By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Between stainless-steel shortages, a frosty room air season and a floor-care market in freefall, 2004 can't end soon enough for many in the major appliance industry. But dealers and manufacturers take heart: Continuing demand for residential real estate and premium white goods, plus pass-along price increases, should bode well for business in the new year. Until then, TWICE recounts some of majaps' defining moments of the last 12 months.
Best Buy Adds Siemens Brand: Best Buy will add BSH Home Appliances' premium Siemens brand to its assortment in a move that further blurs and redefines the traditional channels of distribution within the major appliance industry. The high-end European line, which will debut domestically in September, is a sister in construction, design, price and parentage to the luxury Bosch and Gaggenau brands, which maintain controlled distribution in the United States.
Builders' Show Plays Vegas: Hot on the heels of CES, The International Builders' Show kicks off its four day run at the Las Vegas Convention Center with keynotes by former President George H.W. Bush and GE chairman/CEO Jeffrey Immelt that underscores his company's commitment to majaps. Intros include a dual-fuel, 17,000 Btu burner Pro-Style cooktop from Maytag's Jenn-Air division; the first GE Profile 42-inch built-in side-by-side fridge; and a new Satina finish on Whirlpool appliances, which are shown within a 700-square-foot “New American Home” vignette.
Samsung Restructures: Nearly two years after entering the full-size majap market within the United States and landing a major placement with Best Buy, Samsung has reorganized its white goods wing as it prepares for its next wave of growth. Under the new structure, majaps are moved under the aegis of Samsung's CE division, run by J.T. Ahn, while former strategic planner Stephanie Kivett Ohnegian is tapped to spearhead the changes domestically.
The Harder Side of Sears: Pleased with the trial performance of white goods within select Sears Hardware stores, the company now plans to add majaps throughout the balance of the freestanding, 163-unit specialty chain, which it has renamed Sears Appliance and Hardware. The company currently operates 60 mixed-use outlets and plans to add appliances to the remaining 103 hardware stores by year's end.
Temperature's Rising: Microwave oven makers attending this month's International Housewares Show in Chicago turn up the exhibit floor heat with new, upscale looks and a rash of added features. Among the contenders: Sharp Electronics, which offers chrome accents and concealed control panels, and LG Electronics, which intros a combination radio/microwave oven and a coffeemaker/microwave unit.
Building a Better Mousetrap: Innovation is in the air at this year's Kitchen/Bath Industry Show in Chicago, as new introductions are cooler, quieter, faster, thinner and shinier. Highlights include Sharp's new multifunctional Insight Range with microwave drawer; Samsung's first-ever cooktop, supplied by Jenn-Air; Electrolux's high-performance Icon line; Haier's new Quiet clean dishwasher series; and Sears/Kenmore's next-generation Trio bottom-mount refrigerators and HE/Duet laundry pairs.
Largo Largess: A record 215 attendees flock to Florida for the Association of Home Appliance Manufacturers' Annual Meeting (AHAM), held this year at the Ocean Reef Club in Key Largo, Fla. Besides the venue, the turnout also reflects a larger floor care contingent, following AHAM's absorption in January of the former Vacuum Cleaner Manufacturers Association. Keynoters include Hal Stratton, Jr., chairman of the Consumer Product Safety Commission, and Sears' white-goods goddess Tina Settecase, who breaks down her business in exquisite detail.
White Goods White Hot: Fueled by anticipated demand for room air conditioners, along with robust sales of laundry and kitchen cleanup products, factor shipments of major appliances overcome tough year-ago comparisons to rocket 12.9 percent to 7.2 million units. But the double-digit gains belie weakness in the core cooking and refrigeration categories, which are more in line with the industry's sluggish 4.4 percent year-to-date performance.
Maytag's Mea Culpa: Maytag undertakes a sweeping corporate restructuring designed to resuscitate its ailing floor care business, streamline operations, cut costs and position majaps for further growth. The “one company transformation” folds Maytag's corporate operations and freestanding Hoover and Maytag business units under a single sales and marketing umbrella headed by CEO Ralph Hake. As a result of the consolidation, Hoover's headquarters offices will be closed and some 1,100 white-collar workers will be let go, while former Hoover and Maytag heads Tom Briatico and Bill Beer, respectively, are reassigned to the new Office of the President, with indeterminate responsibilities.
Blue Light Special: Sears seeks to goose its off-mall growth by buying and leasing some 54 Kmart stores and seven Wal-Mart locations for about $620 million in cash, and by opening an additional 30 strip-mall-based outlet stores over the next two years. Sears already operates 45 of the outlet stores, to be renamed Sears Appliance Outlets, which carry returned, discontinued, overstocked and special purchase majaps, CE and garden products.
A Chill in the Air: Retailers and vendors are slogging through another tough summer for room air conditioning, with unseasonably cool weather slowing sales and fostering $55 promotions on 5,000 Btu units. The silver lining: Higher component and raw material costs will likely drive prices up in 2005, making any current-year carryover more attractive.
Ovens Are Smoking: Factory sales of major appliances rebound from their summertime slump to rise 6 percent this month, led by a 9.3-percent spike in cooking product shipments, with electric ranges and microwave ovens showing particular strength, AHAM reports.
Mixed Bag: Third-quarter results were decidedly dour for the industry's top suppliers. Stung by higher steel and component costs, Whirlpool's net earnings slipped 3.8 percent to $101 million, Maytag's net income plummeted 79.6 percent to $7.5 million, and operating income for Electrolux's North American business dropped 46.2 percent to $23.6 million. Only GE's white-goods group, with its considerable multisegment sourcing clout, was in the black, as profits soared 31 percent to $163 million.
One Plus One Equals One? Sears and Kmart announce a blockbuster $11 billion merger plan, designed to “greatly strengthen both… franchises by accelerating the Sears off-mall growth strategy and enhancing the brand portfolio of both companies,” says Sears' CEO Alan Lacy. The combined entity will have sales totaling $55 million through 3,500 stores, although some speculate that Kmart will go the way of the Blue Light Special, as Sears picks its best real estate clean and sells off the rest. Lacy tells TWICE point blank that Kmart will not carry majaps.
Gregg-arious: Regional white-goods powerhouse H.H. Gregg enters the holiday selling season with a new store concept: Fine Lines, which was developed to sell super-premium appliances to the decorator, luxury consumer and custom homebuilder markets. The first unit is an 18,000-square-foot, vignette-laden showroom located near company headquarters in Indianapolis. Depending on its performance, the concept will be rolled out to most of Gregg's six regional markets which extend from Indianapolis to Alabama.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.