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PRO, HES Are Exploring New Tech Categories

The Progressive Retailers Organization (PRO Group) and its strategic partner Home Entertainment Source (HES) plan to expand their product mix beyond the buying groups’ core A/V specialty assortments.

New categories under consideration include gaming, computers, mobility devices, control automation, energy management and subscription-based content services, group executives told TWICE.

The two independent dealer organizations, together known as The Alliance, will also press vendors for more derivative models, and will explore direct-sourcing opportunities in multiple categories, including possible private-label programs, to better differentiate themselves in the marketplace.

The Alliance will support the new product categories with turnkey business solutions, including logistical support through HES’ fulfillment centers, in order to reduce risk, lower the barrier of entry, and deliver profitable sales for members, the executives said.

According to PRO Group president/COO Dave Workman, the new categories will help drive traffic to members’ storefronts as digital convergence and wireless mobility reshape the industry and consumer lifestyles. “We need customer acquisition,” he said. “We can’t bleed off customers as the energy moves to a digital connected world.”

“The business models of old are just that — old,” added Jim Ristow, executive VP of HES, the specialty A/V division of the Brand Source buying group. “There are opportunities, but it means doing things differently.

“2010 is all about solutions,” Ristow told Alliance dealers and vendors during PRO Group’s annual International CES cocktail reception at Bally’s. “We want to be the solution for the industry for everything above the commodity level.”

Workman and Ristow said the two groups will work more closely this year following a bruising 2009. Total PRO Group revenue declined about 12 percent last year to just less than $1.9 billion, due largely to the liquidation of Tweeter, which had long been PRO’s largest dealer. All things considered, “We did a pretty good job of overcoming Tweeter,” Workman said.

Ristow said HES revenue was flat in 2009, but exceeded sales within the specialty A/V channel by between 5 percent and 8 percent.