2018 Buying Group Roundtable: Jim Ristow, BrandSource/AVB
Retailers, in their never-ending quest to compete for customers’ hard-earned money alongside major big-box retailers and the ongoing threat of Amazon, can really use any advantage that comes to pass. For some, it’s leveraging their local connections within their community. For others, it’s providing a service that attacks a gap in the marketplace or does so at a level no major corporation could ever dream of.
Another strategy: Aligning oneself with a retail buying group.
Buying groups have a way of bringing this industry together for not only the promise of getting better deals on some of the top products in their particular category—though that’s, understandably, one of the biggest benefits for store owners. However, in addition to that, buying groups offer members top-notch education, the ability to network with and learn from some of the top minds in retail, and—maybe most important of all—share their battle stories with other retailers who are likely in a very similar situation to their own.
We recently approached the top executives in the space to let them do the talking. For our annual Buying Group Roundtable, we turned the tables around on those execs and posed some questions around their benefits, what they’re doing in the area of education, and what retail trends and challenges they’re keeping an eye on for next year.
Here’s what Jim Ristow, CEO of BrandSource/AVB, had to say.
Dealerscope: What are the core marketing and sales strategy messages you are communicating to your membership this year? What should they expect, coming into your meetings – and what messages do you most want to be their main takeaways?
Ristow: The macro message is, it’s all about digital. Having the right website, the right digital footprint, we can connect with our consumers in a meaningful way. Nine out of 10 consumers are online before they buy, and at our convention, we talked about ‘digital or die.’ We have to be there, where the consumer is. There are some real positives going on in line with that, within the organization. With our relationship with Google, we keep pushing to keep our members on the cutting edge.
And we’re in a very unique position with AVB Marketing – the agency that the members own. We’re the most effective agency in that space and we’re exclusively working only with our members in the categories we do business in, with one goal: to drive more business. We’re actually growing members’ business by over 17 percent more than those members who aren’t engaged with the digital program. It’s the most effective and the most cost-effective in the industry. We’re up to a third the price of a local ad agency, so that means huge savings for the members. It’s such a good plan, and we’ve got vendors on top of that to augment it with special programs. At the convention, we announced our exclusive co-op match program – our members will match up to $500 a month of their co-op. That’s huge – especially for a rank-and-file member. It’s effective and we’re getting augmentation from the vendors, and now, the co-op match. For an average member, when they look at what it would cost locally plus all the augmentation, it could be another $20,000 or $30,000 worth of benefits for the member. We’re running the members-only agency as not for profit and the reason we’re doing this is that we believe so strongly in what the members need to do. [In carrot-and-stick terms], these are the carrots to get members to do what we believe will be the recipe for success. Since the last show we’ve added almost 35 percent more members on the program. We think right now is the time for members to really embrace this.
Despite the many CE/appliance/CI buying groups within the industry, there are dealers and integrators out there who are still unaffiliated with a buying group - or there are those who might be looking to change their buying group affiliation. What’s your elevator pitch (if any) to them as to why belonging to your group would make the most sense for them?
First, everything we do is all about the members. We’re always trying to make them more profitable. They own the co-op. We report to them and it’s our job to get them the best results as owners of the company. That means putting more money in members’ pockets than any other group per capita. And this year, we’ll return over $7 million more than last year in member benefits than last year – with checks and discounts, and indirectly with savings on marketing spend and augmented vendor dollars. It’s also about innovation, with new ideas and services to help their business. An example: we did a ‘heavy-hitter’ program at the convention for sales reps; we’re blazing new trails to help different parts of the business that haven’t been addressed yet – like the retail sales floor, bringing in the best of the best, putting fire back in their hearts for when they go back into the stores, and really elevating training. The other differentiator is that we really listen to our member owners and are striving to help them. We have committees and take direction from them. Although we’re a big business, we represent family businesses. BrandSource is like a big family, and the idea exchange and member interaction is something we’re proud of.
In what areas will members need the most help from you next year – and how is that different from last year?
It’s interesting – last year, they asked us how to help them make more money, especially during promotional windows, meaning the five major holidays. And we made huge strides in 2018 in addressing that by helping to augment margins for them rather than just having the consumer win. In 2019, we’ll continue to discuss margin and focus on that, and on putting more money in their pockets. It became a top priority in ’18, we made good strides, but we’re doubling down in ’19.
Map out the rest of the year for your part of the group – will business be up or down, about how much either way, and what factors will most profoundly influence the outcome for members?
In appliances, home furnishings, bedding and premium TV, we are outpacing every industry category right now. This is the second show in a row that BrandSource members were actually growing share. We see that trend continuing; as Sears continues to shrink, our opportunities continue to grow. For those who promote the right way, their business is growing unbelievably. They’re promoting same-day/next-day delivery; digital marketing is working for them with the 17 percent delta with engaged members. There’s opportunity out there right now for the independent; in the categories that are flat and down, we are up significantly regarding same-store sales. With digital, we’re focused on simplification to help dealers understand it; we’re building trust with the members because they know the ad agency isn’t trying to “sell” them anything; they’re just trying to build their business; there’s no revenue motive in doing it.
Don’t forget to check out our other 2018 Buying Group Roundtable Q&A’s. Here’s the entire rundown: