Marta Members See Only Benefits Accruing From Partnership With AVB
ORLANDO -- Marta’s new partnership alliance with AVB will strengthen the groups’ buying power in negotiations with CE vendors without comprising their separate autonomies, said retailers we canvassed at the Marta convention here Thurs. As evidence of the enhanced clout that will accrue, Marta members cited the groups’ combined sales of $4.2 billion and a recent agreement AVB inked with Panasonic carrying guarantees for a supply of plasma and LCD TVs that puts ABV/Marta on par with national chains in terms of revenue volumes.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
While many Marta members said they had questions as they arrived for the convention, most we polled appeared satisfied with answers they received from Marta Chmn. John Rice and AVB/Brand Source Exec. Dir. Bob Lawrence. In separate presentations that were closed to the press, Lawrence and Rice highlighted similarities between the groups, while underscoring that Marta will continue with a separate board and buying committees, according to retailers we polled who sat in on the presentations. “This is a partnership, not a merger, because neither of us wants that,” said former Marta Chmn. Roger Van Vreede, Van Vreede TV & Appliance. “Up until 2 days ago, I wasn’t sure because you never know how these things will go, but now I have confidence.”
Marta will continue group programs separate from AVB, including those with Frigidaire, Sharp and Toshiba, while benefitting from AVB’s extensive cross-docking and back- office operations, including financing. Marta also will work with AVB’s buyers for CE, major appliances and furniture, said Mike Fischer, a Marta board member and pres. of Spencer, Ia.-based Nielsen Tire Co. “The assumptions that were made were wrong,” Fischer said, referring to the belief in some quarters that the buying groups were merging. “We didn’t have to do this and we could have just continued what we were doing. But that doesn’t add any value to the group. The model that buying groups have followed has been the same for 30-40 years, but that needs to change. It’s about productivity, efficiency and value and now we have the best of both worlds.”
In outsourcing some administrative functions to AVB, Marta expects to slash group operating expenses 120% by 2007 from about $1.5 million in 2005, Marta members said. At the same time, group revenue will decline 109% from about $1.7 million, members said. Marta will continue to maintain offices in Scottsdale, they said.
In finally deciding to forge an alliance with AVB, Marta needed to change the image of AVB it had harbored as a group dominated by small dealers, Van Vreede said. Indeed, AVB itself changed from a somewhat disorganized buying group to one headed by Lawrence that focused on providing services, said Fischer, who quit AVB to join Marta several years ago.
As evidence of the cooperative spirit of the new partnership, Marta members were invited to attend AVB’s group meeting in Dallas in March. It hasn’t been decided whether the groups will continue with their own meetings in 2007 or have a joint event with separate sessions for the individual organizations, Fischer said. For the time being, AVB and Marta will maintain a “hands off” policy with regard to recruiting new members from their respective groups, Fischer said.
“We've been talking to them for years, but never really gave it consideration because they had so many little dealers,” Van Vreede said. “But what has happened in the past 6-7 years is they've been building an infrastructure. Once we realized what they could offer us and we could offer them in terms of volume and big dealers that are good at what they do,” the alliance came together.
AVB has 15 members with annual revenue exceeding $50 million and 114 with more than $20 million, Marta members said, quoting Lawrence’s presentation. AVB recorded $3.2 billion in combined wholesale revenue in 2005 from appliances ($1.8 billion), CE ($900 million) and furniture ($500 million). For its part, Marta, with 93 members, has 11 chains with annual revenue of more than $30 million and 43 with $10 million or less.
Forming the alliance didn’t come without fallout. Marta Exec. Dir. Warren Mann resigned in Dec. and 3 members -- Grand Appliance & TV, Olinde’s and Schewels Furniture -- left the group earlier this month (CED Feb 16 p4) to join rival Nationwide. Executives at Grand Appliance and Olinde’s weren’t available for comment at our deadline Thurs. But Schewels Sales Dir. Steve Campbell said the chain “felt it was time to make a change” and that Nationwide would give it “access to more vendors.” Lynchburg, Va.-based Schewels operates 52 stores. “We wouldn’t jump ship for emotional reasons,” Campbell said, responding to criticisms voiced to us by Marta members, but not for attribution. “We did it for business reasons. I wish them the best and hope everything works out for them.” Schewels had been in talks with Nationwide for a while and joined the group with “Brand Builder” status, giving it “significant price advantages,” Campbell said. “Based on the preliminary pricing we've received, we made the right decision,” he said.