GE Dissects Majap Market At BrandSource Show

Alan Wolf -- TWICE, 9/20/2004

Las Vegas — Dave Goodrich, general manager/marketing operations for GE Consumer & Industrial, presented a strategic overview of channel growth within the major appliance marketplace, during BrandSource's recent National Convention and Buy Fair at the Paris Hotel, here.

Goodrich began by showing that sales growth within majaps' high-end and, to a lesser extent, low-end segments is outpacing that of midpriced products, to the point that high-end goods now claim the lion's share of sales dollars. Specifically, over the past six years low-price products have grown from 20 percent to 25 percent of the majaps market and high-end white goods have accelerated from 32 percent to 41 percent of the market, while the industry-wide mix of mid-priced products has shrunk from 48 percent to 34 percent.

At the same time, the unprecedented growth of the home-improvement channel and new major-appliances initiatives by Best Buy have eaten into the market share of Sears and independent retailers, although the latter still remain the industry's retail leaders with 37 percent and 34 percent share, respectively.

GE calculates market share by multiplying share of shoppers by closure rate, and Goodrich noted that market share shifts can be brought about by changing either or both of those variables.

Interestingly, independents' market-share loss rate is greatest within the high-end product segment, where Lowe's is expanding its assortment. Indeed, independents' 3.1-percent share loss within the high-end over the past four years is nearly twice as steep as the channel's 1.6 percent share loss within the opening-price-point arena during that period.

Finally, Goodrich shared the results of a 400,000-respondent survey that gave high marks to home improvement centers on price, ease of credit and selection, while independents still won out on service and sales presentation. Nonetheless, “Selection is a major issue,” he warned, and independents should review their business strategies and play up their customer service and in-store strengths to remain competitive.

Majap Market Share, Q2 '04

Retailer	Share	Change Year-Over-Year
Sears	37.1%	-1.6%
Independents/others	32.5	-2.1
Lowe's	14.5	+0.4
Home Depot	8.0	+2.3
Best Buy	7.0	+1.0
Wholesale clubs	1.0	0.0
Source: GE Consumer & Industrial

Majap Mix, By Price Tier

Year	Low End	Mid-Priced	High End
1998	20%	48%	32%
2003	25	35	40
2004	25	34	41
Source: GE Consumer & Industrial

Share of Majap Price Segments, 2004 YTD

Retailer	Low End	Mid-Priced	High End
Sears	33.6%	41.6%	42.1%
Home improvement centers	26.1	18.9	13.6
Independents	30.3	32.4	38.5
Source: GE Consumer & Industrial

Channel Preference: Why Shop Where You Did?

Reason	Bought at home improvement center	Bought at independent
Competitive price	43%	35%
Convenient credit	7	3
Location	9	6
Selection	16	11
Good repair service	1	4
Previous experience	10	16
Stands behind product	2	6
Informed sales staff	4	5
Source: GE Consumer & Industrial, based on a poll of 400,000 consumers