Confidence in the service-oriented independent brick-and-mortar retailing model, and in his members’ ability to continue its successful execution in the face of the big-box stores and Amazon, was apparent in the comments expressed by Executive Director Jerry Satoren to media, at last week’s Dallas-held meeting of the NATM Buying Corp. The group consists of 12 of the country’s most prominent regional independent appliances/furniture/electronics retailers.
Satoren reported that the group as a whole was tracking “north of $6 billion” in revenue for the year. The appliances category is enjoying “an exceptionally strong year for NATM,” he said, and was pacing at around $2.2 billion in sales for the year with business being conducted out of 221 showrooms. “We’re likely the most productive storefronts in the appliances business,” Satoren said.
As for consumer electronics, he said that TV sales for the group accounted for anywhere from around $900 million to $1 billion within the group. Industrywide, he added, although the category was “taking its lumps” in overall units and dollars, 4K growth was the salient exception. “It’s enormous, year over year, for the industry,” he said. As for the NATM members, who promote premium-priced models to customers, “we’re a little different because we’ve been mixing up and trending much better than the industry in terms of growing 4K in the last number of years,” resulting in business being “about flat in units but slightly up in revenue….We sell bigger screen sizes and tend to get customers landing in a sweet spot of… $2,000. As long as there continues to be innovation and screen-size migration to those price points, we win.”
Satoren said that, moving into the fourth quarter holiday season, “price compression is a concern” for the TV category, but “that said, availability seems to be good. The only concern potentially is with OLED, which is a very premium technology, and we are selling lots of them… I think there will be enormous growth in OLED.”
In the run-up to the holidays, Satoren said he expected “the cadence will be similar to last year. It will be Black November,” with a pull of the majority of sales into November and a softening in December. The industry “has trained the consumer that way, so now it becomes, especially for the vendors and the nationals, really, really important to get your share of that business on that weekend – not so much for our members [who sell more premium]. For premium sets, the first two weeks of November are the best weeks.”
The group’s membership roster tends to hover at the dozen figure, and Satoren said that exclusivity has to do with members not only meeting certain revenue criteria but also about their being “dominant household names in each of their respective markets” along with the big boxes…we’re competing with the nationals.” While member additions might make sense, “if you look at the profile of a NATM member, there’s probably two and maybe three more retailers who profile like these guys.” For certain, any additions would have to have a brick-and-mortar footprint, he added, “because they would have to share in the issues we have to deal with.. We’re brick-and-mortar guys; we’re showroom guys with commissioned sales forces; we sell mix. It’s a brick-and-click-type player; brick and mortar is not going away, if you give a good experience to someone who walks into the store.”
While Satoren said that getting traffic into stores remains a collective concern, his confidence in the power of the storefront is steadfast – especially as it relates to his members and their strengths. “We have professional, well-trained salespeople and we feel like we can satisfy a customer if we get a chance,” he said.
“In the end, there’s no magic bullet. We have to have a great experience in our stores, and we have to own our customers. We’ve proven it in [the category of] bedding. We have had retailers go into bedding in markets where there was a MattressFirm, and it’s been a rocket ship. The reason is, our members’ consumers buy from them and they enjoy the experience in the stores – and they trust them….
“A common theme for NATM members is, these guys are comfortable with who they are, do not have a desire to be the next Best Buy or Lowe’s, and have managed their businesses in their markets and remained very viable.”
Satoren said that although there is potential appeal for his membership in the adoption of retail-experience-enhancing tools such as the augmented reality (AR) technologies now in their evolutionary stages, “it’s still about our customers and their experiences in the stores.
“Remember catalog showrooms? [The rise of] warehouse clubs? ‘We’re doomed. You’ve got five years left.’ Is this any different? We have people coming into stores and buying products because it’s pleasant – the environment, the selection, the price.
“The good news is that I think Amazon has done all it can to our business. The TV business has already been ‘Amazoned.’ It’s now other industries – like groceries. There’s no new tricks we have to learn.
“The group is very happy, healthy,” Satoren said. “We’re looking out for each other.”