At the end of 2009, AV retailers, integrators, and manufacturers learned that they had another option in two-step distribution, when a national network of leading consumer electronics wholesalers formed the Powerhouse Alliance Group.
The alliance, which is comprised of 10 regional and national CE and appliance distributors, believed that increased efficiencies and centralized resources of a coalition could better serve customers and create new line opportunities.
Members of the new corporation include, east to west: MRI in New England; M. Rothman & Co., covering New York through West Virginia; 21st Century Distributing in the Southeast; CTD and CED covering the Midwest; Autco in the plains states; Wave Electronics covering Texas to Mississippi; Mountain West in the Rocky Mountain states and Southwest; Volutone covering California, Nevada and Hawaii; and EDI in the Pacific Northwest.
Powerhouse Alliance Group executive director Dennis Holzer
I spoke with the alliance’s executive director Dennis Holzer, last week, to find out how the group’s plans were coming along. He said that while there were no major setbacks to date, the experience so far had been similar to forming a start-up company.
“All of our 10 members are very established in their territories and in their fields, but being a member of a group like this is new for most of them,” he explained. “We’ve been putting our heads together, getting the bylaws written, meeting and setting a direction, plotting lines, etc.”
According to Holzer, who is a 28-year veteran of the CE/appliance distribution channel and a former principal of Pennsylvania distributor Hamburg Brothers, the Powerhouse Alliance Group controls $500 million in annual sales volume and 750,000 square feet of warehouse space.
Each distributor will remain a stand-alone business with its own name, operations, billing and product lines under the alliance. The difference, Holzer said, is that a member can now hand off shipping to a Powerhouse partner in closer proximity to a customer, cutting freight costs dramatically in exchange for a share of the profit.
In addition, all members will also participate in new product lines, to be sought out by Holzer, which can be centrally billed as a single program covering all 50 states.
This is the change that might be most noticeable to an integrator who had an existing relationship with a Powerhouse Alliance Group member. I mentioned Volutone, as an example of one of these companies, and Holzer played along. “Volutone is obviously a very good custom distributor with a multitude of lines,” he said. “They already supply A-Z to their customer, yet they’re in the process of picking up another five to seven lines, in additional areas, to solidify their spot as a one-stop solution.”
Dealer training is also expected to improve under the Powerhouse umbrella, along with enhanced customer services such as faster lead generation, Holzer said.
It’s all about efficiencies for the members of the alliance, Holzer explained. “We have 10 guys who do the same thing, but we all do it 10 different ways. Now group members can talk, figure out what’s working for other people, and maybe open them up to lines that they may not be familiar with, passing on successes that maybe one has that the other hasn’t because he didn’t market the product the same way.”
The confederation mirrors a model established within the custom installation market by the 13-member Edge Distributors Group and eight-member TAG (The Advantage Group), and follows a strategic partnership forged last spring between the Digital Delivery Group (DDG) and DSI Systems within the custom integrator market.
“There’s national distributors out there who do what we do, but they don’t have the concentration on a per territory basis like we do and that’s the difference,” Holzer added. “Some of the national distributors out there, and I’m not knocking them at all, they do a lot of business but they may have hypothetically four big warehouses, and 20 satellite warehouses. But on a per territory basis, other than their corporate offices or their major warehouses, they don’t have nearly the territorial concentration or investment frankly that we have.”