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Buying Group Update: Gest Accor

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The key to the success of this buying group is to think 'customer'.

Much has happened at Gest Accor since the July 1996 $50 million deal was negotiated between founder Yves Royal and John Gillberry with his partner Working Ventures Canadian Fund. Gest-Accor Inc. of Laval, Quebec, is one of Canada's largest home furnishings and consumer electronics buying groups.

At the bustling Toronto International Home Furnishings Market in January, Michel Gervais, National Vice President, presented his dramatically new and comprehensive strategic marketing plan to dealers from across the country. "The time is right to change the recipe, to be innovative and to provide G.A. dealers with opportunities for significant additional income for 1997 and beyond," he told us. "Interest rates are lower and the consumer feels he has more money to spend. The deficit is coming under control. It will take a little while longer to go through the adjustment, but there are a lot of positive signs in the economy."

Michel quoted Donald Soderquist of Wal-Mart, "If in 10 years your company is still the same, you'll have been out of business for a long time!" and "It's a lot more expensive to do nothing than to change!"

The new reality for the retail industry involves permanent change with a constantly fluctuating, unpredictable economy. Distribution has become greatly modified with fewer players, many independent retailers disappearing, bigger players on the scene, the trend towards specialization and niche marketing and the fact that consumers are looking for added value.

Because the "Key to success for the retailer is to THINK CUSTOMER," said Michel, "it's essential to know and understand our clientele's profile, their needs and their expectations. On the other hand, the retailers need and expect to increase their volume, and maximize their return on investment through controlled finance, volume rebates, programs and services. Suppliers, just like retailers, must also increase volume and maximize return on investment. Since we share the same needs and expectations, it's up to us to create a real, strong partnership."

The partnership philosophy is the basis for Gest Accor's "Ultimate challenge, to make the transition from the traditional buying group to a more modernized and contemporary concept, a marketing group." Buying power, Michel explained, will not be measured by capacity to generate central order buys, but the Group's ability to structure, promote and control programs and promotions set up for dealers with partner-suppliers.

"We're going for quality instead of quantity for suppliers, retailers and services."

Marketing and financial agreements with suppliers were reviewed. "We looked at each individual supplier. Annual agreements were renewed with the 90 who were best equipped to support our programs, and with whom we could increase our buying power by giving them greater regional and national exclusivity. We have a very good mix. We're developing core programs and kick-off promotions to create a network of G.A. dealers for each supplier. To say they are enthusiastic about the new arrangement is an understatement! It will increase central buying and obviously, the more product the dealer has on his floor, the more loyal he will be to the supplier."

Dealers will be able to make their own selections, and will qualify for individual volume rebates based on their own purchases. Regional managers are putting programs in place in the stores.

Gest Accor has also conceptualized a well rounded mixed multi media advertising/publicity package designed to increase store traffic, "The best publicity at the best possible cost," said Michel. The package involves flyers, television and radio ads, ad mats, stickers and posters.

Gest Accor pioneered the program in New Brunswick and Quebec. A 29 year industry veteran, Martin Savoie, Harvey Furniture, Campbellton, New Brunswick, has already taken ownership of the entire package. After four years as part of the Gest Accor family, he said, "It's a good decision to restructure and concentrate our activity, to have less suppliers but more activity with them. There were too many suppliers before. The larger the purchase the greater the attention you get from the supplier, good for your customer service. Today, you're gone if you don't give good service to your customer. It's a tough world, and a tough market. Northern New Brunswick is a key decision area."

There are five dealers in a 160-190 mile radius and they meet the first Monday of each month. They advertise together. "We put all the same products on sale at the same time and instead of paying $1,000 each towards, for instance, radio spots, we all chip in, pay $5,000 and get five times the advertising. With the new approach things will be even better. Our flyers will be streamlined, down to eight pages, instead of l6, listing a few items with teaser prices to bring the customer in. And they will cover a shorter period, just two weeks instead of several, to create a greater sense of urgency. We have control over flyer content. Gest Accor sends us pictures and they ask our preferences, and the suppliers come to us and check how many sets we want in our store. Or it could be it's something you already have on your floor."

At Harvey Furniture, "Computers do everything but the dishes! All my accounting, all my invoices, stock, everything. I used to pay a lot of money to my accountant for my year end. Now I do it myself and my fee has dropped 50 percent; that's significant. One person in the store runs the computer, my wife, Martha. The stock comes in the back and the freight bills, orders and invoices are entered right now, not three days down the road."

There are 40,000 to 50,000 people in the region surrounding the 12,000 square foot store. Martin "started as a truck helper at Great Universal Stores, and from helper I went to credit manager, then to sales on the floor. I never looked back. I went on to Woolworth's who were opening a furniture department, and in two years grew the sales from zero to half a million. Then I went to work for Savoie Furniture (no relative) for three years and the store was bought by Harvey Johnson. After another 10 years I bought the store from him.

"With Gest Accor I have another great advantage, my insurance costs me one third of what it would cost if I were not a member of the Group."

There's a boldly lettered sign in a prominent place on Harvey's wall, "Here the customer is priority number one". Insists Martin, "Don't even think you can make it if you don't make your customer priority number one!

Three hundred miles south of James Bay, Gilles Theberge and his son, Alec, serve an immediate population of only 6,000. "But there are about 200,000 people in the entire Abitibi area," Gilles told us. "I started the business for Alec, and we're having fun. We're not booming yet, but we're growing every year."

Mining and lumber, the region's prime industries are "doing well, the slump is over, the economy is moving up and so will the furniture business".

The Theberges affiliated with Gest Accor when they opened their 10,000 square foot facility. Gilles said "Their ideas are going to be beneficial. They're working for us now. I like the new approach." Affiliated with the electrical distribution business for 26 years, Gilles welcomes the consolidation of suppliers. "It's time consuming to have too many salesmen from too many companies visiting the store.

"Gest Accor is working for the good of the dealer now instead of the good of the buying group. It has become a marketing group. And it gives us an opportunity to make money. I like the advertising package because it's all done, it's complete, and it's one half the price I was paying before. We can have eight flyers each year if we want them, but we are not obliged to take them. Radio works best for me.

"In a little town like this, service is really important, personal service. If a sofa breaks down, I go and get it right away. I have no choice, I'll see the people on the street for the next 20 years!"

Gilles and Alec have handled their inventory and all accounting on computer, "right from the beginning". Executive Vice President Tim Turcott has just joined forces with Tyler.NetTM to offer dealers a faster, Internet based multi-option computer system, designed specifically for the furniture industry to ultimately replace existing systems.

Across Canada, dealers are switching product on their floors and adapting to the freedom of Gest Accor's fresh direction. Back in July, President John Gillberry planned to "re-energize" the Group. He and his team are making that happen.

Furniture World is the oldest, continuously published trade publication in the United States. It is published for the benefit of furniture retail executives. Print circulation of 20,000 is directed primarily to furniture retailers in the US and Canada.  In 1970, the magazine established and endowed the Bernice Bienenstock Furniture Library (www.furniturelibrary.com) in High Point, NC, now a public foundation containing more than 5,000 books on furniture and design dating from 1620. For more information contact editor@furninfo.com.