NEW ORLEANS -Nationwide TV & Appliances members showed up in record numbers to discuss how to counterattack the big-box retail chains that have moved into their territories and how to further grow their independent businesses at the Prime Time meeting held here last week.
Among the topics considered, Nationwide leaders were optimistic about Circuit City’s exit from the appliances segment and Montgomery Ward’s closing shop. Executive director Robert Weisner said those two companies’ departures will put $2 billion back into the market, and independent retailers can vie for that business.
“We think it is the most positive change for the independent appliance dealers in America,” he said, adding that many of the Nationwide retailers in the same markets as Circuit City or Wards have since seen increased sales of 10 -20 percent. Now, he said, “Sears is our biggest enemy when it comes to battling for this additional business.”
As for competition from Wal-Mart, Lowe’s and The Home Depot, Nationwide executives reiterated throughout the three-day event that the big retailers can’t match the independent dealers’ ability to provide friendly, helpful and complete service.
“Higher-end products have not moved well in Wal-Mart-type stores,” Weisner said, which makes the manufacturers dependent on the smaller stores.
The 2,159-member buying consortium grew by 106 dealers last year and saw sales rise about 6 percent to more than $7 billion in 2000, he said. The Prime Time event had 1,580 attendees, representing more than 500 stores.
Expanded Internet services, a boosted training program and continued store growth are some of the ways Nationwide leaders plan to continue fighting the national chains.
The buying group’s Internet initiative, which will include a combination B-to-B and B-to-C website for members, is expected to be completed in stages over the next couple of years. The B-to-C initiative involves an exclusive partnership with majorappliances.com, which will allow Nationwide members to sell directly from their own websites or through the majorappliances.com portal that will link all of the Nationwide member sites.
Most of the members should be networked to this system by summer, Weisner said.
The B-to-B part of the Nationwide Internet plan is expected to be completed by mid-2002. Ultimately, the ordering, tracking and billing processes will be streamlined by connecting each Nationwide member with all of the group’s major appliance vendors.
“We anticipate this to be a savings for the organization,” Weisner said. “Lower costs for the vendors to do business will translate into savings on the part of the dealers.”
Once they have a unified system for tracking products on the Web, dealers will also save by making better purchasing decisions, said consultant Jim Delli Santi, who is coordinating the Web initiative for Nationwide. Right now, some members order direct from some of the vendors, but there is no unified system.
In another attempt to be better than the big-box vendors and to tackle the complexity of digital technologies, the buying group spent more than $1 million on developing a training and certification program for all of its members. Last year, it trained 2,000 salespeople in “consumer electronics 101” and 5,000 in video, which includes DVD and audio, Weisner said.
Going forward, the group intends in the next year and a half to train all 18,000-plus member salespeople on the nuances of selling digital products, major appliances and “up-scale lifestyle appliances.”
The group’s sales mix has remained the same during the past two years, with 20 percent in consumer electronics, 65 percent in major appliances and 15 percent in furniture, Weisner said. “We’re seeing some rebirth in the CE category,” with unit sales growing 10 percent last year-which he attributes, in part, to retailers regaining faith in home theater’s profitability.
Nationwide retailers are seeing good sales in most things digital: DVD, projection TVs, HD-ready TVs, set-top boxes and MP3 recording products. As a result of the digital boom, some Nationwide retailers have stopped offering analog TVs, while others have ceased focusing on their sale.
Mel Hunger, executive director of Nationwide sub-group NECO, said his organization is minimizing its analog offerings. While calling 13- and 19-inch analog TVs “necessary evils,” Hunger stressed that “if we can explain to the consumer the benefit of moving into digital, we do.”
Panasonic account representative Daryl Seese, who attended the show, said digital TV is growing quickly, “there’s a lot more interest than six months ago, especially by dealers.”
In addition, sales of VCRs and CD players have been slowing down, said Murray Huppin, owner of Huppin’s in Spokane, Wash.
In appliance categories, upscale and built-in units are growing, as well as products with the Energy Star label, Hunger said. “We sell the energy story,” he said, explaining that customers are often willing to pay a little more when the retailer takes the time to show how they will save on their energy bills.
Attendees seemed unfettered by the slowing economy, as vendors at the buying show reported great sales-in some cases, double the orders that were seen at the group’s previous event. In general, retailers and manufacturers said January and early February were surprisingly positive, though some retailers said sales flattened in 2000 compared with 1999.
“Our retailers had good fourth quarters, but not the sales they anticipated having,” Weisner said. “Most of the retailers in the nation overbought going into the fourth quarter.and so there has been a slowdown in purchasing [from vendors]. But most of the Nationwide retailers have experienced a good start in 2001. The economy can still be bad, but we can still do good because we have fewer competitors.”
Among the skeptics present at the show, David Moore-who is president of the Panamint Group, which serves as a financial consultant on Nationwide’s board of directors-pointed to the economy and lower consumer confidence. “The first six months are going to be tenuous at best,” said Moore. “But I think in July through December it will improve.”