THE WOODLANDS, TEXAS — Conn’s left the NATM Buying Corp. after 23 years last month as its ambitious expansion strategy began encroaching on fellow members.
The move came as the company proceeded with plans to open upwards of 23 stores this year and enter the new markets of Colorado, the Carolinas, Mississippi, Nevada and Tennessee.
Conn’s already overlaps with NATM dealer Curacao in Phoenix and Tucson, Ariz., and its first Tennessee store, which opens later this week in Memphis, skirts the trading area of Nashville-based Electronic Express.
By the fourth quarter Conn’s will also open stores in Las Vegas and Mississippi, where it will compete with R.C. Willey and Cowboy Maloney’s, and according to a 10-K filing will soon open a distribution center in South Carolina.
The multiregional furniture, bedding, appliance and CE chain currently has 80 stores in six states, and chairman/ CEO Theo Wright told investors in December that the opportunity exists to operate as many as 300 locations.
Conn’s departure from NATM also avoids an intragroup conflict with Nebraska Furniture Mart, which will complete a $1.5 billion retail complex in Dallas next year.
“With everyone expanding, the day is over when you can be in a region without competing against a friend or foe,” said Conn’s retail president David Trahan.
The move leaves the big-box buying group with 10 members and total revenues in excess of $5 billion. NATM president/executive director Bill Trawick said the co-op plans to open up membership to one or two additional retailers that can bring value to the organization.
NATM has long served as an incubator for regional chains with larger ambitions, including past members Circuit City and h.h.gregg, but the group “has always been able to expand and move on,” Trawick said.
Trahan said leaving NATM was strictly a business decision that was made without animosity. He still counts the members as friends, and remains close with Trawick, a former Conn’s executive and director, who he described as his mentor.
Conn’s latest expansion took form earlier this month with the soft opening of its first two Colorado stores, located in the Denver suburbs of Aurora and Centennial. Trahan said the stores will be joined by four more locations in late summer/early fall, including sites in Arvada, Sheridan and Fort Collins, and that all will be supplied by a new distribution center in Aurora. A formal state-wide grand-opening event will be held at that time.
The stores, like all new locations, will conform to the larger HomePlus format, which averages about 40,000 square feet and devotes greater floor space to furniture and bedding, two key drivers of the company’s growth. Comp sales at HomePlus locations have been outpacing older model stores by 10 to 15 percent, the retailer reported.
Trahan has described Colorado as a natural fit for the chain, with many credit-constrained and underserved consumers who can utilize its in-house financing. He said the new Colorado beachhead may also serve as a jumping off point for other nearby markets.
He said Conn’s expansion strategy is predicated on an abundance of available real estate, the growth of its core median-income demographic, and “an appetite for our business model,” which includes an aspirational mix of better furniture, CE and appliances and in-house financing and distribution.
Trahan acknowledged the industry’s roll call of defunct dealers that grew too fast and flamed out, and has no intention of following them.
“We have a pretty solid model,” he told TWICE. “Our philosophy is we don’t have to grow for the sake of growth. We will grow in a controlled, profitable manner. We believe in making money.”