Hard to believe, but consolidation is even more acute in appliance retailing than it is in electronics.
With nearly 50 percent of majap sales now controlled by the two big home improvement chains, what’s an independent dealer to do?
The short answer: Join a buying group. These retail confederations pool resources, buying power and best practices to level the playing field, and few do it better on a regional level than the Appliance Dealers Cooperative (ADC).
A chapter of the $1.5 billion NECO Alliance that spans the Northeast, ADC, led by NECO co-founder Mike Napoletano, was a progenitor of the own-your-own warehousing strategy that allows its members to compete.
Founded in 1972, ADC now owns and operates three distribution centers (DCs), located at the group’s headquarters in Monroe Township, N.J., and in Pittsburgh and Harrisburg, Pa. With more than 450,000 square feet of space combined, they house the approximately 700,000 units (mostly appliances) that are shipped to the chapter’s nearly 200 dealers annually. Getting them there is a fleet of 31 ADC-owned trailers that make an average of 44,000 deliveries a year across 10 states, many of them by the next day.
The warehouses allow ADC to buy and stock container-size shipments direct from manufacturers at competitive prices. At the same time, having the products on hand allows dealers to pull small lots as needed, relieving them of inventory overhead, and enables the group to respond immediately to marketplace events, such as price actions by big-box chains, Napoletano told TWICE.
While ADC is a buying group in the literal sense of the word, “We’ve become so much more than that,” Napoletano said, by providing services like floor planning, exclusive promotions, instant rebate tracking and even bookkeeping.
“We address all the problems that the independent faces,” he noted, “either because they can’t or won’t.”
The latest arrow in ADC’s quiver is a rather large one — a proprietary end-to-end digital platform, developed by Sewell, N.J.-based HomeSource Systems, which provides automated inventory and supply chain management; an advanced e- and m-commerce platform for dealers replete with search engine optimization and social media campaigns; and comprehensive product specs, promotional vendor videos, competitive pricing, real-time inventory status and click-and-order functionality.
ADC’s other not-so-secret weapon is executive director Ken Miele, who joined the group eight years ago from the apparel industry. Miele brought with him a business discipline and logistical prowess that has helped the chapter nearly double its volume to $500 million annually in six years, as it wins back market share from big-box competitors.
Looking ahead, ADC — which maintains ties with the Big Two of buying groups, Nationwide and AVB — plans to add more warehousing, expand into furniture and bedding, and extend its reach into new territories both west and south, in the quest to control its own destiny.
“We have to do everything we can to compete and be profitable,” Napoletano said.