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Nationwide Preps Dealers For Challenging 2nd Half

9/05/2012 08:00:00 PM Eastern

NATIONAL HARBOR, MD. – The Nationwide Marketing Group (NMG) is pulling out all the stops to gird its independent dealers for what could be a bare-knuckles second half.

Operational improvements, new and enhanced merchandising and marketing programs, and an expanded product portfolio that now includes Canon and Nikon will help members gain share amid a challenging market for CE and appliances, NMG executives said.

Speaking at the group’s PrimeTime! summer buying fair and conference, held here in mid-August at the Gaylord National Resort and Convention Center, NMG’s senior merchants projected flat unit volume and single-digit declines in dollar volume for CE, and flat or low single-digit declines in majap unit volume for members in the fourth quarter.

Still, the forecast outpaces the CE industry’s outlook of a 3 percent to 6 percent decline in unit volume and a low double-digit decline in dollars, said CE senior VP Tom Hickman, while senior appliances VP Jeff Knock spoke to a 12 percent delta between Nationwide’s unit and dollar performance, 4 percent of which was built on vendor price hikes, he said.

The group attributes the outperformance to its assisted sales floors; a higher mix of premium products and brands; tripling its selection of derivative models and 90- and 120-day exclusives; and its “draw, escape, sell” merchandising model (DES), a variation on the traditional three-step approach, which provides a promotional item to draw traffic and two step-up SKUs that offer increasingly higher margins.

The DES strategy limits each vendor to 30 SKUs, which allows manufacturers and dealers to consolidate their merchandising and marketing activity around core models, while increasing operational and sales floor efficiencies, Knock said.

NMG is also rolling out a new program, beginning with majap dealers, which will equip sales associates with tablet computers. The handhelds are preloaded with Nationwide software and apps designed to help engage customers, thwart showrooming and close the sale.

“We need to be proactive on the sales floor,” Knock said. At the same time, he promised an aggressive majap promotional calendar, and urged dealers to “disrupt or be disrupted. If you’re not disrupting the market, the market is disrupting you.”

On the CE side, Hickman, a former Toshiba retail sales director, expressed concern about video vendors, given the flow of red ink in recent quarters, but also anticipates an “HDTV-like bump” within the next three to four years as OLED and 4K by 2K displays hit popular price points and consumers come to the end of the typical eight-year replacement cycle for TVs.

In the meantime, Hickman is focused on reducing delivery times to dealers from 72 hours to 48 hours through NMG’s wholesale distribution network, and is leveraging the group’s A/V specialty and custom-install division, Specialty Electronics Nationwide (SEN), led by Jeannette Howe, to present TV dealers with new high-margin opportunities in services and attachment sales. These include security systems and whole-home control and automation, as well as turnkey home theater and headphone displays.

The headphone program, developed with Monster, provides significantly higher margins than small-screen TVs, Howe told TWICE, while CE merchandising VP Doug Schatz noted that headphones, along with a recent mobile computing program with D&H Distributing, help drive new, younger and potentially long-term customers to dealers’ stores.

CE members will also benefit from the addition of Canon and Nikon to NMG’s vendor roster. Nationwide inherited the brands with its acquisition earlier this year of Cantrex, a major Canadian buying group, from Sears Holdings. Besides adding 900 members and $2 billion in purchasing power, Cantrex also provides Nationwide with a central purchasing model that can help ease U.S. dealers’ inventory finance burden, explained executive VP Dave Bilas.

Other Nationwide initiatives include a turnkey Gallery bedding program to help CE and appliance dealers enter the high-margin and high-traffic mattress business; the consolidation of the group’s varied web services into one comprehensive platform; and a renewed focus on succession planning, this time incorporating vendor support.

Looking ahead, Nationwide president/CEO Robert Weisner was optimistic about the post-election period. Despite small-business concerns over tax rates, workman’s compensation issues, health care costs and high unemployment, he said the customer base has largely paid down its debts and has amassed “a lot of pent-up demand.” Nationwide dealers also outperform the competition with close rates of 80 percent, compared to 30 percent at the wholesale clubs and 40 percent to 60 percent at Sears and the home improvement chains, he noted.

Nationwide, along with its Cantrex and NECO divisions, will next convene at the Venetian Las Vegas March 3-6, 2013.