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ACs Heat Up NECO’s Sales

The oppressive heat and humidity that lingered in the Northeast throughout most of the summer paid big dividends in room air conditioner sales for many of the NECO Alliance’s independent TV/appliance dealers, who attended the group’s recent Ninth Expo, was held at Foxwoods Casino, here.

“The heat was constant, and that helped our air conditioner sales this year,” said Mel Hunger, NECO’s executive director. “We also helped by offering special incentives with EnergyStar, exclusive NECO five-year warranties and consumer financing options. We made it as easy as possible for people to buy., and that really helped out.”

Adam Thomas, marketing VP at Nationwide Marketing Group, which works in cooperation with NECO on product buying and merchandising efforts for NECO members, said the only negative regarding the 2005 air conditioner business was the continued “commoditization” of compact models.

“But the NECO dealers have done a wonderful job in carving out a market for products requiring difficult installations, casement-window products and through-the-wall products, where they have registered a strong share of the business in this part of the country.”

Similarly, Hunger said NECO’s members steadily increased their business in home theater display installations, particularly flat-panel models, which frequently bring in buyers eager to hang a flat screen on the wall.

This year, NECO operates five warehouses with 1.2 million square feet of space. The Alliance will open another warehouse this fall with its long-time member Intercounty Appliance, Hunger said.

The addition will help satiate NECO’s growing membership ranks. In the past year, the Alliance added 35 members, growing its members to 450, representing just over 600 storefronts in the northeast United States.

“This year our members are doing more business with higher-end vendors in both brown and white goods,” said Hunger. “We are growing our breadth of products.”

The consumer electronics end of the business continues to represent the biggest growth segment for NECO’s members, although in overall sales volume it is still second to major appliances.

Flat-panel HDTV is a significant business opportunity for NECO’s members, noted Jay Lebowitz, one of five NECO chapter presidents and president of Commack, N.Y.-based Intercounty.

The number of flat-panel TV vendors that service NECO is growing steadily. This year Polaroid, Samsung and Westinghouse television were added as vendors.

“In our group, we’re going to make it a no-brainer to put a [dealer] back in the electronics business,” said Lebowitz. “We are going to go into their stores with our outside sales people and, using as little as a five-square-foot area, put a guy back into the flat-screen TV business. Many of these products today are becoming impulse buys, and we can help that with our financing programs.”

Lebowitz noted that in the past some dealers had shied away from the brown-goods business because of shrinking profit margins. But with flat-panel TVs, he noted, the ticket prices are higher, so the dollar return can be high even if the margin percentage is not.

“It’s dollars today,” said Lebowitz. “Instead of looking at the percentage, you should look at the dollars.”

As for the fourth quarter, NECO’s leadership is looking for continued strong sales, despite the threat of rising home heating oil and gasoline prices.

“We have an advantage over many of our competitors because we are local,” said Hunger. “People don’t have to travel long distances — we are right in town.”