By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Between the recession, the murky housing market, and the disposable dollars lost to cash-for-clunkers auto sales, majap makers and retailers certainly took their lumps in 2009.
The good news is that this year, which may likely prove to be the worst on record for the white-goods business, is quickly coming to a close. Also heartening are the latest factory shipment reports from the Association of Home Appliance Manufacturers (AHAM), which show steady month-over-month improvements from earlier double-digit declines.
Whether the trend continues into the new year remains to be seen; until then, here's a brief look back at the highlights — and lowlights — of 2009.
Attendance was light and the mood on the show floor downbeat at the 2009 International Builders' Show (IBS), as the housing sector — and satellite industries including major appliances — continued to feel the effects of a depressed real estate market and fallout from the shaky financial markets. Only a handful of majap vendors exhibited at the Las Vegas Convention Center, although others held court in hotel suites offsite.
Factory shipments of major appliances fell 14 percent this month, recovering from the 24 percent plunge in January as the downturn in white-goods demand continued into its third year. Every category tracked by the AHAM showed declines, except for microwave ovens and chest-style freezers. The latter was up a whopping 26 percent, reflecting cost-effective bulk-food buys by consumers dealing with the ailing economy.
The extended downturn in the major appliance industry could force smaller, specialty manufacturers to close up shop, buying group executives warned, and member dealers are being advised to avoid doing business with third-tier brands. Driving that outlook: 90 percent of consumers are now shopping for majaps on the basis of value and price, compared with only 33 percent three years ago, the Nationwide Marketing Group reported.
Amid the worst recession in memory, majap makers continued to invest in innovation in an effort to prime the pump and prepare for the eventual economic recovery. New product developments included Samsung's first induction range, due out in the fall; Haier's dorm- and eco-friendly combo unit that melds a microwave oven with a refrigerant-free compact fridge; an auto-touch freezer compartment on LG's French-door refrigerator that opens like the tray of a DVD player; and GE Profile's single-double wall oven that fits two ovens into the space of one.
The diminished presence of many of the appliance industry's largest manufacturers at the Kitchen/Bath Industry Show (K/BIS) allowed new exhibitors and smaller brands to bask in the limelight, including range hood manufacturer Kobe, premium kitchen majap maker Dacor, and Blomberg, the U.S. arm of Turkey's Arcelik, the No. 3 appliance vendor in Europe. But the show belonged to Sears, whose booth featured separate displays areas by Bosch, Electrolux, GE, Samsung and Kenmore, and featured appearances by Blue Man Group, Super Bowl MVP Eli Manning, and an executive panel with executives from the aforementioned brands.
Retail sales of major appliances fell 4.7 percent to $23.9 billion for the industry's 100 largest dealers last year, according to the newly released TWICE Top 100 Major Appliance Retailers Report. But the decline in white-goods sales moderated from 2007's 6.8 percent skid, the annual survey showed, and mass merchants like Sears, together with the home improvement channel, continued to dominate sell-through with a combined share of 71 percent.
Sears Holdings opened its first Sears-branded appliance store within a Kmart location. The store-within-a-store debuted inside what had been the garden department of a Birmingham, Ala., Kmart. The 4,000-square-foot shop holds less than two-thirds of the assortment found in a typical Sears store but substantially more SKUs than are found in the 280-odd Kmarts that currently carry appliances. The several hundred Kmarts nationwide with garden shops present a significant opportunity to “expand the number of places we sell appliances,” said Sears home appliance president Doug Moore.
Frigidaire began rolling out its largest launch ever to national and independent dealers. The effort includes a sweeping overhaul of the midtier Gallery line and step-up Professional platform, as well as a new marketing push featuring celebrity spokeswoman Jennifer Garner, a charitable cause (Save The Children), and an updated logo.
Factory shipments of major appliances continued their sequential improvement, suggesting that the beleaguered white-goods industry may have finally bottomed out over the summer. Wholesale sales were down 6.7 percent year over year, compared with a 9.4 percent decline in August and a 19.1 percent drop in July.
Battered by the global recession, unfavorable currency fluctuations and weak demand for home appliances, Whirlpool reported a 48 percent drop in net earnings, to $87 million, and an 8 percent decline in net sales, to $4.5 billion, for the third quarter. In North America, sales slipped 9 percent to $2.5 billion while operating profit rose 89 percent to $140 million, thanks to cost reductions and productivity initiatives.
Sears announced it will become the sole national retailer of Jenn-Air appliances, effective 2010, supplanting existing distribution deals between majap parent Whirlpool and warehouse clubs Lowe's and The Home Depot. Sears will begin offering 17 Jenn-Air SKUs at 255 of its largest stores in mid-January.
Meanwhile, appliances joined apparel and electronics in the pantheon of Black Friday promotions for the first time in a major way. Preliminary post-Thanksgiving estimates suggest that total appliance sales spiked 25 percent over the holiday weekend, while comparison shopping service PriceGrabber.com said sales of laundry pairs rose 70 percent on Black Friday compared with 2008.
The U.S. Department of Energy (DOE) approved the first wave of state-level plans to administer its $300 million appliance-rebate program, meaning that launch dates will be staggered across the country. All 50 states plus six U.S. territories submitted applications to participate in the federal subsidy plan, which incentivizes consumers to purchase efficient, Energy Star-rated home appliances, water heaters and lightbulbs. The first major national promotions are expected for Presidents Day.
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.