The loss of a major retailer and continued retail price erosion in several electronics and appliance categories resulted in a $350 million decrease in the NATM Buying Group's sales during calendar year 1998.
Group director Warren Mann reported at NATM's Annual Meeting held at the Turnberry Isle Resort & Club in Aventura, Fla., that the organization's sales were $3.1 billion during '98, down from $3.45 billion in '97.
"NATM's total dollar volume dropped 3% in '98," said Mann. "Appliances were almost flat with Sun TV out, but electronics dropped more precipitously, about 12%. We attribute the electronics decline in part to Sun but also to the fact that prices went down, especially in home office products."
Since meeting in Florida last March, original NATM member Sun TV closed its doors, while the group added: Handy TV & Appliance, Birmingham, Ala.; Queen City, Charlotte, N.C.; Vann's, Missoula, Mont.; and Video Only, Seattle, Wash.
"Our current membership didn't completely offset the departure of Sun TV. In addition there has been serious price erosion, especially in consumer electronics," said Mann. By the end of last year NATM members operated 267 stores versus 261 during 1997. As of NATM's annual meeting, the 17 members operate 275 stores.
On the possibility of new members in '99 Mann said, "Our current members have mixed feelings about how we should approach potential new members. If we find someone good, similar to the profile of our current members, we'd love to have them in, but geographic considerations are a factor. Our effectiveness is diminished if we have two members in one market."
"Size is also a consideration," Mann said. "There aren't many independents big enough to support our programs. And an independent has to give up a certain amount of control."
"We could probably add a few more members," he continued, "but we have to remember, it's not the size of NATM that's important. It's not raw power, but how you use it that counts."
Here is a category-by-category look at NATM's 1998 performance (without Sun TV) with a comparison of its performance versus the industry, using CEMA numbers for electronics and AHAM numbers for appliances.
Television: In the overall category, unit sales were higher for the group than the industry, 15.2% to 11.6%. NATM's dollar growth was higher than the industry's, 11.6% to 4.9%. In direct-view color TV the group's unit/dollar sales were up 11.8% and 27.3%, versus the industry's 4.2% increase in dollars and 1.6% boost in units.
As for projection TV, NATM's numbers are dramatically better than the industry's. Unit sales were up 31.9%, versus CEMA's 15.5%, and dollar sales were up 50.6% versus the industry's 14.1%
"We continue to be more upscale in our sales mix," Mann said. "In the TV business, NATM kept up with the industry. Dollars did well, and revenue went up. As we sell more up in the line it is more profitable for us and manufacturers."
Video decks: In TV/VCR NATM outperformed the industry. The group's unit and dollar sales for '98 were 33.6% and 33.4%, respectively, while industry numbers showed a 34.1%/15.6% split.
Overall VCR sales were good for NATM too. Unit and dollar sales were up 11.6% and 6.6%, respectively, with industry unit sales up 2% and dollar sales down 13.6%. Mono and four-head VCR sales were down for both the group and CEMA, but in Hi-Fi decks NATM unit and dollar sales were up 21.3% and 16.7%, respectively, versus CEMA's 13.3%/0.8% performance.
NATM did not release sales numbers on DVD, but the category must have been a great one last year and so far this year: Members interviewed at the annual meeting all reported great sales and inventory shortages.
Camcorders: Combined full-size, VHS-C and 8mm sales were up dramatically versus the industry. NATM unit sales were up 34.3% versus the industry's 1.4% and dollar sales were up 19.4%, while CEMA registered a 5.2% loss.
DSS: Satellite sales were up in units and dollars for both NATM and the industry, with the group holding a slight lead. NATM's unit and dollar sales were up 31.9% and 19.1%, respectively, while the industry's numbers were up 28.6% and 6.5%.
Audio: Components were up 52.% in dollars for NATM, while the industry showed a 3% decline. Rack system dollar sales were down for NATM by 21.3% while the industry posted a loss of 24.2%. Shelf system dollar sales were up for the group and the industry, 21.6% and 23.7%, respectively.
Computers: While NATM did not provide on-the-record unit or sales numbers on the category, the group matched industry sales trends for '98. While unit sales were up dramatically in hardware, peripherals and software, dollars were down just as dramatically.
Appliances: For the category all percentages are in unit sales. Here's a rundown (with AHAM percentages in parentheses): refrigerators 12.9% (10.7%); freezers 15.1% (9.2%); washers 12.6% (8%); dryers 10.2% (9%); dishwashers 10.9% (6.6%); ranges 12.8% (8.7%); microwave ovens 11.1% (13.4%); dehumidifiers 31.6% (25.8%); disposers 26.6% (6.9%); and compactors 14.3% (3.1%).