By Lisa Johnston
New products on display at the American International Toy Fair, held in N
New store openings and explosive growth in advanced TV sales contributed to a “very, very good year” for the NATM Buying Corp. in 2004, with more of the same expected in 2005.
That was the word from Bill Trawick, president and executive director of the $3 billion-plus consortium of 12 regional brown-and-white goods dealers, which convened last week at The Westin Diplomat Resort, here, for its annual group meeting.
According to Trawick, the members' 20 new collective storefronts generated an extra $300 million in revenue over the past 12 months, representing “a large amount of additional volume for manufacturers.”
Also fueling the group's growth year-over-year was a projected 580-percent spike in unit sales of rear-projection DLP TVs, based on NATM's March fiscal year; a 180-percent gain in plasma-display volume; a 150-percent increase in LCD flat-panel sales; and a 120-percent spurt in sales of LCD rear-projection units.
Gains were also realized on TV combo units (“Up big time,” Trawick said), along with digital cameras and camcorders. Moving to the minus column were CRT rear-projection TVs, down 10 percent year-over-year; VCRs, which were “down considerably”; DVD players; and traditional audio.
In white goods, NATM dealers outpaced the major appliance industry average, with double-digit gains in refrigeration, laundry, cooking and dishwashers.
However, Trawick and individual dealers told TWICE that the DLP party has lately cooled, owing to Sony's recent price adjustments on its rear-projection LCD sets. As a result, DLP inventory has begun to build, dealers noted, and DLP producers have been compelled to follow Sony's lead on pricing, although another round of price reductions on the LCD microdisplays are expected soon, they said.
“You can't ignore the power of the 'S' brand,” observed David Trahan, Conn's senior VP/merchandising, while Trawick wondered whether Sony's name was stronger, in some cases, than its technology. Mark Shaw, video buyer for Nebraska Furniture Mart, laid some of the blame for DLP's predicament on chip supplier Texas Instruments for failing to market the technology more aggressively.
Trawick said the group would re-evaluate its core video-vendor matrix of Mitsubishi, Toshiba and Hitachi following the meeting, although it would likely maintain three core programs in order to allow members to spend half of their open-to-buy dollars on outside brands. He also cited increased business with Thomson with the advent of its new management team, and noted that the group had a “phenomenal year with Sony, the best year that we've worked together,” thanks in part to ample holiday shipments compared with the previous Christmas.
The group also considered, but rejected, plans to bring in low-priced secondary brands from Asia due to long-term service concerns, although individual members are carrying price-competitive product by Apex, Norcent and Westinghouse, Trawick said.
Like DLP, majap sales also took it on the chin during the first few weeks of the New Year, Trawick said, due in this case to record December sell-through in advance of steep vendor price increases to cover skyrocketing fuel and steel costs. But NATM's white-goods business has since rebounded, with February and March proving to be “extremely strong,” he said, despite a slight squeeze on margins as members continue to compete on price with national chains.
Indeed, dealers said shoppers appear indifferent to current pricing levels, given the infrequency of their replacement purchases. GE Consumer & Industrial president/CEO Jim Campbell, who attended the NATM conference, agreed that the first two months of 2005 have proven to be a “pleasant surprise. The high-end continues to perform well, and the consumer is still spending on value-added appliances, which still represent a good value.”
Nevertheless, thanks to HDTV, CE continues to grow faster than appliances for the group, giving it a 55 percent to 45 percent split of brown to white goods.
Looking ahead, Trawick expects the 25 additional storefronts planned for this year to propel group volume still further, so that by year's end NATM will have made up the business lost by the departures of H.H. Gregg and American TV & Appliance without significantly expanding its ranks. [See story, p. 20.]
Trawick also announced that the group will move its annual meeting from March to September beginning in 2007 in order to avoid scheduling conflicts during the increasingly busy month.
Highlights of the meeting included a retail road trip to local NATM member BrandsMart U.S.A.'s 80,000-square-foot, $200 million Palmetto store in Dade County, which is being retrofitted with innovations that were developed for the company's recently opened Atlanta store.
The meeting also marked the first for NATM's recently appointed operations director Michael Maund, a retail veteran whose resume includes stints at Brick Church, Tops Appliance, and Bed, Bath & Beyond.
The group will return to the Westin next year for its final March event.
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.