CE/Majap Retailers' Turn To Home Products Spurs Growth

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NEW YORK – Back in 2008, when the stock market tumbled and a deep recession began, demand for the traditional wares of independent electronics/appliance dealers went south. The housing market took it on the chin, as did major appliance sales. And the boom in HD sales peaked in 2009 as the digital TV transition occurred, with prices beginning to plummet the same year.

What could independent electronics/appliance dealers do?

Rick Bellows, president of Mega Group USA, told TWICE his members met the challenge by reminding themselves “they are retailers first. Not an appliance or a CE retailer, but a retailer. And you have to be able to able to satisfy wants and needs of your customers.”

So independents began to look at furniture, bedding, lighting, outdoor products of all types – and many more categories they could explain, demonstrate, deliver and install profitably.

It’s not that these were new categories to members of the three buying groups that are having meetings this month: BrandSource, Mega Group USA and Nationwide Marketing Group. Many of their members have dabbled in those categories for years. But in the past few years many more independents have embraced these categories for the home – for sales, for store traffic and, most importantly, for profits.

Bob Lawrence, CEO of Brand Source, questioned, “How can independents not get into these new categories? Margins have deteriorated [on existing merchandise]. Many independents would not have survived 2008 without mattress sales. You have to look at other categories that will fit the core mix or complement it.”

For instance, Jim Ristow, executive VP of ProSource, mentioned the group’s Energy Squad LED lighting partnership. “This is not just selling lightbulbs, but selling the lighting experience.” Independents are able to explain to consumers and install a category that is “fun and exciting and has re-energized our members’ businesses.”

Ristow said that whole-home integration on the integrator side “continues to explode. The network is the backbone of it, but the more extensive solutions – lighting and shade controls, energy controls – are becoming more mainstream. So the electronics and major appliance guys can do it.”

Dave Bilas, president/ COO of Nationwide Marketing Group, made the store-traffic argument. “We are [adding categories] to extend our reach. If you look at the average household, a major appliance breaks every two years without a move to a new home. With CE, a customer may come in once a year. That is the genesis of the whole thing, to increase traffic.”

Bilas cited bedding, “which is a fairly easy category to transition into. It has become a staple of our business and we have done well with it. If a consumer goes to our dealers [for bedding], our close rate is 75 percent or so.”

He continued that Nationwide has added many furniture retailers and leverages their expertise for the entire group. And by “adding home furnishings – hard goods to motion categories for home theater for various parts of the house … we get to see our customers every three to six months.”

Bilas noted that bedding and furniture are the most popular of these new categories, but that “the outdoor category includes cooking and grilling and heaters, etc., and then furniture. It makes outdoor living a year-round thing … in the West and Southeast. It is really an extension of what we already are, and we will have an outdoor [section] at our show in March.”

Bellows of Mega USA said sometimes it is a “tough sell” for some members of his group to “get out of their comfort zone” and take on new categories. But for Mega, a category he called “outdoor power,” means growth and profits.

“We define that as anything with a motor — riding lawn mowers, weed wackers, snow blowers.” He added, “On the specialty side [of the outdoor category], anything related to outdoor kitchen and patio is a big area right now. Products in those categories are mid- to higher priced,” and are not sold at big chains. The outdoor selection includes casual furniture, outdoor carpeting, fire pits and related products.

Bellows said furniture has been part of Mega’s business model for a decade, along with bedding. With these home-related categories, “You have to have the selection. It has to be labor intensive from an installation or delivery standpoint. You have to avoid stuff that can be sold online.”

For instance, in outdoor furnishings, “We stay away from anything we associate with commodity products. We carry better products, stuff not in Lowe’s or Home Depot, and show a good selection.”

Brand Source’s Lawrence said the outdoor categories will be important at his group’s March event, as will another potential major category that may be emerging: solar power. “This may make more sense for integrators,” he noted, “since it takes 40 hours of classroom training to become a certified installer.” Financing deals and working with power companies are issues to be worked out, but the potential for CE/appliance dealers is there, he added.

Still, independents are not abandoning traditional categories like TV. Nationwide’s Bilas said, “CE is still a good category. There is a lot of churn in the industry, but often times [CE creates] great traffic. We hope that Ultra HD will do that and take us to the next level.”

Ristow agreed, saying that Ultra HD and OLED will revive the CE side of the business, along with other new technologies such as “wireless multiroom audio from suppliers like Bose and Samsung.”

As Ristow of ProSource said about these, and other new categories, “We saw the trend coming and announced key initiatives. More important is that the opportunity for appliance and electronics dealers is great in the next two years.”

Upcoming Buying Group Meetings

Nationwide PrimeTime!

March 9-12
The Venetian Palazzo and Sands Expo Center
Las Vegas, Nev.

BrandSource 2014 Summit & Expo

March 16-19
Marriott World Center
Orlando, Fla.

Mega Group USA Convention

March 20-23
Gaylord Texan Hotel
Dallas, Tex.


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