15: How Consumer Electronics Will Become the Heart of the Home

Written by Rob Stott

March 31, 2020


In some ways, it’s already the case. But at PrimeTime in Houston, Lee McDonald, director of CE for Nationwide, talks about how CE will become the heart of consumers’ homes.

Rob Stott: All right. We’re back on the Independent Thinking podcast here at Nationwide’s PrimeTime event in Houston. Right now, sitting down with Lee McDonald, the Director of Consumer Electronics lead. This is your first show is Director of CE. How’s it been thus far?

Lee McDonald: It is. It’s been awesome. I love PrimeTime. There’s a very electric energy. We started the clap line two years ago and that’s I think probably my favorite part of it. It’s really cool to see all the members come in.

I’ve been a huge fan of Nationwide and for people who know me, I tell a story where Nationwide was actually instrumental in helping me. I was a senior merchant inside of a multi-billion dollar retailer, and even with that, we could not get the attention and the programs that we had on other parts of our business. It really was through the group that that happened. So I’ve always felt indebted to this group and the people who are here.

This first show has been fantastic and giving back to the members a little bit of what I took and then I do blame Doug Wrede a little bit because he made it look very easy, and it is certainly not. It is much harder than it looks.

Rob Stott: That might be the nicest thing you’ve ever said about him.

Lee McDonald: Probably is the only thing I will ever say nice about him.

Rob Stott: Love you, Doug.

Lee McDonald: Love you, Doug.

Rob Stott: That’s awesome. I actually think back, last show we did the podcast from here and it was your first-time podcast. We’ve done one since. So podcast number three now. Are you feeling more comfortable as we get into these?

Lee McDonald: Yeah, I think when I realized it’s just us talking and there’s probably like five people listening. It’s my mom, my dad, and I don’t know, who are the other two.

Rob Stott: My mom, my dad, and hopefully my wife. One of our wives is listening. We don’t know which one.

Lee McDonald: Seriously. My hope is that we can share through our conversations. We get to do a lot of really cool things and interesting things that our members, they can’t afford to travel to CES and to KBIS and all these shows and all these different things we can do. So my hope is that through our conversations we can bring a little bit of that, what’s really important to their business, what’s going to change their business, make them more money, save them more time in a 20-minute soundbite.

Rob Stott: Yeah. A great one pitched by you today three minutes before coming on here as we sit here trying to figure out what to talk about.

No, but a really cool topic and one that I think for those who have listened or will listen to the other conversations I’ve had with some of the CE related, connected home related and connected services related services here at PrimeTime. This space, this CE space is really starting to extend its reach. It’s positioned right in the middle. We’re walking for the video. If you’re watching the video version of this, you walk into the PrimeTime show floor and behind us is the tiny home, another connected home space and then it’s in the middle and everything else branches off of that. You’ve got appliances one direction, furniture and bedding the other. It’s symbolic of sorts because this CE stuff has really permeated throughout the rest of what you see at PrimeTime and really in these markets, in these furniture, bedding and appliance markets.

Lee McDonald: Yeah. That’s where we feel as an organization the direction is going, is that these connected devices, whether it’s devices, hardware services, whatever form or fashion that it takes will become the heart, the central part, just like our show is, of a retailer show floor. If you look at all the major national chains, that’s what they’re doing. That’s where they’re going. And so our responsibility to the group is, okay, how do we help them do that? How do we help them go to market? What’s the marketing look like? But more importantly, how do we help them make money doing it too?

Rob Stott: Yeah. Another side too, educating, because you’re talking about guys that have mattresses and furniture in their stores. They’re thinking, how is connected technology impacting my space right now? Why should I really be paying attention to this? What have you seen in those markets that, are those early signs of technology reaching out into those spaces?

Lee McDonald: Yeah, it’s interesting. So, we talked about Doug a little bit and I actually, I really love Doug and I admire him greatly.

Rob Stott: We all do. We all do.

Lee McDonald: One of the programs that he started was our private label TV BEA, and it’s shocking. We’ve shipped tens of thousands of BEA TVs. A very successful private label TV brand, which if you know anything about consumer electronics, that’s probably the most difficult of difficult is to make that brand successful. And where we find most success is with our furniture dealers because it helps protect their margin. It’s sheltered for a number of reasons, which we don’t have time in the podcast to get into. But as we look into moving into the connected arena, Ikea, Raymour Flanigan, all of these, even Ashley Furniture, they’re all selling these devices today. Home Depot, Lowe’s got into the Nest and Google game long before we are.

The way I look at it is our members’ customers that trust them to be the pillars of their community and advocate for them and tell them what they need to buy and what the right price is. Those customers are already buying these products somewhere else. My hope is that we can help our members capture more of that mind share.

One of the great things now is Nationwide has all this data and we do all these market analytics with Site on Time and RWS and the research is very clear that 70% of shoppers are fine and actually look at other places than where they normally buy to make their purchase. So they’re fickle. Consumers are fickle. They’re very affluent. They’re very smart. They look online and so what we try to do is make sure that when there is a consideration for a product, whether it’s appliances, furniture, bedding, mattresses, anything that the first thing they think of is our members.

Rob Stott: I know you mentioned all those tools and a lot at the hands, at the fingertips of our members to really get involved with and take advantage of so that they can be that first touchpoint for the consumer and attract them and bring them in.

I know that there’s some great statistics around, the first touchpoint for a consumer, that first retailer that they go to. I believe it’s a majority of the time the consumer ends up going with that retailer at the end of the day. A lot of opportunity there.

What are some of the … When you think about the actual technology that has already … I’m looking, I know to drop another Nationwide name, Jeff Rose is excited because he’s gotten into the gaming space in furniture. We have a vendor here that has a gaming chair. So what other examples of that that may or may not be here at PrimeTime right now but that excite you and that you think presents some unique opportunities for those conversations around technology and how it is getting into the rest of the home to happen at Nationwide members stores?

Lee McDonald: I don’t want to steal Hank’s thunder because I think you’re going to speak to him later and Jeff was very gracious. He allowed me five minutes to talk at the furniture and bedding session, which you walk into a room where people are used to making a lot of money and you talk to them about TVs. I was expecting like tomatoes and rotten lettuce to come up flying at me on the stage. But no, it went really well and I think you know what I wanted that room to understand is that there is a path to profitability in consumer electronics. That there are members, their peers that are making 30 points plus in consumer electronics every day, Black Friday all the way through. And they figured out how to do it and the strength and the group is not you and I, it’s not the incredible merchants we have. It’s not the incredible marketing people we have. It’s not Jen Danko. Even though we have some really, really smart people. In fact, I think we have the smartest in the industry.

The strength of this group is in its membership. When we have someone that has this knowledge, I look at someone like Terry Oates who is an incredible merchant, great negotiator. And when he tells you he’s making a certain buy, a certain deal, there’s no doubt that he’s getting the absolute best deal. That’s the power in the group. The power is not, it’s not here. It’s out there.

When I talked to Rose, I said, “I want to talk to your membership about all these different things we’re doing.” So one thing that really excites me is we had over 60 furniture dealers that are not in the CE space, sign up for the Google Prime retail program that don’t sell. And they say, “Hey, you know what? We talked to this person over there. We talked to that person over here. And they told us how successful they are.”

Rob Stott: What types of things were you … in talking to those members, obviously the chance to get a name like Google Nest into your stores in some cases could be enough to convince them that a member or a retailer that’s a program I need to get with. But what types of things in and explanations or reasoning did you hear about why this is something that these guys wanted to get involved with?

Lee McDonald: I think it’s a lot. A lot of things that we do here, we usually stumble for the same reasons. Whereas a group we fail to communicate really what is the intrinsic value of what we’re doing and what is the benefit for the member. So what I found is when I asked for feedback on the Google program for furniture dealers, what they said is, “That’s great. We can buy it. We can buy it from Home Depot, we can buy it from Lowe’s. So what’s the advantage?” And I said, “Yeah, but if you buy it on the Google Prime retail program, you’re at 30 points of margin in some cases.” And that was a differentiator when it was clicking for them. Okay, they don’t have to worry about how to make six or seven points.

I was actually talking to one of my peers in the industry at a different trade show and they said, “We do some of that too. We buy from here. We buy from there.” It’s not about the buying, the buying is the easy part. It’s the making money that is the hard part, and the responsibility that group has.

Rob Stott: Yeah. A program like that is one example of some of the things that are available here. Looking around to the rest of 2020 for CE, what challenges do you think remain for this space? I know, I believe it was Tom I spoke with earlier at the show that said he doesn’t like the word challenges more so the word opportunities.

Lee McDonald: Right.

Rob Stott: In that sense, what opportunities do you think exist for whether, CE specifically dealers or the rest through a program like Google Nests, the prime retail program for other members of Nationwide through CE?

Lee McDonald: I think the recurring theme in CE is, and in all consumer retail, all consumer product goods is the margin compression continues to happen. So the opportunity is first and foremost for our peers to network amongst themselves and learn from, we call it standing on the shoulders of giants to figure out how their peers are being successful. That’s always and will always be the biggest opportunity. That’s why PrimeTime is so important.

We had 4,000, 5,000 NLA attendees and it was crazy. That’s the power. I think for us where I’ve seen our vendors respond, LG, Samsung, TCL, Sony, really coming to the group with group-specific above and beyond programs, but that are not one size fits all.

It’s, how can we better partner with Nationwide members on the CI channel. Now we have a custom CI channel program. How do we partner with our furniture dealers? What do they need? Because their needs are much different than a custom installer. So we’re going to have a custom program for furniture dealers. And then what is the bulk, the bread and butter of the everyday business. What do they need?

What I think the biggest opportunity is, how do we as a group communicate the values of those programs and let the members take advantage of it so that next year it’s not just Terry making 40 points in consumer electronics. Now everybody’s making 40 points in consumer electronics. That’s what I think the opportunity is for us.

Rob Stott: That’s awesome. Another question is a little bit about you but more so as a way to talk about growth in this space and the direction for the CE group at Nationwide. We mentioned it at the top, your first PrimeTime as Director of CE.

Lee McDonald: Yeah.

Rob Stott: What are you doing? What approach are you taking to … You have a background in CE, that’s no secret. People know that. But what are you doing specifically from a perspective of learning the space and taking the temperature of members and what their needs are to continue to innovate what the offerings are through Nationwide the rest of this year?

Lee McDonald: My goal is to have a very intimate relationship with our individual members. Just like Tom puts up his phone number. We did that in our emerge session and I think we both mean it in earnest. I know we both mean it in earnest, that we want our members reaching out to us to tell them what their challenges and their problems are because yes, everybody has very specific things in their market or their product. But there’s a common denominator that I think once we have enough data we can figure out.

My approach is that I want the members to know that I’m available, I’m a resource and I can apply the knowledge and we have an incredible team that can help them too. My goal is that, yeah, to build that personal relationship with the membership.

I think that’s really the key. What I want to try to do is figure out … We have some incredible, incredible talent in this organization where we’ve got people that are world-class in training. We have people in the CI channel that can do an audio demo that blows your socks off and it makes you want to buy a $10,000 audio system. We have dealers that are great about hiring a delivery driver. So, what I would love to do is get to a point where the members are teaching them, you go to a NLA class where someone else teaches how to hire or how to train. That to me is the way, and I don’t want to be on stage. I don’t want to talk. I want this to not be about me at all. I want our members to be the one networking with each other.

Rob Stott: That’s awesome and at the end of the day, what I think is a theme that runs across the organization is you see a lot of these member to member-led sessions.

Lee McDonald: Yeah.

Rob Stott: I’d appreciate seeing myself talk less. Does that mean not hosting a podcast? I don’t know. Maybe we turn it over to the members. Let them talk on a podcast.

Lee McDonald: Yeah. Actually I know we’ve … I know you’ve had some members on the podcast too, right?

Rob Stott: I have yeah. I absolutely love talking to some members on this podcast. We’ve had a few and got a couple while we were here this week at PrimeTime. So looking forward to getting those up if they aren’t already by this point as you’re listening to this. Be sure to go back, check those Spotify, Google’s and Apple lists.

Lee McDonald: That’s right. Looking at you, mom and dad.

Rob Stott: Get that subscriber count up to like six or seven here soon enough. Lee, I appreciate you taking the time and chatting with us. And I know, again, this is something, we’re getting in the groove now. This is number two of a monthly series is here.

Lee McDonald: Start of a beautiful relationship.

Rob Stott: We’ll see where it goes from here, but thank you for stopping in. I know PrimeTime is crazy on the schedule, so to be able to fit this in and make it happen and on the fly we did it, so we made it through another one, man.

Lee McDonald: Thanks for having me. Appreciate it.

Rob Stott: You got it.



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