Retail Growth Struggles

By Steve Smith -- TWICE, 6/15/2009

Whenever TWICE has put together our Top 100 CE Retailers list over the years, or the Top 100 Major Appliance Retailers Report (see p. 32) or the Top 25 Car Electronics Retailers Report (see p. 47), one observation either we have made or the industry has made is that “the big get bigger.”

Well, not this time. Top retailers in major appliances and car electronics struggled for growth last year.

The Top 25 car electronics retailers did pick up 2.7 percent sales growth in a tough economy and a rocky period for the car industry in 2008. But 40 percent of the retailers listed showed sales declines last year.

The Top 100 major appliance retailers' performance was not unexpected. Their sales declined for the first time by 5 percent due to the collapse of the housing market and the deep recession. The housing boom helped create the go-go growth years in major appliances, changing it from a replacement sales model to, in many cases, a fashion model.

There were some surprises in both lists, including Best Buy, which topped our Car Electronics Retailers list but had a 5 percent drop in sales for the year.

Other various types of retailers that you wouldn't normally expect to be leaders in the category generated double- and triple-digit gains, such as: RadioShack (27.6 percent), Amazon (30.5 percent), Army-Air Force Exchange (25.4 percent), Sam's Club (55.8 percent), Newegg.com (108.1 percent), Office Depot (39.1 percent) and BJ's Wholesale Club (35.1 percent).

And, as senior editor Amy Gilroy mentioned in her story on p. 47, some familiar CE specialty stores just missed the Top 25 with good sales.

In the Top 100 Major Appliance list for calendar year 2008, Sears continues to own the top spot, with almost $8 billion in sales, but, like Best Buy in car electronics, it was tops despite a decrease in sales. Sears had a sales decrease of 5.9 percent.

And while Lowe's (No. 2 at $4.4 billion) had a sales gain of 1.9 percent, No. 3 Home Depot had a sales drop of 9.8 percent, and No. 4 Best Buy had major appliance sales drop by 3.7 percent.

In fact, only 28 retailers in the Top 100 either had positive or flat sales growth in major appliances last year, a far cry from the salad days of strong single- and double-digit growth in many core major appliance product categories.

One note about No. 7 on the Top 100 Major Appliance list, hhgregg: The chain showed 2.7 percent growth in the category last year, for $499 million in sales.

If you believe the mantra that “flat is the new growth number,” to come up with 2.7 percent growth in white goods in this climate is a major achievement.

A performance like this in majaps and in CE, along with the demise of Circuit City, could be the reason why chairman/CEO Jerry Throgmartin and president/CEO-elect Dennis May feel hhgregg is perfectly positioned to expand and eventually go national. But industry history is littered with regional retailers who tried, and failed, to make expansion work.

The chain, once privately held by the Throgmartin family, a former NATM Buying Group member and now a public company, certainly has the experience and the management team to take hhgregg to the next level.

hhgregg's decision to dramatically expand is a sign of hope for the future of the CE and majaps industries and should be fascinating to watch as its plans unfold.