twice connect
careers

Reaction To Home Improvement Majap Moves Mixed

12/16/2012 07:00:00 PM Eastern

NEW YORK – Last week’s debut of Samsung appliances at The Home Depot, and LG’s first-quarter expansion into Lowe’s, drew mixed reactions from buying group executives representing the independent dealer channel.

In some respects the majap merchants welcomed the channel expansion, which comes seven years after LG entered Home Depot, the third-largest majap chain, and No. 2 Lowe’s picked up Samsung’s line. When all products are available in all doors independents win on customer service, they argued, and marketplace promotions tend to be less disruptive when rival retailers carry the same brands.

One concern, however, is that the added distribution could put a strain on Samsung’s and LG’s production capacities, particularly during busy holiday promotional periods, potentially leaving dealers high and dry.

All agreed that the moves represent a hedge by manufacturers against further deterioration at No. 1 white-goods seller Sears and No. 4 appliance chain Best Buy, which are struggling with mounting losses and ebbing sales.

“There’s been a lot of jockeying for position by brands over the last few years and a lot of speculation about which retailers are going to be around in the next few,” observed Nationwide Marketing Group appliance senior VP Jeff Knock. Any changes could put an enormous amount of market share in play, he said.

John White, appliances and services executive VP for BrandSource, agreed. “Everyone [manufacturers] wants to diversify as much as possible so that they don’t have to rely on one customer,” he noted.

While the distribution changes won’t have much impact on BrandSource dealers directly, the availability of LG and Samsung products at both leading homeimprovement chains “prevents them from playing [pricing] games with each other,” he said, which would have ripple effects throughout the industry. “We’re better off with everybody out there — there’s less drama that way.”

Nationwide’s Knock added that leveling the playing field on assortment also gives independent dealers a home-field advantage. “If all of the brands are literally available everywhere and brand selection is taken out of the game, it comes down to who is best poised to service the customer,” he said.

But Bill Trawick, president and executive director of the NATM Buying Corp., raised concerns over the manufacturers’ ability to supply both major home-improvement chains and still keep his group’s regional and multiregional specialty dealers in stock. “Does this change their ability to supply us?” he asked. “There have been shortages of goods in the past.”

Providing the home improvement channel with a wider selection of leading appliance brands may also put No. 1 majap maker Whirlpool at a disadvantage, the executives said. The vendor’s namesake badge, which has been a mainstay at Lowe’s and was recently added to The Home Depot, could lose floor space and volume amid the more crowded assortment, they argued.

Home Depot was scheduled to complete the rollout of Samsung kitchen and laundry products to all 2,250- plus stores and its HomeDepot.com e-commere site on Dec. 9.

Home Depot merchandising VP Bob Baird told TWICE in an email that Samsung was added in response to consumer demand. “It’s the No. 1 brand searched for on HomeDepot.com,” he noted. “We like their innovation and the fit, feel and finish of their products, [and] we believe it is a great demographic match between our customers and theirs.”

Baird added that Home Depot’s majap sales associates “are very, very excited to have this brand” judging by intranet postings, and that while some believe that carrying both Samsung and LG is duplicative, “we see significant differentiation between these two brands.”

Home Depot also introduced Whirlpool-, Electroluxand Frigidaire-branded kitchen and laundry majaps online and in select stores earlier this year in a bid to grow market share.

Samsung entered the U.S. majap market in 2002 with a line of side-by-side and bottom-mount refrigerators and later broadened into the cooking, dishwasher and laundry categories. Its refrigerators feature multiple air-flow vents and dual evaporators and fans for independent operation of the refrigerator and freezer compartments, while its front-load washers boast vibration-reduction technology to limit noise and vibration caused by unbalanced loads during the spin cycle.

Samsung also received the highest customer satisfaction ranking in three major appliance categories in J.D. Power and Associates’ annual kitchen and laundry appliance report, including refrigeration for the seventh year out of the last eight, dryers for the fifth consecutive year, and washers for the fourth consecutive year.

Lowe’s rollout of LG’s kitchen and laundry line won’t begin until the first quarter of 2013, but will eventually be sold in all 1,700-plus Lowe’s stores and online.

The offering will include refrigerators, washers, dryers, dishwashers and ranges.

“Through this strategic alliance with LG, our stores will now have a broader assortment of innovation and leading designs in appliances to help customers improve and maintain their homes,” said Craig Webber, Lowe’s merchandising VP.

Added Chris Jung, home appliances president of LG Electronics USA: “As a retailer that recognizes the value of innovation and shares a commitment to energyefficient product offerings, Lowe’s is a perfect fit for LG home appliances. Through our new alliance with Lowe’s, even more consumers looking for innovative and attractive appliances will be able to find LG for their homes.”

LG, which initially sold entry-level majaps in the U.S. under the Goldstar brand, introduced its first premium namesake products here in 2001, including washers with direct-drive motors and refrigerators with linear compressors for improved reliability, performance and efficiency.

LG has been a fixture at Home Depot since 2005, the same year that Lowe’s began carrying Samsung appliances.