NECO Plays In The Big Leagues By Wielding Its Warehouses

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Within the over-stored and notoriously cutthroat Northeast corridor, the NECO Alliance stands as something of an anomaly.

Despite its small dealer makeup, the two-year-old group is not only holding its own against entrenched regional chains and big-box incursions, it is actually carving out market share gains in the hotly contested territory.

How do they do it? In a word -- warehousing.

According to executive director Mel Hunger, the group's collective 1 million square feet of member-owned distribution centers allows it to take factory-direct shipments by the truckload and container load -- just like the big boys.

The warehouses, strategically located throughout NECO's 10-state turf, then mete out their largely white and selected brown goods to members in small orders that can be trucked to stores overnight, seven days a week.

"Dealers can buy ones and twos, will have immediate delivery, and don't have to warehouse inventory," Hunger said.

The combination of sharp, bulk-buy pricing and personal, neighborhood service has proved to be a winning formula, he noted, pointing to recent AHAM figures. "The independent's market share is increasing in the Northeast. Whether it's from Tops or P.C. Richard, our business is growing, and these dealers are recapturing share."

Such wasn't always the case. Prior to its creation, most of NECO's five chapters -- Appliance Dealers Co-op, The Boston Group, Dynamic Marketing Inc. (DMI), Intercounty and Nationwide of Connecticut -- belonged to competing buying groups, and the regional rivalries were boiling over.

"All the chapters were fighting one another," recalled Intercounty president Jay Lebowitz of Mr. Jay's Appliance. "We neutralized each other's ability to get better pricing from vendors. So I called my archrival, Vinnie Capuano of DMI, and I said if we don't come together, we're going to die."

In short order, NECO sought and received the blessing of Nationwide TV & Appliance, which continues to serve as its umbrella group, and retained the services of Hunger, a former Technics executive who previously ran Key America. Today, that union boasts 450 members with 700 storefronts and $1 billion in annual revenue, and the sky's the limit.

"It's been marvelous," said DMI merchandiser Hank Van Beuzekon. "Greater than our greatest expectations. I think we got the vendor community's attention."


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