MONTREAL (30 May 2012) - While overall sales through its central billing operation fell 1.9% year-over-year in 2011, Mega Group still outperformed the industry at large, members were told at their recently concluded annual general meeting here. However, the group's appliance and bedding business was up 2.6% and 1.3% respectively.

In his annual presentation to the members, Michael Vancura, Mega's executive vice president of retail operations described 2011 as "the year of retrenching" which he admitted was somewhat surprising as "everyone left 2010 feeling pretty good."

Consumer electronics continued to be the category the dragged down the group's overall performance in 2011. Mega's C.E. sales - which continue to be plagued by price deflation, particularly in the critical television category - were down 8.9% last year. This was the only product area where Mega failed to outperform the industry as total C.E. sales at retail were down 2% for the year.

Mega furniture sales were off 2% for the year, slightly better than the overall 2.3% dip suffered by all Canadian furniture stores.

The group's two hero categories were bedding - where group sales gained 1.3% versus the industry's overall  decline of 7% -- and appliances, where Mega's uptick of 2.6% countered the industry's sales drop of 4.9%.

"We outperformed the market but it wasn't a banner year for anyone," Vancura said.

Unlike previous years, Mega provided no dollar sales figures, either overall or for the four major product groups.

Michael Vancura

In an aside, he pointed out for both The Brick and Leon's, their franchise operations were the star performers. "The owner/operators performed much better than the corporate stores," he said.

Charging ahead were internet sales, which climbed 12% in 2011 alone. "You are competing with the dot coms now," he said, adding that sites like Kijjiji are beginning to turn over a lot of big ticket home goods. Now that Amazon is selling appliances, he doesn't think furniture and mattresses can be that far behind.

During 2011, Mega recruited 14 new traditional members, representing about $21 million in volume for the group. The group also lost 21 smaller members accounting for about $6.1 million in volume. Four members also transited to new ownership during the year.

In addition to BrandSource, Mega operates two other sub-groups, including Promotional Networks which grew to 41 members in 2011. It was re-organized into two areas: Premier and National, with each having slightly different approaches to their advertising and promotional activities. The other major sub-group is Evolution, which represents larger independent retailers such as Stoney Creek Furniture and Germain LaRivière. Evolution has grown to 11 members.

BrandSource remains Mega's largest ‘go-to-market' solution for independent retailers. There are now 143 stores operating under the BrandSource banner across Canada. These merchants have collective annual sales of about $430 million.

Vancura told his members that version 3.0 of the BrandSource Canada web site is now online. Some 85 members have signed on for their own BrandSource web site. Currently, 70 are online and he anticipates the remainder will be up and running in the next couple of months.

He also said the site is now hosting approximately 75,000 unique visitors a month.

Mega has also named Y&R (Young & Rubicam) as its new creative agency for BrandSource, which will continue its advertising campaign on several Canadian specialty cable channels - including Food Network, HGTV Canada, History Canada and Rogers SportsNet, among others - throughout the year.

Vancura told his members that internet advertising will be a key focus for Mega in 2012. "This is the fastest growing advertising channel," he said.

Internet advertising had a value of $2.64 billion in Canada last year and is expected to grow by at least 16% in 2012 and will soon represent almost a quarter of all advertising spending in this country. "It needs to be part of your solution," Vancura said.

This year, Mega will expand advertising opportunities for its members with a particular focus on internet-based solutions. The group will also conduct an e-commerce feasibility study while enhancing its suite of business services.

Looking out to the rest of 2012, Vancura urged his members to remain cautious. "No one is predicting a banner year," he said, adding that even though Mega saw a 5% uptick in the first quarter of 2012, overall projections for the industry remain flat.