of its bankrupt New England dealer Bernie’s by re-enlisting former members Abt Electronics and P.C. Richard & Son, two of the industry’s largest independent operations. The additions, effective last month, gave NATM a $2 billion shot in the arm that increases its clout with manufacturers and fortifies its marketplace position against national chains.

To help its members compete more effectively in the low-margin, promotiondriven marketplace, the group continues to make opportunistic buys of inventory overhang and is turning to non-traditional categories like home office, accessories and home audio. Indeed, new core suppliers include Cyber Acoustics, Dual, Hewlett-Packard, Lexmark and distributor New Age Electronics, while other contenders such as Audiovox, Ingram- Micro, Monster, Omnimount, Sanus, Scosche and Solo are also vying for NATM’s business alongside the major TV and appliance manufacturers.

Nationwide Marketing Group (NMG):

Despite some attrition during the depths of the recession, the $12 billion NMG had a net gain of 71 new members last year, bringing its roster to approximately 3,000 dealers. To help them compete as the economy recovers, the group is focusing on three core initiatives this year: the Internet, digital signage and promotional programs.

The former includes an improved Nationwide e-commerce site,

www.Brands

Direct.com, which offers good-better-best design options for dealers looking to customize their Web pages. The group’s backroom Intranet site was fortified as well; there, dealers can access the group’s inhouse promotional videos and find Webinars on such topics as Internet strategies.

The video clips, along with movie trailers, training programs, HD demo footage and customized TV spots, can also be accessed through Nationwide’s MemberNet TV service. The gateway device is an Apple-based box, priced between $500 and $600 and often subsidized by vendors, that brings in the proprietary content from the Web. Dealers can feed the videos to their TV walls or to individual monitors mounted in kiosks which can be used to greet customers.

The group has also developed a full promotional calendar with its vendors, which includes exclusive programs, incentive offers and buy-in opportunities, and plans to leverage its 2010 Excellence in Appliance Retailing Energy Star Award from the U.S. Environmental Protection Agency in its marketing collateral.

Apart from its regional chapters, key affiliates include the self-warehousing

NECO Alliance

in the Northeast, and the 460-member custom-install

Specialty Electronics Nationwide

division (SEN). The latter is particularly well-positioned to capitalize on new opportunities in connectivity, energy management and whole-home control, and is pressing its advantage by providing free Imaging Science Foundation (ISF) training and CEDIA- sponsored seminars during NMG conventions. Another recent initiative is the creation of home-theater furniture bundles that are available to members through the group’s warehousing program.

Other CE and majap buying organizations include

Mega Group USA/Best Brands Plus

, the Germantown, Tenn.- based collective of independent furniture dealers, and, within the 12-volt market,

In-Car Experts (ICE)

and

Mobile Electronics Specialists of America (MESA)

. The four-year-old ICE, run by executive director Rob Elliot in Pedricktown, N.J., boasts some 240 storefronts and $280 million in sales, while the 50-member MESA was founded six months ago in Northfield, N.J., ago as a dealer-owned marketing and selling group.

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