NECO Members Fly In The Face Of Majap Mayhem

By Amy Gilroy

MASHANTUCKET, CONN. -- The mood was one of buoyant optimism at NECO Alliance's Fall Expo III, held here late last month at Foxwoods Resort & Casino. For even as majap prices tumble, and retail behemoths The Home Depot and Wal-Mart enter the market, members of this Northeast buying group continue to chart double-digit sales hikes and market share gains.

Executive director Mel Hunger said members' unit sales are up around 20 percent this year, with dollar sales not far behind, and that the two-year-old buying confederation -- which is affiliated with mega-group Nationwide TV & Appliance -- is now at $1 billion in sales.

NECO, whose mix is about two-thirds majaps, was initiated by Jay Lebowitz, founder of Jay's Appliance and president of the group's Intercounty chapter. Lebowitz joined with his regional competitors to create what is now a 450-member buying alliance with 800 storefronts and upward of 750,000 square feet of warehouse space.

The warehouses set NECO apart from other buying groups by affording members access to $50 million in inventory for same- or next-day delivery.

Lebowitz is not shy about taking NECO's billion-dollar buying power directly to manufacturers and said, "We are going to go to the manufacturers and say, 'All those things you are doing for Sears and Home Depot, what are you going to do for us?' Does Home Depot think we're going to be another casualty like the lumberyards and hardware stores? I'm not going to let that happen, and the manufacturers shouldn't let that happen."

NECO has forged what it considers a win-win merchandising situation where its corner-store members can offer the service of the independent -- including a knowledgeable sales staff and next-day delivery -- with the buying clout of the big-box retailers.

Along with Lebowitz, other NECO leaders also expressed optimism that Home Depot and Wal-Mart, which has begun a 12-store test of major appliances, were not going to stop the group's steamroller growth.

NECO is taking some new merchandising initiatives this year in e-commerce and upscale consumer electronics. The group will collectively add another 200,000 square feet of warehouse space over the next several years and recently began working with J.G. Sullivan to set up members with full-service e-commerce sites.

Establishing an Internet presence is critical for members, according to Jim Cunningham, who is marketing director for The Boston Group, one of NECO's five chapters and based in Franklin, Mass. While only 1 percent of majap purchases are transacted on the Web, fully 60 percent are researched beforehand, he said. All five major majap manufacturers, as well as many consumer electronics brands, are expected to participate in the NECO e-commerce program.

NECO also continues to make inroads into consumer electronics merchandising with a keener focus this year on HDTV, digital cameras and other high-tech products. Olympus was among the Expo's several first-time exhibitors, and many NECO members said they are looking to beef up sales in upscale CE products.

"We started the step-up sales in electronics, and we want to get back to it," Cunningham said. "We were once the dealers for the radios and color TV, and now we want to take HDTV and be the corner store for it. We have the knowledgeable salespeople in place. We want to take that experience and apply it."