Channel Conflict Gnaws at Retailers
As manufacturers add new distribution points to sell as much of their product as possible, channel conflict will continue to be one of the most pressing issues facing Nationwide dealers, several of the buying group's directors said at this week's PrimeTime conference.
"The single biggest issue we face is channel conflict," one executive told Dealerscope. "You have to get more feedback from the manufacturers so they can publicly say what their strategy is, because it's been difficult even for us to get it."
Nationwide and its dealer members have developed several strategies - including more creative promotional campaigns, greater product differentiation, and deeper database development for more targeted email campaigns - to offset the erosion of product sales and profits caused by channel conflict and over distribution.
The problem, at least on the appliance side, is exacerbated by Sears' continual loss of market share to Home Depot and Lowe's, which has caused the three to intensify their price and promotional wars at the expense of the independent dealer.
"For the first time ever, the home centers now are bigger than sears in the appliance business, so (Home) Depot and Lowe's combined sell more appliances than the Sears does. I never thought that would occur but it has," the executive said. "So you have an incredible battle between those three companies that has created a lot of the conflicts. It's not a lot different than the Best Buy/Walmart fight in the CE (space)."
To help its dealers combat the problem, Nationwide is beginning to roll out a new database platform and the Bronto Email Marketing Companion for the creation of more targeted marketing campaigns. Nationwide began piloting the platform about six months ago among key retailers and is embarking on road trips to inform and train its general membership on using the tool, which will also include marketing templates. Nationwide's vendor partners are also providing assets and tools to add to the database to help dealers build a variety of marketing campaigns and strategies.