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Majap Merchants Mixed On Mft. Price Hikes

2/09/2011 03:30:50 PM Eastern
New York - Major appliance retailers had mixed reactions to a round of planned April price hikes announced by the industry's largest manufacturers.

The increases, which range from 8 percent to 10 percent depending on SKU, are sought by vendors including Whirlpool, Electrolux and LG Electronics to help offset rising oil prices and sharply higher costs for raw materials like plastics, steel and other metals.

As Whirlpool North America president Mark Bitzer told analysts last week, "We've announced significant price increases on most of our products and brands," citing the "inflationary environment and the unfavorable price mix."

Some merchants, including hhgregg, welcome the pass-along -- assuming the proposed price hikes stick. "Manufacturers are in the process of looking at what the market can bear," president/CEO Dennis May told analysts yesterday. "If [they] are able to capture some of the costs of those raw material increases and that actually sticks in the marketplace, then that would be good for us," and the company's gross margins.

But Bill Trawick, president and executive director of the NATM Buying Corp., which represents such leading majap chains as P.C. Richard & Son, BrandsMart USA, Conn's, ABC Warehouse, Abt Electronics and Nebraska Furniture Mart, fears that financially strapped shoppers may balk at the higher price tags and settle for lesser-featured models.

"How will consumers feel about a $100 increase for a side-by-side in this environment?" he asked. "It may force them to step down."

Trawick said a consensus should form in the next 60 to 90 days after the national accounts weigh in and existing inventory runs dry, including the considerable white-goods stock hhgregg said it bought last month in anticipation of possible price moves.

For more details, see the Feb. 21 issue of TWICE.
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