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Nationwide Upbeat On Prospects For ’05

2/16/2005 12:57:00 PM Eastern

Lake Buena Vista, Fla. — The Nationwide Marketing Group, the largest electronics/appliance buying organization in the industry, celebrated its 2004 performance and set the new year planning during its winter Prime Time event, which was held at the Walt Disney World Swan & Dolphin Resort, here, last week.

A mixture of around 125 electronics, appliance, furniture manufacturers, along with service providers, took 125,000 feet of exhibit space during Prime Time. Ed Kelly, Nationwide’s president/director, along with Robert Weisner, executive VP/director, and director Les Kirk, all were able to report impressive statistics on the organization’s growth during 2004 and the first six weeks of the new year.

Kelly said during the middle of the show that Nationwide will probably have 100 more members, or 2500 retailers, by the end of the event. That translates into about 6,500 stores which generates annual electronics, appliance and related sales of well over $8 billion. And Nationwide’s sales mix looks like this: 72 percent in major appliances, about 22 percent in consumer electronics and the rest in furniture and related product categories.

Kelly summarized the current state of Nationwide’s members by saying, “Our dealers are happy, growing and making money, which makes life good for them.” That sunny analysis aside, the devil is usually in the details, so here are some of them.

In its largest category, major appliances, Nationwide has had a “good six weeks” during the start of 2005, Kelly said. While its members ordered early before price increased due to higher steel costs kicked in, sales have been good this year. Kelly indicated that price increases for most appliances were “more in the 10 percent area, than 5 percent.”

Nationwide has seen during 2004 and this year “growth in higher end goods with the average sales ticket going up tremendously.” Kelly noted that Nationwide members are selling front loaded washers at a higher rate than the industry, with “20 to 25 percent of the category’s sales in that area.” Due to that performance, “We are watching our competitors, like Best Buy, because they are making a big play on that.”

In consumer electronics for Nationwide it is mostly big-ticket items, meaning HDTV. Due to “three years of preparation” 2004’s TV sales were “up substantially,” Kelly said. “We are also excited about this year. More of our dealers, who had dropped out of CE altogether, have come back into it. New displays have taking off. More and more consumers are interested, if you show them how to operate HDTV and keep it simple.” And he noted, the Super Bowl “pushed HDTV sales, no ifs, ands or buts about that.”

The challenge in HDTV is going to be eroding pricing when “you commit to more product to get more availability.” Kelly stressed that if retailers who make commitments “are not protected you will find yourself in a trap. We are working hard to get availability, but at [current market] pricing.”

And Nationwide is getting more involved in custom installation. “We’ve shown some members how to find people in their marketplace who do the pre-wire and installation, while they can become the product showroom that puts together the systems.” Kelly said that while some have gone that route, others are more experienced and have their own custom installers on the payroll. “We have all flavors. 2005 is going to be a very good year for us [in custom install],” he noted.

Whether you are talking about delivering HDTVs, front-load washers or making a custom installation, Kelly said, “Service and delivery in this business is vital. You need real people talking to real people. You can’t just sell an HDTV and not explain to them how to operate it. They need to know how to use the remote and understand their new system. You need trained people to explain to [consumers] the products they just bought.”

Weisner stressed that Nationwide is trying to get more of its members into other categories besides appliances and electronics to compete against home improvement chains. “Consumers go there to buy windows, small doors and end up buying appliances.”

While Nationwide members can’t “become lumber yards” Weisner said he would want members to “carry a bigger assortment of products, become more of a home furnishings operation, with furniture and bedding, or adding home & garden and barbeques.”

He explained, “If you walk away from some business you are forcing customers to go to Best Buy and buy a flat-screen TV. What will stop him or her to buy a washer dryer? That’s our greatest challenge.”

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