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MARTA Will Operate As Separate Entity Under Brand Source Umbrella

MARTA Cooperative of America met for the first time under its alliance with the larger Brand Source buying group, and the word is that MARTA will continue as its own entity, operating as a unit just like Brand Source’s Home Entertainment Source.

Bob Lawrence, executive director of Brand Source, told TWICE during the MARTA buying fair held last month at the Renaissance Sea World Resort, here, that “for the foreseeable future MARTA will operate as its own entity. We see no reason to change that.”

What will change under the alliance is that Brand Source will negotiate programs with manufacturers for existing Brand Source members and MARTA. “But that doesn’t mean that Brand Source and MARTA plans will be identical. Some MARTA programs might be different than Brand Source,” Lawrence said.

For instance, Toshiba has been a major supplier to MARTA over the years and Lawrence indicated that won’t change going forward. Toshiba currently is not a Brand Source buying partner.

What Brand Source and its new group partner will share will be the opportunity to become part of the Brand Source branding program and participate in the Expert Warehouse, Expert Financing, Expert Care (the group’s health care plan) and Expert Protection (extended service) programs, Lawrence said.

Another change will be that starting in 2007 MARTA’s meetings will be held during Brand Source meetings in March and late August. The scheduled MARTA meeting for August in Scottsdale (Aug. 20-24) is still scheduled, pending “contractual agreements” with the resort, Lawrence noted.

When asked about the morale at this meeting, Lawrence candidly said, “There was some trepidation on our part, opening up all doors to MARTA members and wondering how they would react. But the reaction has been great and the morale has been great. They are gracious partners. This should be a ‘win-win’ for both of us.”

This confirmed comments made to TWICE during the show by MARTA members Roger Van Vreede of Van Vreede TV & Appliance, Mike Fischer of Nielsen’s Tire & Appliance and Itchey Popkin of Furniture Fair.

When asked if there should be concerns among MARTA members that they might now be competing directly against Brand Source members, Lawrence said, “We’ve always had that with Brand Source. We’ve found that other independents in a market are not the competition. The competition is the big guys — Home Depot, Lowe’s and Best Buy.”

Popkin confirmed this and noted, “Brand Source has its eye on the big guys and gets the big picture.”

Lawrence reports that both CE and major appliance suppliers have applauded the alliance. “We work to reduce expenses. When we do we go back to our suppliers and say, ‘Look what we’ve done. We want to share that with you.’ Suppliers have, across the board, said this is a great thing.”

He added, “All groups are facing dealer attrition. Manufacturers have told us that our alliance helps strengthen the independent channel. We can help curb dealer attrition.”

When asked about the problem of dealer attrition and the notion that it comes from the issue of family-owned businesses dealing with succession issues, Lawrence said that trend is more serious than competition from national chains. “When a retailer tries to pass the business to a son or a daughter and they don’t want it, then what do you do? We don’t have an answer yet.”

But Lawrence hinted at a possible future Brand Source might follow. “We could take these stores over, go to college campuses where students might want to take over a business and make them an offer, like what some doctors do when they retire and get a younger doctor to take over.”

Concerning holding meetings during the height of holiday selling season to create this alliance, Lawrence said, “When [the boards of each group] made the decision to make this alliance, we had to work quickly. We met with our board on Dec. 15. MARTA had a meeting on Dec. 17. We wanted to work quickly to avoid rumors in the industry and to achieve this quickly because at the end of every quarter, every half, and every year is when retailers consider changing buying groups.”

Currently MARTA has 90 members after the departure of three of its largest to Nationwide in February. MARTA’s sales for the group are $1.5 billion, Lawrence said.

And he added, “Watch for additional expansion opportunities” for Brand Source. Lawrence said, “With the changes going on at retail and with buying groups, the industry now realizes that groups need an infrastructure to work with plenty of the resources [Brand Source] can provide.”