Nationwide Hopeful About Q4 Majaps Prospects

By Steve Smith -- TWICE, 9/10/2009

LAKE BUENA VISTA, FLA. — While the major appliance business is still suffering, Adam Thomas, appliance merchandising senior VP for the Nationwide Marketing Group, sees some hope for his members in the fourth quarter based on the their strength and the quality of its supplier relationships.

Nationwide, with $12 billion in sales generated by more than 3,000 members, met last month at its annual PrimeTime! summer meeting at Walt Disney World's Swan & Dolphin Resort (see TWICE, Aug. 24, p. 1).

Of Nationwide's annual sales, a little more than half of its total sales are from major appliances.

During a one-on-one interview with TWICE at the show, Thomas commented that Nationwide has been able to withstand the economic storm in majaps better than competitors because “we have a better mix of products and can take [market] share.”

Members have tried some “unusual promotions” to attract consumers to their stores, and Thomas commented about Nationwide member's floor salespeople: “We have the best closers in the business [selling] in the 75 percent or so range. That affords us to do better than the industry.”

In looking at the country, Thomas noted that the major appliance business continues to be tied to the weak home-construction market. “The Northeast and West Coast are struggling like crazy. Florida still has problems. The bright spot [in major appliances] seems to be the Southwest. It was not as affected as the rest of the country.”

Thomas also said the super-premium appliance business generated “gigantic dollars” but will “never be back where was it was due to ... those crazy mortgages and financing [deals].”

But he still sees hope in the appliance business for the second half, which Thomas said “will be better than the first. We are not going to see a hockey-stick recovery, but we are at bottom and slowly evolving to 40 million [annualized] units. The industry is at 37 million now.”

Thomas again disputed the notion that white goods have strictly become a replacement market again. “Consumers still have an aspiration” for better appliances, but “some who can afford it do not want to spend as yet.”

He also predicted that there is a lot of “innovative products that will be coming on board” that will generate more consumer interest.

Those products will come from major brands, such as GE Appliances. When asked what GE's status is now in the marketplace, given its possible sale and the condition of the majaps market, Thomas said, “GE is taking share right now in certain categories. It creates cash for [the corporation], which is great in this environment. And GE Appliances has become a better partner, and been more aggressive, than ever before.”

While Thomas said that Sears is Nationwide's No. 1 target in major appliances right now (see TWICE, Aug. 24, p. 1), and while the group continues to watch Home Depot and Lowe's, Nationwide is also watching hhgregg, which is in an expansion mode.

“In appliances hhgregg is a formidable competitor. We know Jerry Throgmartin [hhgregg's chairman] and Dennis May [CEO]. The biggest problem they will have is going to be finding people” to run their stores. “[hhgregg is a] value-added retailer, different than Best Buy or Lowe's. To make [the expansion] work they need to sell consumers better products.”

As for the fourth quarter for Nationwide in white goods, Thomas noted that the group will be “3 to 5 percent better” due to plenty of promotions in place.

He estimates the industry will be off by 11 or 12 percent by the end of the year. Thomas added Nationwide knows the fourth quarter “won't be easy,” and that “we'll have to take share,” but the group feels “pretty good” at this point about its sales of majaps during the second half.