Taking stock of its enhanced buying clout, a newly enlarged Nationwide TV & Appliances laid out a five-year plan to members last week that is designed to better leverage the group’s bulging ranks.
Although only 700 retailers attended the 30th anniversary Prime Time meeting in Las Vegas, the addition of about 1,250 former Key America dealers last month boosted Nationwide’s membership to some 2,000 stores, representing 5,000 storefronts.
According to Nationwide executives, the new members have lifted the group’s annual wholesale volume to $7 billion from $6 billion in 1999, further extending its sales lead over its six rival buying groups.
The next largest buying consortium, the 2,400-member Associated Volume Buyers, did $3.5 billion in wholesale sales last year. Three Key chapters, representing about 600 dealers, joined AVB after the $3.5 billion buying group disbanded in December, while the 55-member Key Northeast chapter cast its lot with Best Brands Plus last month.
“Today, Nationwide as a whole is among the top five electronics retailers,” director Robert Weisner told the rank and file during the general session. “We want to be as big as Circuit City and Best Buy. We want to be a $10 billion business.”
To get there, he said, “We have to pitch vendors as one entity. Everything we’ve done over the past five years was to move us toward being one company. Vendors love it because it cuts costs.”
One manifestation of that is Nationwide’s Direct Plus centralized buying program. According to co-director Ed Kelly, 185 dealers and 15 vendors are already participating in the EDI ordering system. “By automating purchasing and billing, we create a single entity, and that will decrease manufacturers’ administrative costs,” Kelly said.
Also helping to consolidate the far-flung group is the creation of a Nationwide Intranet. It will allow members and administrators to exchange e-mail, disseminate pricing information and, eventually, order goods, explained John Sullivan, whose company – JG Sullivan Interactive – built the group’s electronic infrastructure and is developing a Nationwide e-commerce function.
“We’re evaluating our e-commerce strategy,” Weisner told TWICE, “and expect to roll out a program midyear.”
Although he wouldn’t disclose specifics, Weisner noted that “we’re partnering with someone who has a dynamite site. With 5,000 storefronts, we’re in a position to have a very successful campaign. Our goal is to be the dominant e-tailer for the independent storefronts.”
Establishing an e-commerce strategy has assumed a greater urgency for appliance-heavy Nationwide in light of escalating majap sales over the Internet. According to Sullivan, some 20% of all white goods will be sold online by 2003, up from earlier estimates of 3% to 6%.
Changing Nationwide’s merchandise mix of 65% white goods to 35% CE is another major initiative for the group. Kelly said the goal is to balance the business to a 50-50 mix of CE and appliances within 36 months to take advantage of the new generation of high-margin big-screen TVs.
“We’re making a major push to get our people back into brown goods,” he said, pointing to a time when 60% of Nationwide’s sales were derived from electronics. “The big-box retailers had taken the margin out of smaller TVs, but now there’s a new opportunity with the bigger TVs.”
Meanwhile, Weisner reported that the group enjoyed a successful fourth quarter that saw double-digit hikes in white-goods sales and single-digit brown-goods growth.
“Just about every product category in white goods is up, although the high-end business is exploding,” he said. Indeed, for the 100-some Nationwide dealers who carry Thermador, Kitchen-Aid, Sub-Zero and other high-end lines, upward of 40% of all majap sales are derived from that category.
In electronics, “HDTV-ready sets were off the chart,” Weisner said. “We underestimated its growth, along with DVD, and couldn’t get enough.”
Weisner anticipates slower growth through the first six months of 2000 and said, “The first quarter traditionally lags the fourth quarter, and we also have to contend with shortages of white goods as well as brown. Although we’ve got to get the pipeline filled again, we’re looking forward to a very positive year for Nationwide.”
The group itself is structured around a contingent of 153 core members, including a 30-store Brand Builder sub-group comprised of Nationwide’s largest dealers.
Surrounding the core group are four “satellite” divisions – including the NECO Alliance warehouse operations; Nationwide West and United Stores of California, both former Key chapters; and Nation’s Brand Direct, comprised of the 12 latest Key chapter arrivals. The latter, led by former Key president Murray Provine, who represented his dealers in Las Vegas last week, will hold its first meeting this August in Biloxi, Miss.