The changing economy was the primary focus at the Nationwide Marketing Group (NMG) semi-annual PrimeTime event held in mid-August in Kissimmee, Fla. The 5,000-member buying group’s members are primarily independent retailers engaged in consumer electronics and custom installation, along with carrying major appliances, bedding, and/or furniture.
The overriding message from the three-day Nationwide Primetime event is that independent retail is fairing much better than national players in the current economic slowdown, which has been already labeled as a full-fledged recession by some.
“We are entering a new season,” declared Tom Hickman, president and chief member advocate for Nationwide. “The last time we met, the focus was on lack of inventory and supply chain problems. It’s different right now. I don’t know what it is going to look like in the future.”
To help members get a gauge on the upcoming market conditions, Hickman sat down with Charlie Dougherty, a top economist from Wells Fargo. Dougherty told the gathered audience for the opening session that the economy is definitely slowing down.
“We are not in a recession yet, but all the data points to a slow down. There has been a shift in consumer behavior, which is part of the driver for the slowdown,” he says.
Dougherty says consumer spending has shifted away from the purchase of goods or durables to services, but he believes the recession will be short-lived because there is still a huge supply of accumulated wealth sitting on the sidelines that consumers hoarded during the pandemic. He says those savings will eventually be spent, although inflation is eating into some of that.
“Inflation is by far the biggest problem holding down the economy. It is affecting not just goods, but services, as many of you know if you have looked at the price of airline tickets lately. This is not good for the long-term health of the economy. We will remain in an inflationary environment for some time to come.”
Dougherty says the current 9% inflation rate needs to drop down to 2% to 3% ideally. He predicts the Fed’s raising of interest rates will slow the economy so much that the Federal Reserve will need to hike rates back up in 2023. He anticipates two to three interest rate cuts next year.
The interest rate increases are hurting the housing market because it causes mortgage rates to rise and makes home less affordable. However, Dougherty says the Millennial generation is in their prime window for buying homes and the massive size of that demographic group will help the housing market over the next five years.
“This is back to normalization,” he quipped. “We are going back to 2019.”
Supply Chain Still ‘Messy’
Although the supply chain crunch has eased, it is still unhealthy.
“The supply chain is still a messy situation and it will remain so for the foreseeable future, but the worst is over,” adds Dougherty.
At PrimeTime, NMG members were encouraged to get back to basics.
“Let’s face it. Many of you could afford to be ‘less than perfect’ over the past few years. Now you must be more efficient,” said Aaron Bundschuh, chief digital and technology officer at Nationwide. “Now is the time to gain market share. Many of you cut back on marketing because the product wasn’t available. Now is the time to show off your entrepreneurial elements to compete against the big-box stores.”
He recommended that retailers and integrators use this opportunity to upgrade their showrooms so they can increase their average ticket prices. That will be important because they will have fewer clients in the store, and their sales teams will need to sharpen their sales skills.
Lee McDonald, vice president of consumer electronics at Nationwide, says the market has quickly shifted to an over-supply situation for many products.
Patrick Maloney, executive vice president of membership, also cited a 13% increase in the use of consumer financing in the month of June. He recommends members put financing options on their websites for customers to see.
“Consumers will be migrating back to experiential retail and want a better level of service,” he noted.
“The power is back in your hands. Manufacturers now have supplies six to seven months. National retailers were caught off guard by the drop in consumer demand.
During PrimeTime, various suppliers were on hand to reveal new products for NMG members, including Samsung with its new OLED TVs.
The company has also created a microsite tool that enables Nationwide members to simply add a full Samsung section to their websites easily.
Randy Derr, head of Nationwide eXchange distribution program, highlighted the addition of Wesco/Anixter and the PowerHouse Alliance to the group, bringing NMG to a total of 17 distribution partners with 200 warehouses and a cumulative 5.7 million square feet of warehouse space.
Hank Alexander, director of the Home Technology Specialists Network (HTSN) within NMG, gave members an overview of some of the new brands in the group, including eero, Sound United, Screen Innovations, and AMP Lighting.
He also highlighted some of the brands that are performing well for HTSN members, including Klipsch, Snap One, Sony, and Metra AV.
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