By Lisa Johnston
New products on display at the American International Toy Fair, held in N
MEGA Group USA/Best Brands Plus, the nearly $2 billion buying group for independent furniture, majap, CE and lawn and garden dealers, held its national convention last month at the Downtown Renaissance Grand, here.
About half of MEGA's 900 member dealers were on hand for the event, which drew 90 vendors who filled 100,000 square feet of exhibition space. The confab included seminars, dealer roundtables and prize giveaways, and was highlighted by a keynote address on healthcare reform by former House Speaker Newt Gingrich.
According to executive director Pat Reed, the group continues to enjoy solid growth, scoring “record years on top of record years” following a brief pullback in business in the wake of 9/11. So far, 2005 is no different, with “the first quarter moving along very well in all categories” and membership expected to reach the 1,000 mark this year.
MEGA/Best Brands dealers are now located in all 48 continental states, although the membership is concentrated in the eastern half of the country. Roughly 150 of its 900 members participate in the group's Best Brands Plus cobranding program, and most make use of MEGA's marketing, extended warranty, and health and business owners' insurance programs. Headquarters remains in Memphis, Tenn.
Reed attributes the group's success to its broad, multi-category approach to market and its dealers' value-added offering which includes accurate product information, timely delivery and expert setup. Furniture and bedding comprise MEGA's biggest category with about 50 percent of total volume — ostensibly making it the largest buying group for furniture — followed by white goods with some 35 percent of sales. CE, which nearly faded from group programs three years ago, now represents between 10 percent and 15 percent of volume, followed by the recently added lawn and garden category, which represents between 5 percent and 10 percent of total sales.
In major appliances, the group enjoyed an “outstanding year” in 2004 by outpacing the industry with double-digit gains, reported Rick Bellows, MEGA's white-goods merchandising director. And despite initial fears of customer sticker-shock in the wake of substantial pass-along price hikes, the increases appear to be sticking at retail, and dealers are seeing “good sell-through in the first quarter, which makes the rest of the year just flow,” he said.
Front-load washers in particular are performing very well, Bellows observed, although the category is set to “explode” as every major supplier adds front-load SKUs. “It won't be too long before there are more front loaders than top loaders” in the marketplace, he said, as consumers embrace their greater performance, energy efficiency and convenience.
White-goods dealers are also enjoying “a lot of play” in bundled stainless-steel kitchen packages, Bellows said, and continue to see growth within the builders' channel, where dishwashers and refrigerators are in high demand.
In brown goods, the resurgence of CE at MEGA is tied to the advent of microdisplay TV. “Dealers have seen the profit opportunities in widescreen TV, particularly in the DLP-type products,” said electronics merchandise manager Jim Sendrak. “They realize that there's substantial business to be had, and that they are already skilled in product delivery.”
MEGA members also “do a great job in plasma and flat-panel LCD,” although the drift toward commodity pricing in flat panel is squeezing profitability and compelling dealers to attach more services with each sale, Sendrak said.
Once a Thomson house exclusively, Sendrak has since developed several national programs that are delivered factory direct or cost-effectively via distributors. Core video vendors now include Toshiba, Hitachi, Philips and Daewoo (“A great utility brand”) in addition to RCA. The group also dabbles in audio and several tertiary categories, Sendrak said.
Looking ahead, Reed expressed concern over the impact that rising energy prices and healthcare costs may have on his dealers, as well as the issue of succession planning. But MEGA's “focus on delivering a wide range of services,” including health insurance, combined with positive macro-trends within its four core industries, should bode well for members going forward.
MEGA will next convene Sept. 18-21 in Daytona Beach, Fla.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.