Nationwide Dealers Expand Amid Availability of Cut-Rate Real Estate
LAS VEGAS - Nationwide Marketing Group dealers are scrambling to grab cut-rate real estate for expansion but with an eye toward avoiding clashes with big-box rivals, retailers at the organization’s annual meeting said.
Filco is laying the groundwork for a new 40,000-to 50,000-square-foot store in Sacramento, while Spencer’s TV and Appliance redesigned its outlets to add CE and expand its presence in Phoenix. Grand Central is opening its second store by moving into a former Rex TV and Appliance location in Wilkes-Barre, Pa.
Despite the growth, independent dealers are a “ripple in the water” for national chains, who are more focused on competing with each other than with smaller dealers, said Nationwide President Ed Kelly. But the independent retailers are benefitting from the same bounty of available real estate that has driven regional retailers like P.C. Richard & Son, hhGregg and Ultimate Electronics to expand, Kelly said. But with regional chains focusing on national competitors, independent retailers are seeking to fill a niche in the CE and major appliance market, he said.
Part of that niche will be created by Nationwide working with CE suppliers, including Sharp and Toshiba, in creating derivative lines and close-out promotions that will separate independents from regional and national chains, said Michael Decker, senior vice president of electronics marketing for Nationwide. Nationwide has had discussions with the P&F subsidiary of Funai Electric on building a line of products that could be sold through its dealers, said Robert Weisner, executive vice president of member services.
Independents suffered last year as major CE companies became “greedy” in pursuing high-volume sales through national chains at the expense of smaller dealers, Decker said. At meetings during CES in January, the tenor of talks with CE companies changed with manufacturers more willing to work with Nationwide dealers on promotions, Decker said. “They realized we had a lot of share” of the market for major appliances and CE, Decker said. Independents typically account for 30 percent of the sales of CE and major appliances, said Weisner, whose group has 3,000 members with combined sales of $12 billion. Nationwide’s major appliance sales totaled $6.5 billion in 2009, followed by furniture, $3 billion; and CE, $2.5 billion, Weisner said. While Nationwide’s CE unit sales rose 23 percent in 2009, the dollar volume declined eight percent on plunging flat-panel TV prices, group officials said.
In seeking new programs with CE manufacturers, Nationwide is seeking to recover from a year in which it lost more than 100 dealers, with some retiring and others simply shutting down. It added new retailers for a net gain of 61 to 71 members, Weisner said. Before the collapse of the U.S. economy, Nationwide typically lost 25 to 50 members, dealers said. Retailers struggled amid tightened credit that only recently began to ease, dealers said. In addition to Citibank, GE, and Wells Fargo, independent dealers are approaching local and regional banks for funding, Nationwide members said. In addition to tighter terms for inventory, retailers also were faced with tougher terms for consumer purchases, dealers said. Consumer credit approvals for Nationwide’s retailers have inched up to 67 to 69 percent, from the mid-60 percent range last year, but are still below the typical 72 percent level, Les Kirk, executive vice president of finance and operations, told us.
To open a new avenue for revenue, some Nationwide members have deployed Rent-a-Center’s (RAC) Advantage program. RAC supplies a staffer to develop a lease-to-own format inside a Nationwide dealer’s store. The dealer gets a fee and RAC rents products from retail inventory, Nationwide members said. The Advantage format could be expanded to 500 Nationwide retailers during the next several years, Weisner said. Nationwide began testing RAC Advantage during the past 30 to 60 days at three of Big Sandy Superstores 18 locations in Kentucky, Ohio and West Virginia, Weisner said.
Attendance at Nationwide meeting increased to 3,300 this year from 2,500 in 2009 as the number of members attending the show grew to 825 from 700, Nationwide officials said. About 200 of Specialty Electronics Nationwide’s 240 dealers came to the meeting. Nationwide’s RentDirect had 110 of the 140 members of its rent-to-own program on hand.