Majaps Changes Shown In Top 100

The TWICE Top 100 Major Appliance Retailers Report makes its annual appearance in this issue, illustrating the challenges this industry is facing.

The overall sales number for Top 100 in calendar year 2007: $25.029 billion, which is down 0.3 percent compared with 2006.

Technically that's down, which is surprising for this or any retail top 100 of this type. Usually the leading retailers are taking share from smaller competitors or from each other. The relatively flat performance by these leading majap retailers only goes to show the difficulty the entire industry began to feel since last fall. That foretold the problems that were about to hit in the housing and credit markets.

Another surprise was the relative strength of the top 10 retailers. All are in the same positions they were in 2006. All but four showed sales gains, led by hhgregg, which benefited by having 11 more stores and by increasing its white-goods sales by 36.6 percent.

Sears had a 7.3 percent drop in calendar year 2007 major appliance sales. That's not really a surprise, given the problems it has had over the past year or two. What still amazes me is that for all the talk, Sears' annual major appliance sales are $8.32 billion, almost $4 billion more than Lowe's, at No. 2, and almost $4.5 billion more than The Home Depot, at No. 3.

In the past five years — and in some markets the past decade — the major appliance business evolved from being a replacement to a fashion industry, with all the opportunities and ills such a transition brings.

More than a decade ago, if a retailer sold both electronics and appliances, the former might have created plenty of store traffic, but the latter provided margin. Since then, major appliances have become more volatile, with margins being kicked around a bit. But there was and is money to be made in upscale kitchens and laundry rooms.

A quote like, "We're holding our own," about sales in a category aren't words you read in banner headlines.

Yet in an economy being dragged down by fears of possible $5 a gallon of gas, among other ills, it is an accomplishment.

Concerning the volatility of the majaps market in recent year, a bit of perspective is necessary. Take the comments of industry veteran Bill Trawick, executive director/president of the NATM buying group, who spoke with TWICE in April about the industry (see TWICE, April 21, p. 1).

He said, "We have seen 10 to 12 years of tremendous growth" in appliances. "Even last year, which may have been [the industry's] second-worst year during that time period, was pretty good. It is aggressive with nationals fighting for their share with promotions, which has made it tough on margins."

Trawick also acknowledged the turn to replacement vs. fashion sales.

How retailers will handle this change, plus the pending sale of industry giant GE Appliance, will loom large as the category turns to the second half.

One publishing note: Our next print edition will appear on July 7. In the meantime, visit www.TWICE.com and subscribe to TWICE eNews Daily for the latest news and trends. Have a happy and safe Fourth of July.