Brand Source Retailers Seeking Niches As National Chains Restructure
DALLAS -- Amid a market littered with store closings by national retailers, independent Brand Source dealers are scrambling to carve a niche and win new business, industry officials said at the buying group’s meeting here. And while the smaller dealers that fill Brand Source’s ranks weren’t unscathed by the flat-panel TV price wars that raged during recent holiday season, many emerged with a renewed emphasis on custom install and service, industry officials said.
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While CompUSA, Rex Stores, Circuit City and Tweeter have moved in recent weeks to shut stores, Brand Source retailers have sought to grab new business and leverage the group’s collective buying power to negotiate better deals with vendors. Brand Source affiliate Home Entertainment Source (HES), with 675 members and $1.3 billion in sales, is launching a Premier program involving a bidding process with 2-3 vendors for 7 microdisplay, LCD and plasma TVs, HES Gen. Mgr. Jim Ristow said. Overall, Brand Source has about 3,500 members with combined revenue of $9 billion.
HES hopes to have the first of the agreements in place within 60 days, Ristow said. Among Brand Source’s top CE vendors are Hitachi JVC, Pioneer, Samsung and Sharp. In pooling its buying, HES will be able to better compete with national retailers already well-schooled in bidding strategies, industry officials said. “This is our goal-to- market strategy with things that we're going to jump behind,” Ristow said. We're going to bid this out and we're going to pick special models that we'll all support and they're going to back it with better pricing, marketing, all the back end stuff we need to sell it.”
While CE manufacturers haven’t passed up volume orders from national retailers requiring low prices, they're also seeking buying groups that will “partner on something other than the lowest price,” HES Pres. Bob Cole said. “Tweeter is no slouch and look what’s happening to them… you don’t want to follow down that path.”
Although Brand Source dealers are forced to remain competitive in pricing, they also can charge more for installation, said Brian Pimental, principal at Woburn, Mass.-based Home Theater Co. “It’s service, service, service and being able to meet with customers on their terms, not necessarily when its convenient for you. The big chains are all about the numbers and meeting them, not about meeting the experience and expectations.”
Brand Source retailers aren’t the only ones seeking shelter from the pricing storm. Mitsubishi also is trying to turn a profit in LCD TV. It’s dropping a 37W LCD TV from year ago, but adding a new line of 40W, 46W and 52W models with 1,920x1,080p resolution and 120 Hz frame rates. “We're going to be focused more on the premium end of the market,” Mktg. Vp Frank DeMartin said. “We're not going to sacrifice profitability for share. We want to get enough of a share so we're a player in the business, but we want to maintain and keep a profit” for Mitsubishi and its dealers.
Among the retailers benefitting from Brand Source’s position are former members of the Marta buying group that last year became affiliates. While its ranks have decreased to about 70 members from 90, Marta has kept its independence within Brand Source, while benefitting from increased buying power, said Bill Holda, pres. of Holda Appliance & TV, Jackson, Mich. Marta expects to add 2-3 members in the coming weeks, Managing Dir. Bob Thompson said, declining to identify them. “If you look at the numbers, our membership is far better off than it was a year ago and the benefit that we gained is it allowed Marta to reorganize,” said Thompson, a former Maytag executive who was hired as Marta’s managing dir. 5 months ago. “Were probably more tightly knit and have more of a common cause then we did a year ago.”
Brand Source Meeting Notebook…
HES reached agreement with Comcast that will allow dealers to install the MSO’s digital cable boxes, Ristow said. Comcast, which is exhibiting at the buying show, will take orders and ship product to Brand Source dealers via the Internet. The retailers get a commission on each sale. “I probably wouldn’t brand myself with Comcast, but I would say I'm a Comcast provider,” Pimental said. “With the amount money I would make on Comcast and what I would charge extra for it would actually save me money.” ----
Bell'O home theater furniture and Coaster Furniture have been added to HES’ Expert Warehouse network, which features more than 15 brands of CE goods. HES operates three 300,000- sq.-ft. warehouses in Atlanta, New Jersey and Reno, Nev. Custom warehouse, which features accessories, has brought in Universal Electronics and Monster Cable, Ristow said.