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GE Dissects Majap Market At BrandSource Show

9/20/2004 02:00:00 AM Eastern

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

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