Distributors Flock to APRO Show to Increase Presence in Rental Market
LAS VEGAS -- After years of CE makers drop-shipping product directly to rent-to-own (RTO) stores, distributors increasingly are emerging as a major supply conduit, with vendors pulling back. The trend is embodied by distributors D&H and Brooke, which are exhibiting here at the Assn. of Progressive Rental Organizations (APRO) show for the first time, while O'Rourke Bros. has assumed responsibility for distributing Philips products.
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D&H and Brooke join what is becoming a crowded field of distributors that also includes BDI Laguna, DSI and SED International. They're vying for the attention of 342 APRO members, but also 2 of the largest RTO chains, RentWay (794 stores) and Rent-a-Center (RAC) (2,892) -- that parted ways with APRO last fall.
“This is our first chance to address the dealers as a whole and it’s a brick-by-brick thing,” D&H executive Jeffrey Stevenson told Consumer Electronics Daily. “So many of these guys have fallen off manufacturers’ radar on direct shipping. They have to get product from somewhere and distribution, in many cases, is going to be the only place they're going to be able to get it. Manufacturers largely don’t want to drop-ship to every store any more, and they have a tough enough time shipping large quantities in the U.S.”
Philips, in relegating some RTO distribution duties to O'Rourke Bros., nevertheless will remain an associate APRO member and Philips executive Michael Neighbours will continue to head up RTO from his Norcross, Ga., hq. O'Rourke Home Theater Mgr. Chuck Olsen said his company will take over distribution from its network of 10 local offices in the U.S. Among Philips’ larger RTO dealers is RAC, which will get its first shipment of rear-projection TVs for a fall promotion through O'Rourke, Olsen said. “They way they operate in terms of truckload shipments, they can’t effectively handle the rental channel,” Olsen said. “Philips handles the truckloads really well, but they have trouble with the drop shipping.”
Brooke largely has focused its attention on Fla. and the southeastern U.S., a territory that includes the Atlanta hq of Aaron Rents, said Mark Cohen, vp-operations at Brooke, which markets the Funai, Initial, Sharp and Panasonic brands. Meanwhile, BDI Laguna is serving as Samsung’s exclusive distributor for the RTO market and has added Syntax to its mix.
In pursuing the RTO market, many distributors we polled said, they realize it may take time to build ties in a market where most accounts have fewer than 60 stores. “I've been told it’s a slow train coming and you're going to have to be patient,” D&H’s Stevenson said. “These guys are going to want to see that we're around and test us -- like the way business was done a long time ago.”
Distributors believe they can affect the RTO merchandise mix, said those we canvassed. For example, Gateway’s eMachines PCs have gained shelf space at many RTO dealers since the PC vendor signed on in Jan. with distributor SED International. As a result, some dealers have begun carrying Gateway’s entry-level notebook PC. It took work to change the perception among RTO dealers about eMachines, which Gateway bought last year, said Jose Cuesta, an SED account executive.
Among those converted was Buddy’s Home Furnishings, which now carries several eMachines, including an entry- level PC with a 2.8 GHz Intel Celeron processor, 17” CRT monitor, 80 GB hard drive and a $24.99 weekly fee on a one-year contract, Buddy’s Operations Dir. Jeff Robinson said. At the APRO show, SED also showed an eMachines model with a 2.93 GHz processor, LCD monitor and 100 GB hard drive. PCs by eMachines have “helped boost” a category once seen as withering, said Robinson. He said the line’s LCD monitors have been a particularly big draw for customers.
APRO Show Notebook
Yamaha has tailored a version of the DVX-C300 5.1- channel home theater system exclusively to RTO dealers, company officials said. The DVX-C300T incorporates what had been 2-way shelf speakers into 4 tower models that, coupled with a 6.5”, 150 w subwoofer, provide 900 w power. The package also includes a 5-disc DVD changer compatible with DVD-Audio and SACD, 108 MHz/12-bit video DAC, 192 kHz 24-bit audio DAC and MP3, JPEG, DivX and WMA playback. It carries a $399 minimum advertised price, but can be rented for $22.99 weekly on a 78-month contract. RAC is among the chains marketing the system.
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AV furniture supplier Bellogetti will ship a new Pamari brand in Sept. as it seeks to address the entry- level market, executive Joseph Greco said. The Pamari line will consist of 44” ($199) and 63” ($349) 2-shelf TV stands that will dispense with the glass and metal found on Bellogetti products and instead use composite wood, Greco said. “It’s a way of expanding our business and our customers have been asking for it,” Greco said. The Pamari line also will compete for shelf space with Tech Craft. Bellogetti added Sears distribution in May, lengthening a national retail roster that also includes Best Buy.