Retail Observer

RETAILOBSERVER.COM FEBRUARY 2019 52 T he appliance industry had an optimistic start in 2018, with expectations of between 4% and 5% growth. Coming off a robust 2017, all indications were that the upward trend would continue. Well, a funny thing happened on the way to market. The industry fell flat. The good news is that the independent channel has significantly exceeded the industry's overall growth in 2018. With all of the headwinds, inventory challenges, and strong competition from the market, many independent retail appliance businesses have grown by double digits year over year. If we break down the industry numbers by quarter, you can see that there is an easy way to rationalize the market ebb and flow. The year started with news of price moves on kitchen products and an impending tariff on front-load laundry. This got the year off to a slow start. The subsequent price moves on laundry in Q2 further stagnated demand. There are additional mitigating factors that may make this appliance market "miss" seem greater than it truly is. Indications are that the big-box stores lowered on-hand inventory levels, which drove down demand for a short period. These adjusted inventory levels could present opportunities for independent retailers. Consider that Sears has one of the highest percentage of "take with" buyers in the market. Sears generally maintained a high stock level of appliances that allowed buyers to take the product home with them the same day. (Incidentally, this back stock was generally higher-featured product that a consumer would gladly step up to for the convenience of walking out with it that day.) If our big-box competition is lowering their on-hand levels, and Sears is continuing to close stores, it stands to reason that independent retailers have a great opportunity. This opportunity is not only sheer volume, but it constitutes both discerning buyers that want the expertise of a knowledgeable sales associate AND those consumers who have an immediate need to fill and would like to take an appliance home today. Sixty percent of consumers are buying a new appliance because the old one broke. They are under duress and need a solution. This opportunity poses a challenge for independents. We need to be "in the market" every day. We have to have marketing activity that captures the attention of consumers, and also, have a well- defined plan to sell that can easily be executed on showroom floors. The risk of "grabbing" the Sears consumer without a distinct plan for step selling could lead to less margin and more work. This is not something we can afford. Alternatively, if we have a plan to sell, these valuable footsteps could lead to profitable purchases that drive the bottom line. Focus on a short and narrow assortment that delivers margin as your associates step consumers up the line. We need to challenge our vendor partners to deliver margin at both ends of the spectrum. Capturing the take with consumers, and selling a complete kitchen for a remodel, creates the need for subsets of models to satisfy these consumers. We also need to be profitable in both of these ventures. If you need assistance, please do lean into the merchant team at Nationwide. We develop plans to sell via our "Prepare for Share" models that deliver margin with unique independent retail- exclusive offers. The industry is predicted to be flat or slightly down in 2019. However, there will be more consumers in the market than ever before. These consumers will have less choice when it comes to retail outlets. Although the retail market's "pie" might not grow in 2019, our opportunity lies in taking a larger slice of the pie in our markets. Focus and diligence will take us to heights the independent channel has rarely seen. Let's work together to capture our unfair share of the market. Patrick Maloney, Senior VP Appliances Nationwide Marketing Group Patrick Maloney Appliance Trends RO STEP UP AND CAPTURE THE "TAKE-WITH" CUSTOMER A flat market and more consumers spells opportunity — let Nationwide help

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