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H.H. Gregg Leaving NATM Buying Group

9/16/2002 02:00:00 AM Eastern

Midwest CE and majap powerhouse H.H. Gregg has withdrawn its membership from the NATM Buying Corp. and will officially leave the group on Sept. 30.

The chain, which operates stores in Indiana, Ohio, Kentucky and Tennessee, said it chose to end its 10-year membership in order to avoid territorial conflicts with fellow dealers as it continues to expand into multiple regional markets.

Indeed, Gregg has been pursuing an aggressive expansion strategy that has catapulted its store count from 18 to 48 units over the past five years. Last April, the privately held company announced plans to enter the Atlanta market in March 2003 with 11 stores and a central distribution center to support them. Gregg's executive VP/chief operating officer Dennis May cited Atlanta as one area of potential conflict, given fellow NATM member BrandsMart USA's interest in that market. "We felt that if we can't work freely and openly within the group, it was better to leave than make less than a first-rate contribution," he said.

For NATM, the departure will represent the second member loss within a month, bringing its dealer roster down to nine. Two weeks earlier, Sight 'n Sound Appliance Centers withdrew from the buying group after it was acquired by Aaron Rents, which operates stores within members' markets.

The loss of Gregg's volume — estimated at $313 million in CE and $191 million in majaps annually, according to the TWICE Retail Registries — "is not good," said Ernie Olson, NATM's operations and marketing director. He noted that NATM will "entertain new membership if it's right for the group."

But former and founding NATM executive director Saul Gold believes the impact on vendor relations will be negligible for the $2.75 billion buying group. "Dollar volume doesn't matter," he said. "Each member is big and strong and dominant in its own market. That's what manufacturers look at."

To Gold, the bigger problem is the loss of NATM president Jerry Throgmartin, CEO of H.H. Gregg, who has been "the backbone, the cheerleader of the group for so long."

BrandsMart CEO/president Michael Perlman, agreed. "These days, manufacturers care more about mix than volume," he said, "and losing Jerry's volume is less important than losing Jerry. He was a leader of the group. He's very intelligent, one of the best in the business, and it was nice to get his input."

Con Maloney, CEO of NATM dealer Cowboy Maloney's, concurred. "None of us like seeing Jerry leave the group," he said, "but he's not just a regional player anymore. I tip my hat to him for anticipating that he's going to bump up against other members."

Harry Elias, executive VP/CFO of JVC of America, said he "wasn't totally surprised" by Gregg's decision to leave NATM, given the size of the chain.

"In today's market, an operation such as Gregg can do just as well on a one-to-one basis with manufacturers," as JVC does with individual NATM dealers, Elias said.