By Bob Johns
The electronics and appliance retailer is rapidly diversifying its product selection to combat the changing world of electronics retail.
Electronics retailer h.h. gregg is in the process of taking a giant leap to diversify its product offering. Traditionally known for its TVs, electronics, and appliances, the company is knee-deep in a push to carry furniture and fitness equipment nationwide. While on the surface this may sound like a strange fit, when you consider that most electronics are geared toward leisure, this may turn out to be a perfect fit. Also, the company is trying to avoid the same fate suffered by many other electronics retailers, being so tied to a type of product that has ever-reducing margins and increasing competition.
Home products can be a stabilizing influence for the retailer, which is used to dealing with massive price drops in technology and ever-increasing competition from online and brick-and-mortar retailers. The company first piloted furniture and fitness nearly a year ago. "Last November, we introduced a limited selection of home entertainment furniture and home fitness products," said Jeff Pearson, senior vice president of marketing. "During this spring, we tested and expanded an assortment of furniture products in our Chicago stores and have been very pleased with the results. We are in the process of rolling out that new assortment of furniture (nationwide)."
The ultimate goal is for the newly expanded selection to be showcased in every store. The company currently operates 228 stores across the U.S., but in order to become truly national, the company is going to need to continue with the expansion plans of which they have recently backed off. The hope is for the new product lines to account for roughly 10 percent of sales, hopefully offsetting the rapid decline in video and television sales.
Another possible revenue source for h.h. gregg is financing. The company currently offers a private label credit card through GE Capital, but nearly 25 percent of applicants fail to qualify. Many of these customers decide to not make purchases because of this inability to get credit. The company is currently exploring the possibility of expanding its credit offerings to include all credit levels. In a conference call earlier this year, h.h. gregg CEO Dennis May was asked why the company was considering customers with spotty credit. He stated, “In today’s economy, I think there is a wider customer base. I think that is an impact of the overall economic environment we live in.” This customer base is also able to take advantage of h.h. gregg’s relationship with Rent-A-Center for rent-to-own options on major purchases. Right now these major purchases on the h.h. gregg credit card account for 35 percent of sales. This figure could get a significant boost with the new credit options. The broader credit offerings also stem from the aforementioned decision to de-emphasize weaker electronics merchandise and focus on other big-ticket items for the home, including furniture and fitness equipment. These items are rarely paid for in cash, so the credit has to come from somewhere.