NECO Strategy Targeting More Low-End SKUs
By Amy Gilroy -- TWICE, 9/25/2006
Mashantucket, Conn. — In an effort to capture younger shoppers and make them customers for life, the NECO Alliance announced a new “Bill of Rights” program last week at its annual Fall Expo that promotes lower-priced products rather than the group's bread-and-butter premium lines.
NECO, the Northeastern buying group comprised of white- and brown-goods retailers, acknowledged that the strategy to compete more aggressively in the lower price tiers was unusual for independent dealers, and is a segment that members had steered clear of in the past.
Instead, the new drive is aimed at winning younger customers who can't afford the high-end, high-margin products that NECO dealers traditionally favor.
“We're trying to make sure our members cover the entire price range,” said NECO executive director Mel Hunger during last week's convention here at the Foxwoods Resort & Casino. “The members are very successful at stepping up consumers to the high end, but there's a market of young people coming in who can't go upscale yet. We want to capture this audience.”
The new program is aimed not at pushing the very lowest price tier but “step two” product, just above it, he said.
NECO has selected a group of products for its Bill of Rights program that will be backed by 12-month financing, NECO rebates, and dealer incentives. With these programs in place, consumers may find that step-up products are available at the same price or just above the price of the low-end promotional models, said Jerry Grasso, merchandise director for Appliance Dealers Co-op (ADC), one of NECO's five divisions.
NECO said it will also continue the push it began 18 to 24 months ago in large screen TVs. The group said more of its members are now selling LCD and plasma TVs and still more are expected to aggressively push the category over the next six months.
In addition, the group said its buying power and warehousing strength has helped alleviate some of the spot product shortages that had been plaguing in the category.
Despite slower housing starts and high gas prices, NECO convened its annual Fall Expo in an upbeat mood, citing yet another year of high growth in key product segments.
A unit of the $10 billion Nationwide Marketing Group, NECO said its sales of major appliances and advanced TVs have grown at a double digit pace over last year to top $1 billion at the wholesale level. The group also continues to attract new members: It is now closing in on 600 dealers, up from 550 last year.
NECO, however, is not impervious to changes in the marketplace. Stephen Moran, president of the Boston Group, another NECO division, said of the recent slowdown in housing starts, “We're starting to feel it. A lot of houses out there are sitting and that means they are not getting new refrigerators and dishwashers, but we're still up by double digits.”
ADC's Grasso estimated appliance sales are up by 8 percent to 12 percent for the Alliance, which says a key asset is not only its buying group purchasing power, but its 1.2 million square feet of warehousing space, which helps members guarantee same- or next-day delivery on most purchases.
NECO has also added several new vendors this year including Garmin.
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