Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


hhgregg Outlines New Merchandising Strategies


hhgregg announced a series
of in-store, online and marketing initiatives to further drive
sales and share.

The plans include a renewed focus on major appliances;
a change in store-level management structure; a redesigned
e-commerce site and smaller brick-and-mortar
stores; a more a tailored TV assortment and expanded
IT selection; and a new marketing campaign built around
The Beatles’ song “Help!”

In appliances, the 175-store chain sees “a significant
opportunity to grow share,” president/CEO Dennis May
told analysts during a fourth-quarter earnings call late last
month, and promised to become “more aggressive” in the
category. Among the changes: splitting the role of store
sales manager into two positions, with one dedicated to
CE and the other to white-goods and furniture.

The company is also launching a white-glove installation
service for majaps, will keep more inventory within
the stores to accommodate take-with purchases, and will
commit more marketing funds to the category.

The new website, developed with interactive marketing
agency Rosetta using IBM WebSphere software,
will launch this fall with enhanced functionality. New features
include in-store pick-up and ship-from-store fulfillment
options, as well as enhanced product selection and
knowledge base.

May said the concept is to match the online experience
with the sales-assisted in-store experience, and
to adapt the business to changes in consumer shopping
habits. To that end, the retailer is also launching a
sister mobile-commerce site.

At the same time, the chain is moving to a smaller,
25,000-square-foot brick-and-mortar format, compared
to its typical 30,000-square-foot boxes. May
said the new size is more in line with real estate opportunities
going forward, and can be realized without
any significant SKU reduction due to the thinner
nature of TVs.

In TV, the company will concentrate on larger screen
sizes, with a focus on 3D and smart models, and will
edit its assortment accordingly. Nevertheless, May
said the availability of 3D and connected features in
mid-sized displays will help buoy average selling prices
this year, and could help offset pricing pressure on
entry-level models.

hhgregg will also place a greater emphasis on IT, with
an expanded assortment including 12 tablets SKUs by
summer, and continued investment in computer support
services. May said an opportunity exists to reposition
the chain as an IT retailer, and that the category’s
lower gross margins are more than offset by increased
traffic, warranty and service attachments, and the lower
cost of IT transactions, compared with shipping and
warehousing major appliances and large-screen TVs.

Elsewhere, the John Lennon tune “Help!” was licensed
for a new print, TV, online and in-store marketing
campaign called “We Help,” which emphasizes the
retailer’s knowledgeable sales assistance.

On the same day as the conference call hhgregg
said that due to the addition of 42 new stores hhgregg’s
fiscal fourth quarter profits increased 45.7 percent to
$14.6 million. Net sales for the three months ended
March 31 rose 21.5 percent to $507 million, but samestore
sales declines across all major categories led to
a 10.8 percent drop in comparable store sales.

Looking ahead, the company said it will open 35 to
40 new stores during the current fiscal year, with the
majority in Chicago, Miami and Pittsburgh, and is projecting
net sales increases of 15 percent to 20 percent,
and comp store sales of negative 3 percent to flat.

Said CFO Jeremy Aguilar, “As we progress through
the fiscal year and move beyond the anniversary of the
appliance stimulus program, we expect to face more
favorable comparable store sales comparisons in the
second half of the fiscal year. While we expect the
video industry to continue to face challenges in fiscal
2012, we believe the video comparisons are more favorable
in the second half of the fiscal year.”