Report From the Front Line A Buying Group Roundtable
March 2005
For a long time, buying groups have been the champions of the independent, proving the theory of strength in numbers and creating the buying power of one through a collective. Their presence has been essential to independents, helping to stave off the omnipresent national big-box CE retailers. Their insights, then, can be invaluable indicators of what is happening on the forefront of small-scale retail.
Most groups agree that sales growth in 2004 was proof that the slow but stable economic recovery that began in 2003 was no joke, and they are optimistic about 2005. But, as is always the case in retail, there's no reason to rest easy—better times don't always equal better business. The pressure of national chains is rising, and there is an influx of new competition, whether it is in the form of home improvement giants like Lowe's and Home Depot or web operations like Amazon.com. No matter what the climate, challenges lay ahead.
Controversy on the MAP
One of the foremost issues affecting retailers is minimum advertised pricing (MAP) and the controversy surrounding it. If a manufacturer carries a MAP policy, the retailer is technically not supposed to advertise a product below a certain price. But not everyone obeys the rule. "We've seen a casual attitude toward MAP pricing," says Warren Mann, executive director of the MARTA Cooperative of America. "Sears, Best Buy and Circuit City arbitrarily decide, 'We're going to sell it at [a lower than MAP] price.' We're playing by the rules and we're getting beat up and you have two nasty answers to solve that problem and neither one of them is particularly satisfying."
Nasty answer number one, explains Mann, is reactionary. "If it's supposed to be $119 and they run it for $99, you run it for $88 the following week—but then you're a week late," he says. The second answer is proactive, but still not ideal. "The other thing is to pre-break MAP, and then you're the bad guy," he says.
Bob Lawrence, executive director of Brand Source/Associated Volume Buyers, also sees problems occurring in MAP, but from a different angle. "From a [direct] MAP standpoint we don't see a lot of violations, and most of those I believe aren't intentional," he believes. "Our concern is there's a lot of places popping up where if you use the store's credit card on Wednesday, you get 10 percent off. It would seem to me that every one of those is a MAP violation, although it's not advertised as a price."
Most groups agree that sales growth in 2004 was proof that the slow but stable economic recovery that began in 2003 was no joke, and they are optimistic about 2005. But, as is always the case in retail, there's no reason to rest easy—better times don't always equal better business. The pressure of national chains is rising, and there is an influx of new competition, whether it is in the form of home improvement giants like Lowe's and Home Depot or web operations like Amazon.com. No matter what the climate, challenges lay ahead.
Controversy on the MAP
One of the foremost issues affecting retailers is minimum advertised pricing (MAP) and the controversy surrounding it. If a manufacturer carries a MAP policy, the retailer is technically not supposed to advertise a product below a certain price. But not everyone obeys the rule. "We've seen a casual attitude toward MAP pricing," says Warren Mann, executive director of the MARTA Cooperative of America. "Sears, Best Buy and Circuit City arbitrarily decide, 'We're going to sell it at [a lower than MAP] price.' We're playing by the rules and we're getting beat up and you have two nasty answers to solve that problem and neither one of them is particularly satisfying."
Nasty answer number one, explains Mann, is reactionary. "If it's supposed to be $119 and they run it for $99, you run it for $88 the following week—but then you're a week late," he says. The second answer is proactive, but still not ideal. "The other thing is to pre-break MAP, and then you're the bad guy," he says.
Bob Lawrence, executive director of Brand Source/Associated Volume Buyers, also sees problems occurring in MAP, but from a different angle. "From a [direct] MAP standpoint we don't see a lot of violations, and most of those I believe aren't intentional," he believes. "Our concern is there's a lot of places popping up where if you use the store's credit card on Wednesday, you get 10 percent off. It would seem to me that every one of those is a MAP violation, although it's not advertised as a price."
