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Nationwide Takes Aggressive Majaps Stance

NATIONAL HARBOR, MD.

— On Labor Day weekend the Nationwide
Marketing Group is launching “the most aggressive [major appliance]
promotion we have ever had. And will duplicate it going
forward. We are not going to lose share we are going to take it,” according
to Adam Thomas, major appliance merchandising senior VP.

This is the aggressive stance Nationwide had taken in white
goods this year, and it seems to be reaping benefits. In the first
half, Thomas said, Nationwide’s sales growth was double that of
AHAM’s reported 7.8 percent.

He added that at year’s end, AHAM shipments may be up 5 percent
and that Nationwide could be double that — “at least that is
what the plan is.”

For Nationwide, the stakes are high. Half of the buying group’s
$11 billion in sales comes from major appliances. In an interview
with TWICE during the group’s PrimeTime! convention, which took
place at the Gaylord National Resort, here, this month, Thomas
noted, “We learned more from the Energy Star stimulus program
[earlier this year]. It taught us if you offer consumers in this economy
a great deal, they will buy.”

He added that Nationwide was very
aggressive with the program, with one
of its retailers earning 10 percent of its
state’s Energy Star stimulus funds.

With the recession and cutback in
new-housing construction, “consumer
spending habits have changed over
the past two or three years. This is a replacement
business [again], but there is
still some remodeling going on.”

So Nationwide members have “done
a good job in taking the ‘super premium’
business and making it a ‘mass
premium business’ to server everyone’s
needs,” Thomas said. He defined those
two categories in terms of car brands:
“ ‘Super premium’ would be Lexus. A
couple of years ago consumers would
buy a Lexus but really were Chevy, or
‘mass premium’ customers. They are
now buying Chevys again.”

The biggest challenge facing Nationwide
members selling white goods in
the past two years is that “national retailers
have increased their competitive
posture and it has impacted margins.
We have had to rethink how we support
our members.”

Thomas added that Nationwide’s major
appliance vendors “have been wonderful
in supporting us [and] work hard
to get product, pricing and promotions
right to keep our guys competitive.”
Their cooperation has been “far greater
than ever before.”

He noted that the greater competition
has hurt profits. “Overall, there has been
about 2 to 5 percent impact on margins
in the past two years, and that could
have been worse.”

So independent appliance dealers
need as much support as they can get
in the second half because it will be
“very promotional,” Thomas predicted.

“We have seen 30-percent-off sales
by Sears now and expect 60-percent-off
by Black Friday … the pricing doesn’t
seem believable,” he noted.

But Thomas said that Nationwide will
“put as much as we can behind holiday
events. We won’t lose share — we will
take share.”

He said that the Energy Star program
also taught Nationwide that “you have
to have credibility in your offer. The Energy
Star program was credible. We are
going to try and replicate those great
deals and augment them with consumer
rebates or gift cards.”

Since most major appliance customers
are in the market “once every
10 years,” Thomas said, Nationwide
members will “make sure deliveries are
made on time, always sell extended
warranties and charge for installation
when we can.”

He said that in today’s whitegoods
market, “Lots of products are
complex, and you need to explain the
products. Independents are good at
explaining these products. National
chains aren’t. They can’t sell wall
ovens and, while Sears is OK, have
never have been successful with
built-ins.”

Inventories have currently recovered
from the Energy Star stimulus program
from March to May, he noted.

In talks with his members at the
show, Thomas told them, “The reality
is that this business is a lot of hard
work now” compared when housing
starts were booming. “It’s hard work,
but that’s OK. It’s not easy, and [Nationwide
is] here to support them.”

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