New Orleans — Business is largely holding up for members of the Nationwide Marketing Group, dealers and group leaders reported.
The buying group, which is convening here this week for its biannual PrimeTime! show and conference, said members are countering the recession by cutting costs, leveraging the group’s buying power, utilizing its services, and returning to the conservative, fiscal fundamentals that many of the businesses were built on.
“The situation has been very tough over the past six months and continues to be tough, yet our dealers seem to be doing well,” observed Robert Weisner, member services executive VP.
Indeed, the group's net sales hit a record $12 billion in 2008, largely on strength in electronics, and the new year was also off to a strong start: TV unit volume was up 23 percent in January, the group reported, and major appliance revenue was flat despite widespread industry weakness.
Members’ resilience was also reflected in attendance at the show, which was down only 7 percent from last year’s 2,800 participants, compared with steeper declines at other recent industry events. Nationwide had anticipated a much lower turnout given the challenging economic climate, and admittedly beat the bushes to drum up traffic. “Dealers wanted to stay home, close to their businesses, but we made them understand that this will help them be around for the long-term,” Weisner said.
For others it was too late. The group acknowledged a net loss of about 100 dealers — after the addition of 200 new members — who either left the business or succumbed to the soft retail environment.
For those who stay in the game, other challenges include tighter access to credit for themselves and their customers, and the apparent elimination next year of all-zero percent financing programs. Les Kirk, the group’s finance and operations executive VP, said the Federal Reserve Board now deems any promotions with an increased interest feature deceptive, and has forbidden banks to offer them after July 1, 2010. Nationwide plans to produce and air a series of TV commercials to protest the policy, he said.
The group has also forged a new relationship with TCF Bank, which is “working with dealers to aggressively establish credit lines” for inventory financing, and is partnering with GE Capital, Citibank and Wells Fargo to provide private-label credit programs with acceptable approval rates for customers, Kirk said.
Despite the headwinds, 2009 represents “the greatest opportunity I’ve seen in my life for the independent to gain momentum,” said Nationwide president Ed Kelly, beginning with the $4 billion in TV volume that Circuit City and Tweeter left behind. New efforts to help Nationwide dealers get their fair share include:
• inexpensive display-fixture programs for appliance dealers looking to add TV;
• extensive consumer research to better understand current customers and attract new ones;
• expanded relationships with tier-one video vendors, including LG, Samsung, Sharp and Toshiba;
• the addition of Haier to the video roster, to address the opening price point segment;
• a direct-sourced cable and accessories program that can provide hefty margins, and the expansion of a Toshiba laptop program through distributor SED;
• a new relationship with InstallerNet, which can provide dealers with third-party custom-install services or outsource jobs to installers from Nationwide’s Specialty Electronics Nationwide division (SEN);
• additional classes, offered both at PrimeTime! and in the field, that address such back-to-basics retail disciplines as cash flow management and inventory control; and
• helping dealers obtain low-cost loans from the Small Business Administration.
“Times are tougher,” Weisner said, “but if we stay strong and do what we need to do, we will come out on top.”