NASM SEEKS NEW PATH, WEIGHS MERGER

CHICAGO -- The National Association of Service Merchandising here may cease to exist as a freestanding organization in upcoming months, SN has learned. Among possibilities under consideration are a merger with one or more trade associations, some type of partnership with other trade associations or the deployment of members to other trade associations.

concerning NASM, but we are going to do so before our convention." The association's 15th annual convention is set for Oct. 27 to 30 in Palm Springs, Calif.

Gary Ebben, NASM president, declined to detail last week in what direction NASM might go, although he acknowledged that new directions are being sought. "I have no comment, but I can say we are investigating more actively than ever before synergies between ourselves and other organizations and we are talking to a number of organizations about possibilities."

According to Havice, NASM is searching for a new direction because of intra-industry consolidation of service merchandising companies. "The service merchandise industry is no different from what

has happened in the food industry, with mergers, buyouts, sellouts and consolidations. "NASM has taken in new members, but the time comes when you see a trend and you say to yourself: Stop. Wait a minute. We may be doing more dollar volume, but as one company acquires another, we have fewer members, and we don't want to get down to a meeting where one service merchandiser is meeting with all the manufacturers.

"I don't think anybody would say that's very productive."

Havice said likely partners for NASM membership are the American Wholesale Marketing Association, the General Merchandise Distributors Council, or both.

"We've researched other trade associations, but we felt these were the two most likely for our members to associate with because they would be best served by one or both," he said.

AWMA, Washington, a 3,100-member organization that primarily services candy and tobacco products for the convenience-store trade, is attempting to expand its base in health and beauty care and general merchandise.

Membership includes 1,300 distributor companies, 450 manufacturers, more than 200 retailers, mostly chain operators, and 1,200 individual brokers. GMDC, Colorado Springs, Colo., is a group with just under 500 members that serves the HBC and GM categories in the retail and wholesale industry. Membership includes 120 retailers and wholesalers, 10 service merchandisers, 235 HBC manufacturers and 130 GM manufacturers. In late 1992 GMDC created three new classes of membership: service merchandisers, nondirect-buying food store chains and club stores. David Strachan, executive director of AWMA, told SN that his group and NASM have had conversations for the past year and that "We certainly hope NASM members will join our association.

"Obviously, we are going to contact them as we would any prospective members -- to sell them on the advantages and synergies of our organization -- though we have no specific plan for doing so.

"We would hope to attract from their existing members that portion that specializes in general merchandise and health and beauty care for the convenience-store trade, which I estimate would include 70% to 80% of their members."

AWMA was created two years ago through the merger of the National Association of Tobacco Distributors and the National Candy Wholesalers Association.

Rick Tilton, president of GMDC, told SN his association "hasn't sat down and analyzed the NASM membership closely to specify prospects, but we would hope to pick up 40% to 50% of its members, with some companies joining both groups. We expect to do direct mailings to NASM members as we do with any prospects."

Tilton said he plans to attend NASM's convention in October, "and I expect to take a higher profile there than I have in the past."

Several NASM members told SN last week they received survey forms late last month asking whether they would prefer to join AWMA or GMDC.

According to Dan Garber, an executive at Rack Rite Distributors, Shiremanstown, Pa., "The questionnaire asked members to indicate which organization they want to join -- to give NASM an idea of which ways members wanted to go." Industry observers offered several explanations of why NASM would seek change.

"NASM is financially sound, and membership is basically strong, but the association looked down the road and didn't see itself growing, especially as retailers were getting more involved in taking care of their nonfood sections with store labor in an effort to shave product costs and eliminate the jobber's upcharge," said one NASM member.

Another observed that "the rack-jobbing business is no longer the entity it once was. Many companies now have their own nonfood divisions or receive nonfood from wholesalers.

"In addition, major manufacturers are drop-shipping products to retailers and using personnel contracted from large service organizations to bring the product from the backroom, price it, stock the shelves and build displays or merchandising presentations."

Said another observer, "Originally, NASM members provided full service to retailers by ordering nonfood product, delivering it, packing it out, pricing it and caring for the gondolas.

"But the competitive nature of the nonfood business has resulted in rack jobbers acting only as distributors and delivering general merchandise and health and beauty care products to retailers who price, stock and maintain the departments themselves.

"Other NASM members include national and regional service organizations working on behalf of manufacturers that have shipped products to retailers for packing out, pricing and merchandising. Some service firms rely on contract workers to perform these store-detailing services."