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While concerns about problems facing the industry, such as HDTV pricing and the effect of the housing crisis on major appliance sales, were on the minds of many at Nationwide Marketing Group's PrimeTime! convention, attendees were upbeat about this organization's performance this year.
In speaking with key manufacturers and retailers among the record number of attendees at this year's event, all acknowledged economic and industry challenges, but also complimented the relative health of this group and independent retailers in general.
Mel Hunger, executive director of NECO Alliance, commented that business for his division of Nationwide "has been fine" but that the "low end has been tough" because "you have to be competitive [with mass merchants] to get customers in your stores."
Commenting on what would be a recurring theme with those who spoke to TWICE, Hunger said his unit, like the rest of Nationwide, has defied the trends this year and "has done well" in majaps. "With our 1.3-million-square-foot warehouse that serves [NECO's mostly Northeast retail members] we provide overnight delivery of both appliances and CE. Our retailers do not need to carry a lot of inventory."
Hunger acknowledged that "the problems we face at retail have increased. While we can't give away the low end [of the HDTV market] to big chains we emphasize the higher-end products and focus on add-on selling and installation." He added, "We feel when it comes to TVs, the bigger the better. Plenty of customers come in for a 42-inch and say, 'We can't fit a 50-inch or 60-inch,' and often times our guys sell the larger set to them."
Scott Ramirez, TV marketing VP for Toshiba, complimented Nationwide, saying it provides, "great product selection and plenty of information and expertise to its dealer base, and for us it provides access. That is important for dealers too. We can't get to every small independent dealer. That's why Nationwide is important to us. Buying groups get our message out to those retailers, who are important to us."
He said the role Nationwide provides is "getting our message out to their members" and "aside from providing the right products at the right price, Nationwide helps nurture these retailers and they trust us."
As for the changing marketplace that sees some national retailers having problems, Ramirez noted, "The effect to us has been that we have had to look closely at credit lines. It is a volatile marketplace, but we still value all of our sales channels."
Ramirez shared his view of Black Friday, saying one top-tier HDTV manufacturer last year "created a domino effect on that tier that continued through the fourth quarter and into Super Bowl weekend. We only hope that Black Friday pricing ends that weekend."
Ed Knodle, sales director for Standard TV & Appliance, based in Portland, Ore., commented that Black Friday should be "absolutely ... very aggressive" in terms of pricing" and the way retailers need to maintain profitability is to "go with step-up merchandise ... of name brands. You have to perform installations and sell accessories."
He said that those retailers to sell "tier-three and -four brands" that provide "ridiculous pricing" could provide costly problems. "If that type of brand is under warranty, but you can't get parts and the customer returns the product, the perception is that the retailer is at fault. If we couldn't fix a product like that, we'd give the consumer a new TV."
Keith Ito, JVC's buying groups VP, reported that sales were good for LCD TVs, camcorders and accessories in the past quarter. For the fourth quarter, Ito said, "We will emphasize higher-end products. Some [consumers] will want commodity-type products for second- and third-tier companies. Every member [of Nationwide] that we deal with goes with mid- to higher-end products." Ito added, "At CEDIA you will see us emphasize higher-end 1080i products."
Max Wasinger, sales and marketing senior VP for Mitsubishi, said Nationwide supports its membership with advertising, marketing support and training that makes it both a "marketing and a buying group."
He noted, "Independents are investing in their businesses, the higher end, the biggest flat panels like ours, and do custom installations in A/V and in appliances with kitchens. We thought business was tough five or so years ago. It is really tough now, but these are the things that have to be done to be a player."
Sharp Electronics was back on the Nationwide convention floor for the first time since 2005, and Alex Rivera, regional accounts group VP, and Bruce Fairchild, regional account group director, discussed its company's LCD TV supply advantages now that its eighth-generation LCD plant is in production in Kameyama, Japan producing 40-inch to 50-inch screen sizes.
Assembly of those LCD TVs will be in Mexico and both Rivera and Fairchild stressed that this will improve delivery times to "U.S. retailers by four weeks" with "greater and consistent quantities of LCD TVs" for the balance of the year.
As for the role Nationwide and independent retailers play in this changing CE environment, Fairchild said, "Independents provide a level of service and expertise that can't be delivered by national [chains] in many cases."
Rivera added, "As more and more A/V products reach markets that have upscale, custom features, the need for informed independents that can sell, install and service those products has become more important than ever before."