News > i3

NATM’s Elite Retailers Continue to Thrive in a Changing Marketplace

Four years ago, Gerald Satoren, a veteran consumer electronics executive on the manufacturing side with Thomson/RCA and Toshiba who also spent four years with distributor DSI Systems, became the executive director of the NATM Buying Corporation, the $6.3 billion national buying co-op formed in 1970 that represents 12 of the largest regional retailers in the U.S. that sell electronics, appliances, bedding and furniture.

Heading this prestigious industry institution would seem like a plush and safe job. But as Satoren put it at NATM’s recent Vendor Conference in Dallas, the conventional wisdom back in 2014 was, “The end was near. Brick-and-mortar [retailing] was dead and everyone was going to shop online.”

As what happens many times with conventional wisdom, it turned out wrong.

“The [retail] apocalypse turned out to be for the brick-and-mortar big boxes and the categories they play in,” Satoren explained. “We have thrived and continued to grow.” The reason for the success of NATM’s members, notable retailers like Abt Electronics & Appliances, BrandsMart U.S.A., Cowboy Maloney’s Electric City, P.C. Richard & Son and the rest of the group has been “consistent dominance in their marketplaces. In the past thirty years as every new retail format [entered the industry] they have remained market leaders.”

There was talk about expanding NATM’s membership four years ago. But today Satoren’s view and that of the organization is that “less is more” due to the strength and market shares of its members. He did note that if a retailer approached the group for membership, had a similar size and product mix as NATM members – and could fill a geographic market the group is currently not in – “we would look at it.”

One of the main reasons the current roster of NATM retailers continue to be dominant in their markets is because they changed their individual business models as the industry evolved. For instance, they are not just brick-and-mortar retailers but are also online dealers using social media to drive their customers to their stores.

NATM Buying Corporation’s Gerald Satoren, executive director (left) and Michael Maund, operations & marketing director (right) at the organization’s Vendor Conference in late September in Dallas.

“Today we know that if a consumer wants a 40-inch TV for the bedroom they will go online and click, and that’s fine,” Satoren said. “But if they want to spend more than $1,000 on electronics, appliances or another durable, they will come into a store. The bigger the box we sell, we are there because we are the benchmark for delivery, service and installation.”

Satoren, and Operations and Marketing Director Michael Maund, discussed today’s changing marketplace and Black Friday in a Q&A with the media at this year’s Vendor Conference, which was held in Dallas during late September.

Satoren volunteered that as the year winds down consumer confidence is “pretty good, unemployment is low, they haven’t seen the potential effect of [higher prices due to] tariffs and our customers are spending on product, we are selling more premium TVs.”

Speaking of the premium TV market and what will happen during Black Friday, Satoren said that there will be “great values” in the 75-inch and over TV area, which is a concern. This year “our numbers are like the industry’s,” namely that sales dollars from 4K TVs have not made up for lower 1080p TV sales. “We are hanging in there with revenue dollars due to mix and compelling products such as QLED, OLED and premium LCD. It is a good sweet spot. But the concern is always profitability.”

TV merchandising this Black Friday and holiday season will feature a “two-pronged approach” to have specific models with specific deals from Thanksgiving to what has become Cyber Monday and then “come back around Christmas” with more deals, Satoren said.

While NATM members focus on premium TVs, and upscale audio systems, in electronics Maund said, “Eight of our 12 members sell laptops, tablets, game systems and Apple products.” Some NATM members have gaming departments and “connected home kiosks that demo these items” and how they work together, he noted.

The importance of carrying a wide variety of electronics becomes clear when shopping, Maund said. “You come into our stores for these high traffic items our guys will find a way to sell you and demonstrate our core categories,” he noted.

Concerning tariffs, by the first quarter as new products rollout in appliances, and to some extent electronics, there may be “significant price increases,” Satoren noted. “Our concern is that when there is a 20 to 30 percent price increase at the consumer level, discretionary purchases will be effected. Step up products will be hurt.” For the TV business there were more questions than answers, such as, “Where are the tariffs going to hit? The point of origin of the TVs? Parts? Finished goods?”

Another immediate change in the first quarter will be the tax cut. “There should be a lot more dollars available” due to larger tax refunds and “more spending on durables from March to May,” Satoren noted.

In discussing this Black Friday there doesn’t seem to be a real “must have” in consumer technology. But Satoren quickly added that “the hottest thing next year will be 5G. It will be a watershed,” and will rapidly increase the speed and quality of video and audio streaming and accessing the internet. “For categories that are important to us, like premium TVs,” the rollout of 5G will spur interest in upscale TVs, he said.

When asked if the public now realize they are on the verge of the dawn of 5G, Satoren said, “AT&T and Verizon have begun testing it, but consumers have a limited knowledge” of the technology.

This bodes well for NATM. With its members’ well-trained sales force plus improved outreach to consumers via online marketing and social media, NATM retailers will be able to explain, demonstrate and sell this new technology to consumers, just like this group has been doing since 1970.

Steve Smith