MARTA Cooperative Of America's executive director Warren Mann outlined the current competitive retail landscape for his membership during the organization's recent winter meeting at the Gaylord Palms Hotel, here.
MARTA, which produced one of its strongest years ever during 2004, had a very good year in major appliances with a 9 percent increase in sales, which was about 2 percent higher than the industry, according to Mann. (See TWICE, March 7, p. 1.)
The major concern for MARTA, and independents in general, are the fortunes of the major national chains — Best Buy, Home Depot, Lowe's and Sears — especially since prices have risen across the board due to higher raw material costs. In his presentation to member dealers, Mann discussed the results of a recent report by Off The Record Research, which polled store managers and department managers at each chain.
Mann said this report shows that major appliance sales at Home Depot, Lowe's, Best Buy and Sears met unit and dollar goals, unhindered by recent price hikes. At Lowe's, several managers said the price increases did not deter purchases and actually helped total sales. Sources at all four retailers said most people shop for appliances so rarely that they do not keep track of prices until they need to buy one.
The only sales that suffered were entry-level washer and dryer units, which increased by $30 to $100, from original prices as low as $249. No one reported this was hurting overall category sales. The report showed that January's in-store price checks at Best Buy found price increases early in the month.
Home Depot increased prices in December price checks. Sources at Home Depot, Lowe's and Sears reported price increases in all categories and brands. Home Depot sources said prices increased by $20 to $50 on low- to midpriced SKUs and $50 to $100 on higher-end items, or about a 10 percent to 15 percent increase per SKU on average.
Sears sources reported increases of 5 percent to 12 percent, or $50 to $150 per SKU. Some Sears sources carried fewer entry-level SKUs than other retailers.
As for promotions, they increased for Home Depot and Best Buy. Home Depot ran a successful gift-card-with-purchase deal on select appliances between mid-January and early February. Sources said the new promotion kept customers from pricing out appliances elsewhere.
Sources at Lowe's and Sears did not see an increase in rebates or promotions following the price increases. However, Lowe's had increased appliance advertising following the price increases during the quarter, according to some managers. Lowe's store managers said appliances would be prominently featured in monthly flyers this year.
Concerning Lowe's specifically, Mann said the report showed that the chain met or exceeded plan during fiscal year 2004. But traffic was mixed as several managers said their stores suffered from new store openings and bad weather, which affected one source's store.
November and December sales were strong for those managers polled, but January sales were down a bit for Lowe's. Nevertheless, several managers reported that gift card redemption and higher appliance prices helped boost January sales. Appliances were top sellers for Lowe's, followed by lumber and building materials.
At Home Depot, appliance sales increased during fiscal 2004. Sales were helped by better selection, including exclusive products and special orders. Remodeled stores have made appliance departments brighter and more visible. Appliance sales were further helped by promotions including continued $50 delivery rebates, 12-month interest-free charge card financing and the aforementioned gift card manufacturer's rebate with purchase.