Ultimate Electronics Entering White Goods Business
By Alan Wolf -- TWICE, 9/14/2007
Thornton, Colo. – Ultimate Electronics is adding major appliances to its largely video-based assortment.
The A/V specialty chain began testing the category this month in Oklahoma with a massive 350-SKU selection of laundry and kitchen products that are filling upwards of 40 percent of its three lab store sales floors. Depending on the results, the company said, Ultimate may begin rolling out majaps to its other 29 locations by early next year, which would render it a major force in white goods retailing.
   Test stores feature 350 majap SKUs and working kitchen vignettes. |
Marketing senior VP David Smith told TWICE that Ultimate is moving into majaps to better utilize space in its average 35,000-square-foot superstores that was freed up after exiting or de-emphasizing categories like computers, DVD software and car audio. CEO Mark Wattles initiated the search for a new category 18 months ago that would compliment the company's assisted selling model, and Ultimate embarked on white goods in earnest after attending the Kitchen/Bath Industry Show (K/BIS) in May, Smith said.
The company launched the category in its Tulsa store on Sept. 1 and will add a similar selection of washers, dryers, refrigerators, cooktops, ovens, over-the-range microwave ovens and dishwashers to its two Oklahoma City stores on Sept. 22. Vendors include Bosch, Broan, Electrolux, GE, LG and Whirlpool, with a focus on the mass to premium-mass price segments, Smith said.
The stores added 6,000 square feet to 8,000 square feet of extra space to accommodate the new category, taken largely from warehouse and backroom areas, and the products are displayed both on the remodeled floor and within working demonstration kitchens designed by local designers. To man the departments, the company recruited experienced white goods sales staffers and enlisted current employees with majap backgrounds.
Ultimate is also offering in-house delivery and basic installation services, and a 60-day price-match guarantee to demonstrate its willingness to compete aggressively on price.
“As Sears’ market share has shifted to the home improvement chains, we saw a void to in the marketplace that we can fill with our combination of expertise, service and price,” Smith said.
Smith added that a chain-wide rollout of white goods could ultimately lead to a name change for the retailer.
Ultimate’s brand assortment includes:
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General Electric
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Whirlpool
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Maytag
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Frigidaire
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KitchenAid
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LG
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Bosch
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Electrolux
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Hotpoint
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Amana
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Jenn-Air
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Broan
In a statement, Wattles said “We hope Ultimate Electronics stores will become a one-stop shop for electronics and appliances in Oklahoma. You’ll continue to get the same great service, largest selection and lowest prices that we’re known for, creating an even better shopping experience for our customers.”
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This is just another example of placing a band aid on the real problem. Having visited there stores in several states including those in Oklahoma I can tell you the real problem is that this company is lacking passionate employees that can translate excitement into sales from it’s customers keeping them coming back for more.
In the employee’s defense, the company’s displays and assortment are dull, boring and uninviting. Given the transformation this company has endured, rather than make a futile attempt in competing with “price†as the factor, it should have used higher prices/margins/gp$ to invest in its employees which of whom will ultimately determine this companies future success or demise.
Doug Gillis - 2007-17-9 21:42:00 EDT -
Mark Wattles runs the world. We just live in it.
David Bantener - 2007-14-9 15:02:00 EDT -
Well, Bill, let''s do the math:
32 stores x 350 SKUs = a whole lotta washers and dryers. From the vendors'' perspective, that represents a signficant new opportunity to move inventory during a weak market cycle. From a retail perspective, Ultimate will have more floor space devoted to appliances than BrandsMart USA, which is the eighth-largest white goods chain in the country. Pretty major, at least by major appliance standards.
Alan Wolf - 2007-14-9 13:54:00 EDT -
I fail to see how a regional A/V chain with 29 units can become a "major force" in majap marketing. Since margin compression appears to have driven Ultimate Electronics out of computers and peripherals, this latest "retooling" of the business seems futile. Margin compression results from intense competition, and I don't see how Ultimate can command the buying power of a BBY or Sears, for that matter, when negotiating pricing with manufacturers. Perhaps joining a buyer's group (Nationwide) would allow them to improve their pricing leverage. But I don't see this working long term if the company wants to try to compete on a standalone platform.
Bill Penn - 2007-14-9 12:38:00 EDT -
In a recent visit to an Ultimate Electroics store in the Denver area, I was surprised by the limited selection of merchandise. Maybe appliances will help them fill the space in their stores but, it probably won't help them distinguish their stores from their larger competitors.
After failing in their previous incarnation Ultimate has chosen to go after consumers with a "we offer the lowest
business model." This will be very difficult to sustain with competitors like Wal-Mart, Best Buy and others better able to offer lower prices.
George Whalin - 2007-14-9 12:00:00 EDT
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