NATM Dealers Duking It Out For Share

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The NATM Buying Corp.’s 11 regional dealers are growing market share in video and major appliances despite the weak economy and fierce pricing pressure from national and online accounts.

Members of the $6.7 billion buying group, which held its annual conference at the Ritz-Carlton here last month, say they are contending with macro and marketplace headwinds by opening new stores, entering new categories, tightly managing inventory, matching Internet pricing when needed, and learning to live with lower margins.

As a result, said NATM president and executive director Bill Trawick, the group is still outpacing the industry in TV and majap unit volume despite comparable store declines in both categories.

“Business is not robust but we’re gaining share in the markets we play in and we’re out there aggressively growing our business,” he said.

Indeed, at least four members — Boscov’s, Conn’s, Electronic Express and Video Only — said they are opening, re-opening or expanding stores, while others are entering new businesses like mattresses, lawn and garden or, for Abt Electronics, electric generators and fitness gear. 

To help dealers tap into new opportunities, NATM has expanded its on-site vendor fair, which was first tried last year, from 20 to 39 exhibitors. Categories included audio (Harman International, Klipsch, Polk, Ion Audio and Soul Electronics), video (Daewoo, JVC and TCL), and everything from fireplaces to DJ stations, and Amazon-owned deal-of-the-day site Woot to Warrantech.

To secure its place in the tablet and PC market, NATM is leveraging its relationships with Samsung, Sony and Toshiba, and welcomed vendor fair exhibitors Archos, D&H Distributing, Kingston, Lenovo and Tech Data. Representatives from Dell, Hewlett-Packard and New Age Electronics were also in attendance.

Trawick said dealers are also getting help from new MAP policies and stricter enforcement by some CE and appliance manufactures. The latter took steps to eradicate extreme 25 percent- and 30 percent-off promotions on white goods and, unlike their electronics counterparts, are also raising prices on their products. Whirlpool had signaled its intention to impose a third round of cost increases following industrywide hikes in the spring and summer, while GE became the first to formally announce a 5.5 percent increase beginning in January. Most majap manufacturers are expected to follow suit.

Still, the erosion of price points and declining margin in TV remain “the toughest things we continue to struggle with,” Trawick said. “Both retailers and manufacturers are struggling with earnings. We’re burying ourselves.”

The buying group executive pressed the point in an impassioned “State of NATM” address to attendees, in which he implored manufacturers to do more to support the independent channel.

“You built relationships with us, and your investments in companies like P.C. Richard and Conn’s kept them competitive,” he noted. “You helped them get where they are, and we helped your company get where it is. But how many relationships can be built with national accounts? If they’re not happy with a category, they get out of it. We put our lives into selling electronics and appliances, and if we’re not successful, we close doors.

“Manufacturers are also fighting for their lives. National accounts and Internet companies are so big it’s hard to say no to them, but based on their recent financials the nationals are not winning, they’re struggling, and so are you. We need you to provide fair margins so we can exist, and we need you to work with us to grow your business profitably. You must not let them dictate how you run your business because if we continue in the direction we’re now heading, this industry is doomed.”

Trawick noted that despite the challenges, and with the exception of nowdefunct Bernie’s, “Our guys have hung in there through three years of tough times. We’re not losing share, even with competition from the Internet, because a fair amount of people want to buy local, they want a knowledgeable sales person, and they recognize value from our retailers.”

Looking ahead, Trawick foresees a shorter promotional window for Black Friday as manufacturers rein back their timetables and at least two national retail accounts “budget their business down.” Nevertheless, he predicted that pricing will be “extremely aggressive” in home office and TV, particularly in plasma and smaller displays, and that a possible decline in holiday traffic due to the anemic economy may be offset by higher average tickets.

On a personal note, Trawick indicated that he is putting his retirement plans on hold for “a few more years” until the business climate improves.


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