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NATM Carries Winning Streak Into Q1

3/18/2002 02:00:00 AM Eastern

After outpacing industry sales averages in 2001, NATM Corp. kicked off the new year with better than expected first-quarter growth in both consumer electronics and major appliances.

The announcements came during the buying group's annual meeting, held here last week at Disney's Grand Floridian Resort.

But despite impressive gains in core categories, executives exhorted member dealers to keep their pedals to the metal in order to survive in an increasingly competitive environment.

"We must continue to execute and we must continue to grow," explained NATM president and H.H. Gregg chief executive Jerry Throgmartin. "The industry rewards growth and punishes status quo. Staying flat means going backward."

Unlike past NATM events, this year's meeting carried no overriding theme or specific strategic tack. Rather, the message to members was simple: Continue to excel in order to remain a vital channel for manufacturers.

"We're out to grow the business and keep pace with the industry," Throgmartin said. "If you don't, it doesn't take long before you're not important to vendors. So we're telling members to execute where the manufacturers need you to execute, to perform well, and to execute your business."

That strategy paid off handsomely in 2001 and into the first quarter of 2002 for the group as a whole and its 11 individual dealers. According to executive director Bill Trawick, NATM's CE sales grew just over 8 percent last year and white goods gained 7 percent, while key high-service categories including projection TVs, home theater and better appliances "significantly" outperformed the industry.

Group sales continue to be split roughly 50-50 between white and brown goods, although unit volume is higher in electronics as appliances have become "a little more profitable today," Trawick said.

Despite the sales hikes and attendant market share gains, which Throgmartin said was taken from smaller independents, total volume for core categories declined to $2.75 billion last year from just under $3 billion in 2000, reflecting the demise last March of one-time NATM stalwart American Appliance. Nevertheless, Trawick noted that the group is "doing more business today than when we had 17 members," and that it's in no rush to increase the dealer roster.

Explained Throgmartin, "If someone is a fit, fine. But membership drives for their own sake isn't the approach we want to take. We're working very well now, and a member that can't deliver is detrimental."

Besides good execution, NATM dealers are also benefiting from an explosion in home remodels — spurred by low interest rates — and new products in major appliances, projection TV and digital TV that are "driving the high end" and spurring sales in audio and home theater, Throgmartin said.

Also fueling NATM's industry-topping results were store openings, the pace of which will snowball this year with 25 new NATM locations on tap. These include next month's move by Abt Electronics into a new 350,000-square-foot facility, R.C. Willey's ongoing expansion into Las Vegas, and more grand openings slated for Conn's.

Although the group was still finalizing plans last week, Trawick said he expects to forge programs with Mitsubishi, Toshiba and Sony — which returns to the fold following a one-year absence — and is still in negotiations with Thomson. NATM has also added Sharp to its CE vendor ranks.

In majaps, Frigidaire and Whirlpool continue as the group's core white goods suppliers, although Throgmartin acknowledged that "there is a place" in the market for Asian contenders Haier, LG and Samsung, each of whom NATM is currently supporting to varying degrees. European brands are also an important part of NATM's majap mix, he said.

Elsewhere, Trawick noted that NATM's members'-only Web site "will be playing a more important role" going forward as the group expands its online forecasting function and adds more back-room links to suppliers. To date, NATM members can access Toshiba, Whirlpool and, most recently, Sony online, and Trawick expects to add two more manufacturer links in the near future.

Looking ahead, 2002 "started off significantly stronger than anybody anticipated" for both vendors and dealers, Trawick said, and the group expects more of the same thanks to increased demand for HDTV and other digital products, and continued strength and new production in white goods.

Nevertheless, two areas of concern for NATM are increased consolidation and commoditization within the industry. "Retailers are never better off with one supplier, and suppliers are never better off with one retailer," Throgmartin said.

He added that NATM would like to enjoy longer, margin-rich product cycles than DVD's abbreviated 18-month run, where dollar volume is already declining despite growing unit sales. "We're trying to determine who's at fault. We're sure it's not NATM," he said.

But even that plays to the group's inherent strengths. "You can buy commodity goods anywhere now," Throgmartin noted. "But higher featured goods that need explanation and installation are growing dramatically, and we sell them better than other retail formats."

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