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NECO Enjoys Double-Digit Sales Growth

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

Proving once again that there is strength in numbers, members of the North East buying organization called the NECO Alliance kicked off their spring convention here by celebrating double-digit sales increases for the fourth consecutive year of the group's existence.

This year, the alliance shifted its spring show to the Hartford Expo Center, here, which was billed as a good central location for many of the group's members — hailing from 10 surrounding states. The floor of the show was balanced between electronics manufacturers and major appliance vendors. Testifying to the group's renewed concentration on brown goods (consumer electronics), the show featured many of the leading television and video manufacturers including: Apex, Haier, Mitsubishi, Panasonic, Philips, Samsung, Sharp, and Toshiba.

Poised to stay on top of its escalating sales, the alliance is expanding its warehouse space. ADC, one of the five member organizations in the alliance, opened a new 204,000-square-foot warehouse as the show began, and another member, The Boston Group, recently added "a huge addition to their warehouse," according to Mel Hunger, NECO Alliance executive director.

"Every warehouse is increasing in space," Hunger said. "We have almost 1 million square feet of warehouse space, and we keep almost 5,000 SKUs in stock at any one time, totaling almost $100 million worth of inventory."

As a result, manufacturers are listening intently to the needs of the alliance, and have moved the group up on their distribution priority lists.

This was seen in rear-projection television, where industry inventory levels — particularly analog models — have been short due to unanticipated demand.

NECO group members told TWICE they've had no problem with projection television deliveries.

Hunger pointed out, "there are shortages out there, but we are in a better position than most retailers because of our warehouse capability. Manufacturers today want to cut back on their expenses too. We have the ability to forecast out our needs and buy in truckloads — that's exactly what the manufacturers' are looking for."

In addition, the group has fine-tuned its delivery systems "to a point where if we get an order at 3 o'clock in the afternoon, it is delivered to the store at 10 a.m. the next day," Hunger said.

Although white goods have been the bread-and-butter for NECO's retailers over the past 10 years, Hunger said he is currently pushing NECO members to expand their merchandising mix more aggressively into upscale consumer electronics.

Where in the past brown goods offered only low margins and an uphill battle against the big-box stores, "the advent of digital TV, plasma screens and LCD TVs has the margins coming back. If the margins are there, our members are there," Hunger stated.

Additionally, the typical NECO member is able to provide more knowledgeable sales support and service to customers than the volume-driven mass chains, said Hunger. This plays very well in the early stages of the shift to digital products, because customers are looking for as much information as they can get from the retail sales person.

To ensure that competitive advantage remains, NECO is devoting an increasing amount of time and energy to merchandising and sales training.

"Each of our five chapters has its own training sessions — and our Boston Group is even having a training fair in 10 days," Hunger observed. "The vendors come in with their latest stuff, and we bring all of the salespeople in — not just the owners of the stores."

Another project paying dividends is e-commerce. The alliance has offered members guidance on developing e-commerce sites and programs to fit the criteria of the manufacturers. This has led to valuable on-line vendor referrals, Hunger said.

"We are the only buying group that is 100 percent e-commerce enabled now," he said. "We have links to our group on the GE and Maytag sites, and this is generating a tremendous amount of referral business to our members' brick & mortar stores."

Going beyond vendor programs to increase foot traffic, NECO last April began its ongoing NECO Months campaign, in which the alliance worked with one manufacturer each month on special brand/product promotional incentives. These specials typically include zero-percent financing offers, product discounts and exclusive consumer rebates.

"We work with the manufacturers to select the products and arrange the incentives. We then follow it up with training on the pieces — so sales people know what is happening and when it's happening," Hunger stated.

"Every month, NECO sends members a kit containing hang tags, laminated signs and window banners proclaiming the months and the manufacturing being featured," Hunger said.

To localize the campaign at the store level, NECO offers templates for advertising circulars that allow each retailer to input its own stamp on the program.

Vinnie Capuano, president of the DMI buying group chapter, said "We were all doomed. Through the alliance, we've been able to take market share back from the big-box stores."

Jay Lebowitz, president of both the Intercounty chapter and of the NECO Alliance, said the unity of the five chapters has built NECO into the largest buyer in the Northeast corridor.

"We've been able to beat the recession by taking market share way from the big box stores," he said. "I believe Circuit City got out of major appliances in part because the independents in the area were so strong."

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