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.”