The NATM Buying Corp. is preparing for rough weather, both literally and figuratively.
The nearly $4 billion buying group began its annual four-day meeting here at the Gaylord Texan Resort last week, but considered cutting the conference short as Hurricane Ike approached the Texas coast.
NATM, like most of retail, is also facing storm clouds in the marketplace. “Business has not been good,” said Bill Trawick, president and executive director of the 12-member confederation. Besides the weak economy, group sales were further impacted by the presence of major dealers within the nation’s hardest hit markets of Florida (BrandsMart USA), California and Las Vegas (R.C. Willey), and Detroit (Grant’s Appliances).
Two other members, Conn’s and Cowboy Maloney’s, with operations along the Gulf Coast, are also contending with another active hurricane season, while department store chain Boscov’s continues to explore options while under Chapter 11 bankruptcy protection.
The group’s white-goods business, which represents about a third of total sales, has also come under pressure with the industry-wide downturn. NATM’s unit shipments of majaps fell 8 percent from January through August, although declines in dollar volume were milder.
Despite the travails, sales remain strong in NATM’s core TV business. Flat-panel sales were up 80 percent in units and 50 percent in dollars from April through August, and total TV sales rose 25 percent in both unit and dollar volume during the period.
Even majaps had its bright spots, with sales of front-load washers and three-door refrigerators remaining robust.
Moreover, NATM dealers have managed to maintain or increase their market share within their respective trading areas, Trawick said, and some, including ABC Warehouse, Bernie’s, Conn’s and Queen City, are opening new stores.
Still, the NATM president is concerned about his members’ profitability as margins continue to erode in both brown and white goods. Indeed, cost hikes in majaps, price drops in CE, and the potential for disruptive holiday promotions by wounded chains and over-inventoried vendors alike will put increased pressure on bottom lines, Trawick said.
But pricing aside, Trawick expects NATM’s TV business to remain fairly strong through the fourth quarter, as members leverage their strength in larger screen sizes and higher-end models, and take advantage of ample supplies and opportunistic buys. NATM dealers will also do well in TV combo units, navigation devices and laptop computers, he predicted.
“We’re gonna move a lot of units,” he said.
“Overall we’re fine,” Trawick added. “We’re moving ahead, sticking to plan, and just fighting to get through this like everyone else.”