NATM Hangs Tough Despite Weak Market

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– The NATM Buying Corp.’s 11 leading regional retailers are riding out the recession by cutting costs, opening stores, entering new categories and otherwise hunkering down until the economy recovers.

“Our members are strong and well-financed,” said the buying group’s president and executive director Bill Trawick, and NATM is maintaining its market share in a stagnant, if not declining, environment for TVs and major appliances.

Speaking at the group’s annual conference, held here last week at the Ritz-Carlton, Trawick and NATM operations director Michael Maund pointed to consumer insecurity, the ailing housing market and flat-panel saturation as key contributors to flagging CE and majap sales.

Indeed, the group’s white-goods dollar volume was up only slightly in the first half of 2010 over a weak year-ago period, thanks to an artificial boost from the federally funded appliance rebate program. But trends have soured again, the executives said, and factory shipments of appliances are returning to negative territory.

Another “major concern” for Trawick is TV. Unit volume, which grew last year as average selling prices fell, was flat for the first six months of 2010 and is beginning to run negative despite vendor price drops and bundled giveaways. Labor Day was particularly disappointing, Trawick said, and some TV manufacturers have already lowered their forecasts for the year.

The dour sales environment has left Trawick looking forward to Black Friday, when even fiercer CE and majap promotions, and the suspension of MAP policies, “should bring people into stores.”

Gregg Richard, president, P.C. Richard & Son: “Business is not fantastic. It used to be predictable but now it’s up and down. Things will get better but will it be in six months? Three years? When [the economy] does get better we’re going to be in a really good position. In the meantime we’re still private and we’re still profitable.”

Peter Edwards, president, Video Only, noted, “It’s a struggle. The housing slowdown came late to our market [Seattle] and things are a little sluggish right now, but it should turn around by 2011.”

Bob Perlman, CEO, BrandsMart USA, commented, “There is business but it’s tough and it takes a lot of work.”

Sam Yazdian, president, Electronic Express: “TV unit volume is up but dollar volume is flat to down because of all the promotional pricing. Our appliance business is good, even without the rebates in Tennessee, because of replacement business after the flooding in Nashville last spring.”

In the meantime, the buying group is considering new tactics to help bolster its members, including operational initiatives to reduce costs and a direct-sourcing program to bring in accessories and other categories from China.

NATM has also extended its mix to gaming and PCs, with Nintendo, Microsoft, Sony PlayStation, Dell and Samsung’s computer division among the conference’s first-time attendees.

The group also received a major boost with the return of Abt Electronics and P.C. Richard & Son, which raises NATM’s annual sales volume to $5 billion and more than offsets the revenue loss of former members Queen City (to the Nationwide Marketing Group) and Bernie’s (to bankruptcy).

Dealers themselves are combating the soft economy by opening new stores, relocating older ones, and testing new formats and product categories. P.C. Richard plans to open its seventh Connecticut store in October along with a regional distribution center to support them, Gregg Richard told TWICE, while Abt continues to add new categories like jewelry, water heaters and HVAC (heating, ventilation and air conditioning), president Mike Abt said.

Similarly, Florida-based BrandsMart USA, which recently opened a fourth Atlanta superstore, is launching its first “small”-format showroom Oct. 10 near the upscale Dadeland Mall in South Miami. CEO Bob Perlman said the smaller format, which is roughly half the size of the chain’s typical megastores, opens up more real estate opportunities while keeping the same assortment.

The store will also employ new merchandising concepts and services, such as a combined TV and audio presentation, valet parking, and an interactive display concept for its wireless department that features live pre- and post-paid phones across all carriers and MVNOs (mobile virtual network operators), and 32-inch screens showing product features and videos.

Further north, Tennessee-based Electronic Express will relocate its 8,000-square-foot Murfreesboro store to a new 26,000-square-foot location in October, making it the largest in the 17-store chain, and is building a new site for its Tullahoma store that should be completed early next year. President Sam Yazdian said the expansions will accommodate the company’s recently added appliance assortment and a re-merchandised PC department that has been extended to 1,500 square feet.


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