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Nationwide: CE Pricing, Sears Changes Are Opportunities

2/27/2012 04:38:21 PM Eastern
Orlando, Fla. - Nationwide Marketing Group sees growth and profit opportunities as Samsung and Panasonic -- and reportedly other CE vendors -- issue new pricing guidelines, as Sears announces store closings, and as the group increases its furniture business.

Nationwide's management team met here with the media Monday morning during its annual PrimeTime! event at the Gaylord Palms hotel. The event has drawn a record crowd of more than 3,400 attendees.

Robert Weisner, CEO; Dave Bilas, executive VP; and Doug Schatz, electronics merchandising VP, reported that Samsung has put in place a unilateral pricing strategy for part of its CE line. Separetly Samsung confirmed to TWICE that it has issued new unilateral pricing policies, but did not provide further details.

They said this will benefit the group's dealers since it applies in part to "higher featured products that our type of retailers sell," Schatz said.

Separately, Panasonic confirmed to TWICE at the show that its 2012 home entertainment line will now "serve a reduced number of dealers directly" and will handle the rest of its retailers by going through distributors. The company also said its MAP policy has broadened the range of products for which sale through third-party marketplaces is not permissible under its MAP policy, including home entertainment products such as TVs, Blu-ray and home-theater products.

Weisner confirmed that other CE brands are planning a similar new unilateral pricing and channel strategy, but did not provide names.

"All six or eight top-tier CE vendors have similar plans to accomplish the same goal. Most have some enforcement involved. If you add up the numbers" in losses, especially in TV, "they have been told to change their business model."

Schatz noted that the strategy is "born out of necessity," adding that unilateral pricing programs coupled with a retail channel strategy "have a chance to work" rather than the MAP-only programs of the past.

He added, "Nationwide supports this effort. We want to make it work."

Schatz said that in Samsung's case it has taken a "multifaceted approach, on one hand to have a unilateral pricing program for some products, some of which are higher end. [Those products] need a selling floor to sell them, and [vendors] have to invest in those selling floors so they will survive ... and generate profits for everyone."

This would mean Nationwide-type dealers would be able to profitably sell 50-inch and larger flat screens. "That is our membership's skill set, to sell these products on a value-added sales floor with well-trained salespeople," Schatz said.

Part of all this plays into the change by CE manufacturers, Schatz said, where they are now "building to forecast vs. building to sell." The former means that vendors will now manufacturer what is ordered and, theoretically, will not overwhelm retailers with inventory that has to be sold off every month.

As far as channel management, Schatz said, "That's when the right products are sold in the right channel. We can sell value-added products -- smart TV, 3D, voice- and gesture-based controls -- that require a selling floor. Our view is we are part of the solution. We applaud Samsung as a market leader in this effort."

"The industry has been through so many false starts on this, but despite this I am optimistic," he said.

The announced closings of Sears' locations and the spinoff of parts of its business "is a positive for us," Bilas said, again citing Nationwide's product selection in CE and major appliances and value-added sales floor.

In major appliances, where Sears remains the No. 1 retailer, Jeff Knock, appliance marketing senior VP, said, "Sears' major appliance customers are used to being served, so this is really great news for our members and vendors. We know the Sears customer. We can serve them. Our members can serve that customer because they can depend upon the Nationwide members to give them the product mix they want."

He added that major appliance vendors "may be concerned on the volume level, but they know the independents can serve those consumers. It will strengthen our relationship with [vendors]."

On the CE side, Schatz said changes at Sears "benefits our membership ... since we have a value-added sales floor. Again, our ability to demonstrate CE products like over-50-inch flat screens are a sweet spot for us and benefit members."

In non-CE and major appliance moves, Nationwide is putting an emphasis on more bedding and furniture sales for its members, and trying to attract more furniture retailers to carry CE and vice-versa.

Weisner remarked that "margin degradation in electronics and appliances is a factor" in turning more towards bedding and furniture, among other categories.

"We want our members to sell more and expose their customers to more categories," Weisner said. For some members, "bedding is the holy grail ... with 30 points of margin" and the ability to pay for a store's overhead while still attracting consumers with CE and majaps.

Nationwide has about 3,000 members, with $6.5 billion of its $12 billion in annual volume from major appliances.

Weisner has ambitious plans for the group and said Nationwide is targeting 1,000 more retailers, many of them furniture dealers because of that category's great growth potential.

He said "furniture stores want to get into electronics and appliances" to increase traffic, and members that currently do not sell furniture to increase profitability.

For more coverage of the Nationwide Marketing Group meeting visit TWICE.com and the March 12 print issue of TWICE.

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