Buying Into Buying Groups

With these organizations, independent retailers can access discounts and marketing tools, while networking with others across the country.

The past two years have been a rollercoaster for bedding retailers. First came substantial during the 2020, highs of pandemic demand followed by inventory and material shortages, freight increases and other supply chain disruptions that made doing business incredibly difficult.

But some retailers have found a not-so-secret weapon to help them navigate the ups and downs of business: buying groups.

“I can’t even imagine going through this without the buying group,” says Chris Cooley of Michael Alan Furniture & Design in Lake Havasu City, Arizona, a member of the Furniture First buying group. “I would’ve felt like I was on an island. So yeah, the value’s been incredible.”

Even prior to the pandemic, buying groups were a powerful tool for independent retailers trying to compete and succeed in a crowded bedding marketplace. Groups such as Furniture First, Nationwide Marketing and BrandSource, among others, offer retail members a host of benefits, from rebates and discounts to marketing tools and networking opportunities.

Cutting costs

One of the most attractive benefits of joining a buying group is saving money. Retailers can cut costs in a number of ways by working with a buying group, with the most obvious being discounts and rebates on product from manufacturers.

Most groups offer their members a discounted rate on purchasing product, rebates on orders or some combination of the two. And those savings can really add up, particularly for smaller independent retailers.

“Somebody who’s not a part of the buying group is paying $10 for an item, whereas we can get them best-in-class pricing for $8,” says Mack Kauffman, assistant director of sleep products for Furniture First Buying Group. “It really helps them make margin, and it helps them when they weigh the cost of, ‘Do I just want to have my retail sales associate sell it, or do I want to hire a mattress specialist?”

This is about you being a part of something bigger to make sure that you’re growing and going where you need to be.

For small independent retailers, buying groups help them compete on the same level with large retailers by leveraging the whole of their membership to negotiate the best prices and rebates.

“It’s getting harder to go at it alone,” says Jarred C. Roy, vice president of BrandSource. “This is about you being a part of something bigger to make sure that you’re growing and going where you need to be.”

Buying groups can use their size to help negotiate other cost-saving measures for retailers, particularly on consumer credit services. These organizations partner with lenders such as Wells Fargo, Synchrony and TD Bank to allow its members to offer financing at attractive rates. And they can help lower credit fees for retailers, as well.

“Every time a consumer comes in and swipes their credit card, there is a percentage that gets charged to the retailer,” says Jeff Rose, director of merchandising, furniture and bedding for Nationwide Marketing Group. “And so, we use our scale to negotiate a lower percentage rate than they could get on their own.”

Buying groups also work with manufacturers to allow their members to offer exclusive promotions to drive sales.

“Recently, we did a gift-with-purchase rewards card with one of our vendors that members could advertise, but somebody who wasn’t a part of Furniture First didn’t get that,” Kauffman says. “Somebody who’s not a part of a buying group isn’t going to necessarily get those exclusives.”

Powerful tools

While discounts, rebates and financing might be initial drivers for buying group membership, these organizations offer a range of tools that help bedding retailers compete. And one of the most game-changing is e-commerce capability.

For many small independent retailers, simply maintaining a website can be a monumental task with limited funds and staff. And in a marketplace flooded with online direct-to-consumer bedding brands, it’s no longer good enough to simply have a basic website without e-commerce capabilities.

“You can’t hide from it — the marketplace has moved,” Roy says. “It has changed, but that’s okay, because we’ve got the solutions to give you the exact same position in your market, whether it’s local, regional or national, to be able to compete with all of the e-commerce capabilities that we have.”

BrandSource offers its own in-house web commerce program, as do Nationwide and Furniture First. These platforms allow members to easily build and maintain a functional website optimized for e-commerce, giving them a critical omnichannel presence.

“The website is just as important as the dealer’s brick-and-mortar store,” Rose says. “And so, instead of us third-partying that out like a lot of people do, we decided to bring that in-house and continue to invest in those website platforms to make them bigger and better. Most consumers are starting the shopping journey on websites, so with us controlling and developing that content, it has been pretty powerful.”

Another powerful tool in the buying group’s belt? private labels. Several buying groups have partnered with manufacturers to offer their members exclusive product. For instance, Furniture First has a private-label program with Mattress 1st and America’s Sleep Specialists, allowing them to provide their members with exclusive models not available in other stores.

“Our team works the deal very aggressively so that it’s a great product that can be priced with really significant margins,” Kauffman says. “And the way the private label works is if somebody wants to sell it for a dollar, they can. If they want to sell it for a million dollars, they can. We don’t mandate what they have to sell it for, so I know there are a few models where people are getting 70 points on it because they can sell that in their market.”

Cooley says the private-label products have been a win for her store, allowing it to make a good profit and also stand out among their competitors.

“It really gives us an advantage in our market share to be able to get margins,” Cooley says. “And our staff and customers are always surprised how great they feel at a great price point. And they can’t go down the street and cross-shop you, so that’s a great value, not only for our customer, but for the store, too.”

And buying group retailers can tout those private-label products — as well as the rest of their assortment — using marketing tools available through their membership. Retail members can tap into a number of different programs, from direct mail to digital marketing, to help them better reach consumers.

At BrandSource, members can utilize the group’s in-house agency, AVB Marketing, to assist them with marketing their store and its products.

“We work with 277 different mattress dealers to integrate all their catalogs, feature specs, product reviews — everything that a dealer would have to say, ‘Turn the switch, let’s go,'” Roy says. “And obviously, we build all of our own in-house websites, designing those to optimize everything organically. And then we parlay that with any and every marketing solution that you’d ever want to have.”

Creating community

While all of those business perks make buying group membership integral to many mattress retailers’ success strategies, one key benefit that may not be as obvious ranks high on the list for many members: networking.

Buying groups have the ability to connect retailers from across the country, facilitating relationships that can be both professionally and personally beneficial.

“It’s amazing because you’re creating these partnerships with all these other successful businesspeople, like-minded businesspeople who are facing the same challenges and successes that you are,” Cooley says. “And they’ll do anything to help you. Everyone just wants to see each other succeed and be successful.”

Buying groups promote communication among their membership in a number of ways, such as retail councils, events like Nationwide’s Prime Time show each year and one-on-one meetings. The beauty of these buying group relationships is that because the membership is so large, it’s easy for noncompeting retailers to connect.

“(Networking) typically has the highest ROI because people learn more from each other than they do from us,” Roy says. “It’s the network sharing. It’s the best practices. It’s the peer-to-peer challenging. They do it very respectfully to help each other run their businesses, to manage those businesses to greater success.”

“Everyone just wants to see each other succeed and be successful.”

During the pandemic, those connections proved even more important for retailers like Cooley. So, buying groups have expanded their networking options to include both in-person and virtual events.

“We do quarterly round table discussions where we’ll facilitate a Zoom call, and if a dealer wants to jump on, we’ll put noncompeting dealers in a room together where they can talk,” Rose says. “And then we facilitate in-person meetings.”

Those Zoom calls and meetings, as well as dispatches from the buying group to relay up-to-the-minute information to its membership, helped keep retailers like Cooley in the loop and able to make strategic decisions about pricing and other issues.

“At the beginning when all these surcharges were coming down, (the buying group) would consolidate all the manufacturers that were in this buying group and tell you where each one was on pricing because it was constantly changing,” she says. “So, they’d send out that information so that you knew. And then you could network with the other members and find out how often they are changing their prices or how they are staying on top of things. Just to share those ideas with each other and know you’re not alone was so great.”

Positive partnership

Above all, for many retailers, being part of a buying group means having a powerful partner on their side — a partner who helps them save money, improve their operations and make connections that build their business.

“They’ll come up with things that are maybe items I would never have thought to look at when I go to High Point (Market),” Cooley says. “Now I’m like, ‘Well, I should go check that out.’ And there are some companies and lines that I probably would never have even heard of, let alone looked at, that the buying group brings top-of-mind awareness to.”

For retailers weighing the pros and cons of joining a buying group, Rose suggests researching the benefits of each group and finding an organization that fits your business and your goals.

“It doesn’t matter how big or how small you are, I think there’s a home for everybody in any of the buying groups that are out there,” he says. “If you’re not in a group, I definitely think that you need to do your due diligence and look at everybody and find the one that fits you the best.”

Rose says once you find the right fit, a buying group can be your business’ biggest ally.

“I love the independent channel. I think it’s the heartbeat of America and the world,” Rose says. “These retailers are just getting up every day, trying to support their families, and they need a little help. And that’s what I think buying groups do — we just help the independent channel, plain and simple.” O

Jennifer Bringle has covered the home furnishings industry for several years, previously serving as editor in chief of both Casual Living and Kids Today magazines. Her writing also has appeared in Glamor, Good Housekeeping, Parents and The Washington Post. Follow her on Twitter at @jcbringle.

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