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NATM Looks Past The Apocalypse

Big-box regionals say they’re stronger than ever.

Whatever doesn’t kill you makes you stronger, and the 12 big-box regional chains that comprise the NATM Buying Corp. have apparently come through the retail industry retrenchment better for the experience.

Indeed, the 48-year-old confederation of appliance and CE heavy hitters, which includes the likes of P.C. Richard & Son, Abt Electronics and Nebraska Furniture Mart, had plenty to crow about at its annual vendor conference this week in Dallas.

“It’s clear we’re here to stay,” said industry veteran Jerry Satoren, who’s marking his fourth year as NATM’s executive director. Citing past supposed dealer slayers like catalog showrooms and warehouse clubs, he said group members are addressing the latest channel challenge by “learning what works online,” investing in mobile commerce and integrating the Internet into their showrooms.

Apparently it’s working: NATM’s business is up 10 percent year over year, to $6.3 billion in cumulative sales, Satoren said, as members maintain their dominance within their local markets and remain industry leaders within their core categories of premium TV and major appliances.

Not that retail consolidation isn’t real. Rather, the so-called “apocalypse” was more about store format and product mix (think category killers like Toys “R” Us) than anything intrinsic to brick-and-mortar. “Consumers of all ages like to go to a store,” he noted. “If you create the right experience people will shop.”

Related: Retail Bankruptcies To Continue Into 2019

For NATM dealers a key differentiator is delivery and installation — a critical and increasingly complex service in this age of the smart refrigerator and jumbo TV, for which the group has set the benchmark. “No one can do it as well as we can,” he said.

Add to that a mix of step-up product, an assisted sales floor and the ability to tailor assortments to local markets, and you have a winning combination that, despite an industrywide slowdown, has led to close to double-digit appliance growth year over year, Satoren said.

But not all is sweetness and light. NATM’s TV unit volume is tracking the industry’s — down by the low single digits — as the 1080p category fades and 4K Ultra HD has replaced some but not all the lost revenue. Perhaps more troubling is a 6 to 9 percent decline in bedding sales as price promotions rear their ugly head in what nevertheless remains a high-margin category, he said.

Satoren is also concerned about Christmas and beyond, given 4K saturation, a dearth of must-have hit holiday products, and a focus next year on 5G, which could divert disposable income into the low-margin mobile category.

And looming over everything is a U.S.-China trade war and rising raw materials costs, which are likely to lead to first-quarter price hikes, he predicted. “If a $299 washer becomes $499, you may see some people banging their clothes with a rock,” he half joked.

That said, unemployment is low, spending is up, “and we’re selling more premium TVs this year.” Another good sign: store expansion, with members Appliance Factory, Electronic Express and BrandsMart USA all adding new locations.

As group president Gregg Richard, president/CEO of P.C. Richard, concluded in his keynote address to vendors and members, “We’re the best brand builders and the best salespeople in the business, by far. … If our merchants are pushing hard, it’s because they’re trying to continue the legacy of these 12 regional strongholds.”