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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
RetailerShareChange Year-Over-Year
Sears37.1%-1.6%
Independents/others32.5-2.1
Lowe's14.5+0.4
Home Depot8.0+2.3
Best Buy7.0+1.0
Wholesale clubs1.00.0
Source: GE Consumer & Industrial

Majap Mix, By Price Tier
YearLow EndMid-PricedHigh End
199820%48%32%
2003253540
2004253441
Source: GE Consumer & Industrial

Share of Majap Price Segments, 2004 YTD
RetailerLow EndMid-PricedHigh End
Sears33.6%41.6%42.1%
Home improvement centers26.118.913.6
Independents30.332.438.5
Source: GE Consumer & Industrial

Channel Preference: Why Shop Where You Did?
ReasonBought at home improvement centerBought at independent
Competitive price43%35%
Convenient credit73
Location96
Selection1611
Good repair service14
Previous experience1016
Stands behind product26
Informed sales staff45
Source: GE Consumer & Industrial, based on a poll of 400,000 consumers

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