After suffering the loss of four member dealers in two years, including regional heavyweights H.H. Gregg and Abt Electronics, NATM Buying Corp. is back at the top of its game.
That was the word from executive director Bill Trawick, who presided over the group's Western-themed Annual Meeting here last month at the Westin La Cantera Resort.
Thanks to new members, new storefronts and "an extremely good 2003," the white- and brown-goods buying group exceeded industry growth in key categories and managed to hit the $3 billion mark in cumulative annual sales last year. That is up from its $2 billion tally for 2002, and equaling annual revenues from a time when the organization boasted twice as many members.
Contributing to the bounty was a trio of new members, all of whom joined last year, including $1 billion mid-Atlantic department store chain Boscov's, central Tennessee's 15-store Electronic Express, and Grant's Appliance & Electronics, a six-unit Chicago area regional.
Also fueling NATM's fires are aggressive expansions and store redesigns that are either planned or were consummated by 11 of its 12 members. That includes Nebraska Furniture Mart's 712,000-square-foot mega-store which opened last summer in Kansas City; Conn's aggressive multi-unit entry into the Dallas market; and BrandsMart U.S.A.'s forthcoming foray into Atlanta. (See story, right)
"The new members and the growth of current members are allowing us to rebound," Trawick said. "These are [largely] private entrepreneurs who are expanding at their own expense. It's hard to believe they'd open new stores if business wasn't good."
And apparently it was, based on NATM's performance figures. According to Trawick, CE sales for the nine months ended December 2003, excluding audio, were up 8 percent in units and 12 percent in dollars, reflecting a "better mix of products and an advantage in fulfillment," he said.
"Dealers had been nervous about facing Circuit City and Best Buy five years ago," Trawick noted. And while some independents did succumb to big box build-outs, NATM dealers, most of who are dominant within their markets, "learned that they could survive and compete against them," he said.
Specifically, unit sales of CRT rear projectors grew 20 percent during the first nine months of NATM's CE fiscal calendar, through Dec. 31, 2003. Plasma display panels were up 140 percent and LCD displays bounded 250 percent, despite allocation constraints. Elsewhere, portable TVs were up 9 percent in units, DVD players grew 6 percent, camcorder sales rose 25 percent, VHS volume was down and VHS/DVD combos were flat over the same period.
In major appliances, NATM's sales were up 7 percent in units and 10 percent in dollars for the full 2003 calendar year, compared to industry-wide unit growth of 4.5 percent. Broken out by category, refrigerators were up 6 percent in unit volume compared to 2.8 percent for the industry; laundry grew 6 percent compared to the industry's 5 percent average; and dishwashers were tied at 3.6 percent each.
"We offer manufacturers a lot of opportunities for growth," Trawick said. Conversely, the organization is also looking for commitments on microprocessor display inventory and is weighing its options in a year marked by "tough choices," Trawick said.
"There are 10 to 15 new CE players out there," he observed. "Some are embracing LCD, some are embracing LCOS and some are embracing DLP. There are also new, emerging brands. Does Motorola and HP come into the market and have an impact? Do the brands that helped us grow over the last 25 years remain in a dominant position? One brand sold to CompUSA, so who do we go out and support? And how many brands are the nationals going to support? If one gets cut, what will it do? We don't have all the answers yet, and the vendors don't either. But we have to see which suppliers will take us from here to the future."
Nonetheless, Trawick said he is urging his members to support Sony, Mitsubishi, Toshiba and Hitachi, the group's four key suppliers in video, while its core majap vendor makeup remains Whirlpool, Frigidaire, Maytag and GE, in that order.
Mitsubishi returns to NATM's graces, if not core supplier status, following its replacement by Hitachi last year. The move, a response to margin declines on Mitsubishi products following the brand's placement with Best Buy, led to the resignation of Abt, which refused to switch TV allegiances.
NATM members are also showing a renewed interest in audio, as witnessed by the attendance here of Kenwood, Onkyo and Yamaha, as the category shows renewed signs of life. "Audio has stopped its nosedive and people are going back to components or better home theater in a box," Trawick said. "They're spending $4,000 to $5,000 on a video display and don't want a $299 HTiB."
Going forward, NATM is "actively looking to recruit" a West Coast retailer to fill a geographic gap in the group's national footprint, although most dealers who fit the NATM profile in that region are strong in white goods at the expense of video, Trawick explained. However, the group is currently "looking at a retailer west of the Mississippi," he allowed, and would only be interested in adding one more dealer after that, for a total of 14 members.
The group is also exploring direct sourcing options under familiar but currently unused brand names "to fit our needs" in major appliances, Trawick said. Despite some anticipated price erosion and possible shortages in the third and fourth quarters, he is expecting a boom in micro display TVs. "Housewives are embracing it, although the sum of vendors' individual projections exceeds the industry forecast for 800,000 to 1.3 million units shipped this year," he said.
Member dealers were equally bullish on business, and were reluctant to look a gift horse in the mouth. "Since January business has been outstanding across the board," observed Edward Maloney, president of Cowboy Maloney's Electric City.
In other NATM news, Harry Elias, honorable chairman of JVC of America, was not able to attend his first meeting of this buying group in 30 years. Elias was scheduled to address the group and to remind them to "work together on merchandising plans, [retailer and consumer] education, and advertise effectively," he told TWICE last week.
(Coverage of NATM's annual meeting continues in the Major Appliances section, p. 42.)— Additional reporting by Steve Smith