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Nationwide Sees Growth In Soft Market

The Nationwide Marketing Group, the $11 billion majap, CE and home-furnishings buying organization for independent dealers, rallied its 3,000 members to step up their marketing and promotional activities in the face of a weak housing marketing and soft economy at its biannual PrimeTime! meeting and convention here last week.

The effort, which includes a focus on higher-margin products like high-efficiency laundry and 120Hz LCD TVs, could help extend the group’s four consecutive years of market-share gains in majaps and its double-digit growth in flat-panel TV in 2007, Nationwide executives told TWICE.

Specifically, the group’s white-goods sales grew between 1.5 percent and 2 percent in unit volume last year compared with an industrywide decline of 5.6 percent, while sales of flat-panel TVs and related accessories were up more than 10 percent in units. Sales in the new year also started off strong, with two-thirds of the group’s 175 core Brand Builder dealers up in January, and 70 percent up in February, said executive VP/director Robert Weisner, besting the results of many national chains.

Brand Builder dealers, Nationwide’s largest, are comprised of regional, multi-store chains with annual sales ranging from $8 million to $300 million, and average revenue of $45 million per year.

To help build profits, the group has set the goal of expanding its high-efficiency laundry businesses to 47 percent of total unit laundry sales, up from the current 38 percent, according to appliance marketing VP Adam Thomas, and is providing aggressive pricing and up-selling strategies in CE.

Nationwide also sees opportunities for its members on the service side, as vendors cut back on their training programs and consumers voice dissatisfaction with national chains. Indeed, in a survey of 500 shoppers who had previously purchased a major appliance at Sears, many cited a lack of attention, a dearth of pre- and post-sales service and a dislike for shopping malls as reasons for taking their business elsewhere, Weisner said. The survey, commissioned by Nationwide and conducted by America’s Research Group, also indicated that 75 percent of respondents would consider purchasing their next major appliance from an independent white-goods dealer, while only 40 percent did so.

The other 35 percent didn’t believe that independent dealers provide the right selection, competitive prices or support services, Weisner said. By correcting those misperceptions, independents could conceivably increase their market share from 33 percent to 40 percent over the next 24 months. “We have a major opportunity to grow share without having to steal business,” Weisner noted.

To help spread the word, Nationwide is providing members with new high-definition TV spots and redesigned promotional tabs produced at the group’s media facility in Atlanta, along with in-store kiosk content and aggressive promotions including mail-in rebates; free delivery, installation and HDMI cable offers; and longer interest-free financing options.

Nationwide will remain a beneficiary of what Weisner described as “the demise of Sears’ business.” Weisner noted that Sears has lost a sizable piece of its major appliance market share in the past decade. “We have to make sure we get a large share of those Sears customers who are not going back,” he said.

Nationwide president and director Ed Kelly added that in light of the housing market downturn, consumers are reinvesting in their homes by remodeling their dens and kitchens, which plays into members’ strengths and will compensate for any softness in their homebuilder business.

“We give the customer the ultimate in-store experience,” Kelly said. “It’s not all about price.”

Ike Epstein, owner of Dr. Ike’s, a 50-year-old True Value home center business based in Laredo, Texas, agreed. Despite such next-door neighbors as Lowe’s, Home Depot and Wal-Mart, the three-store chain is “doing fine,” Epstein said. “My customers always come back. They say, ‘We buy from you because we know you, even if your prices are higher’— which they’re not. The perception on price is wrong.”

Epstein said his biggest problem, rather than competition from national chains, is finding enough qualified employees to meet demand.

During his PrimeTime! opening remarks, Weisner reminded members that manufacturers as well as consumers depend on the independent. “You’re near and dear to vendors’ hearts,” he told attendees. “They need the big boxes to run the factories, but they need you to make the profits.”

Elsewhere during the show, Specialty Electronics Nationwide (SEN), the specialty A/V division of Nationwide, announced new programs with Sencore, as part of a discounted ISF (Imaging Science Foundation) HDTV calibration program, and with Epson Home Cinema. Jeannette Howe, executive director of the group, said SEN is growing by about 100 members a year and now stands at 460 dealers. Her members “will be fine” in the down economy, she said, as they generally tend to a well-heeled clientele for whom they are providing profitable “retrofits and calibration.”

Howe stressed the importance of staying ahead of the curve on custom installation and related services as Best Buy expands the number of ISF-qualified Geek Squad installers. “We’re already abdicating the digital-converter-box program to Best Buy. We can’t abdicate services as well,” she said.

Other first time exhibitors at PrimeTime! included Samsung, Audiovox and Universal Remote Control, which made their convention-floor debuts. Samsung and Universal, as well as Bell’O and JVC, have also joined Nationwide’s Warehouse Direct dealer distribution program, which is operated by distributors Almo, DSI and SED. The program, said Weisner, processes $1 billion a year in white and brown goods, which allows the distributors to work on smaller margins. Dealers in turn can receive aggressively priced mixed shipments when they need them, which enables increased turns with minimal inventory and no price protection concerns, he said.

The Samsung program, formalized in January, brought Nationwide’s tier-one CE assortment to eight brands, including Hitachi, JVC, LG Electronics, Mitsubishi, Pioneer, Sharp and Toshiba, Kelly noted. “We feel Samsung will be a real asset to our company … the competition they bring with their brand is needed in our channel and industry,” he said.

At the show, Hitachi showcased its 1.5 Ultra Thin LCD displays, while Toshiba’s TV products marketing VP Scott Ramirez said in a presentation that his company would match aggressive entry-level retails by category leaders, and would sacrifice some margin so dealers could reap profits at opening- and first-step price points.

“1080p is the new 720p, so the step will be 120Hz,” Ramirez said. However, the presence this year of tier-one brands at tier-three prices will make it harder to step the consumer up, he advised.

Weisner noted that Toshiba worked closely with Nationwide dealers to address HD DVD inventory hang through a number of remedies, including concessions, allowances and take-backs. “They’ve done everything they needed to do to so that the dealer doesn’t get hurt,” he said.

Also new on the show floor was Nationwide’s first line of direct-sourced home theater furniture from China, which comes 18 months after the group established a trade office there. The Savannah Point Collection features modular wood and wood veneer consoles and hutches, and rear panels for mounting plasma and LCD TVs.

Weisner said the group is also looking into sourcing CE products, but will hold off on TVs given the already aggressive pricing of tier-one vendors. “Prices will have to stabilize before we put our name on panels,” he said.

Nationwide will hold its next PrimeTime! meeting and convention Aug. 17-20 at Mandalay Bay in Las Vegas.