Retailers have often compared major appliances to the bond portion of a portfolio: No dizzying gains, like those afforded by stocks or consumer electronics in a hot market, but no steep declines in a downturn.
True to form, major appliances delivered the goods in 2002. Despite a brutal retail environment, the nation's 100 largest white goods dealers, as identified by TWICE, enjoyed a nearly double-digit hike in their major appliance businesses last year.
Although the 9.9-percent increase, to $15.8 billion, trails 2001's 14 percent spoils, majap sales still outpaced consumer electronics, which provided a slimmer 6.2 percent payoff to that category's 100 top dealers.
However, most of majaps' growth last year came from the home improvement channel. The sector, led respectively by the second and third largest appliance dealers in the land, Lowe's and The Home Depot, enjoyed a 15.7 percent spike in Top 100 market share, to 29.5 percent of sales, while every other channel was either flat or declined.
This didn't bode well for Best Buy , which falls to fourth place from third, nor No. 1 appliance retailer Sears. Although the industry's 500-pound gorilla retained its top perch, and still generated nearly three times as much majap revenue as Lowe's, Sears conceded market share for the first time amid last year's internal and external challenges.
Hamstringing Sears' appliance sales was an overhaul of the company's full-line stores, a weak retail scene and a decline in traffic at shopping malls, where many of its units are located.
At the same time, Lowe's mounted an aggressive store build-out that brought it into new markets, and both it and Home Depot continued to make majaps a key focus of their merchandise mix.
Through it all, Sears managed to edge appliance sales up 2 percent last year, which it deemed "a respectable increase in a difficult sales environment."
This year, VP/general manager Tina Settecase intends to reassert Sears' dominance by adding more real estate and SKUs, re-emphasizing value products through new marketing and signage, offering more take-with product on the sales floor, and testing majaps in Sears Hardware stores.
Nevertheless, analysts fear that Sears' white goods woes will be compounded by the sale of its credit business, whose lenient terms made big-ticket purchases possible for many of its customers.
Meanwhile, Lowe's continues to wield its wide selection, female-friendly mega-stores and occasionally mercenary pricing to good effect. Although time is running out on its overly ambitious goal of surpassing Sears in appliance sales by 2005, it nonetheless grew that business 24.2 percent in 2002.
Latecomer Home Depot, which only entered the category in a meaningful way in 1999, has been making up for lost time. Its new appliance showrooms, located adjacent to its kitchen design departments, are twice as big (upwards of 1,500 square feet) and pack twice the products (approximately 150 SKUs) of the original presentations. The expanded set is now in more than half of Depot's nearly 1,400 locations, where it has helped boost white goods business an average of 45 percent per store, and will be rolled out virtually chain-wide by year's end.
Also feeling the heat of the home channel is Best Buy, which is still struggling to find the right formula to right its ailing appliance business. Despite successive monthly negative comps, a sales decline of nearly 6 percent for the year, and incessant rumors that it will follow Circuit City's lead and jettison majaps, the company says it remains committed to the category, which represents 5 percent of its total sales and about 11 percent of its floor space.
Its latest strategy has been to alter the playing field by introducing alternative Asian brands, notably LG, Samsung and Haier, while exploring Gen Y opportunities with a forthcoming line of youth-oriented white goods from Whirlpool. Whether newly named chief merchant Ron Boire, who left Sony this month to succeed Mike London, will continue on that tack and ultimately turn the business around remains to be seen.Rounding out the Top Five is Costco, whose omission from prior year rankings was, quite frankly, an oversight. Led by its Whirlpool-made Kirkland kitchen and laundry appliances and buoyed by microwave ovens and room air, the warehouse club sold an estimated $646 million in majaps last year, which was 12.7 percent more than in 2001.
Majap Sales By Retail Channel
|Store Type (a)||Estimated MAJAP Sales (b) in millions 2002||Estimated MAJAP Sales (b in millions Revised 2001)||Percentage Change '01-02|
|Total Mass Merchants||$6,040||$5,923||1.9%|
|Total Home Improvement Centers||4,644||3,657||27.0|
|Total Electronics/Appliance stores/ Multi-Region||1,400||1,384||1.2|
|Total Electronics/Appliance stores/ Regional||1,296||1,185||9.4|
|Total Electronics/Appliance stores/One Market||1,029||973||5.8|
|Total Warehouse Clubs||858||769||11.6|
|Total Home Furnishing Stores||351||320||9.7|
|Total Department Store||54||53||1.9|
|Total Catalog Showrooms||4||4||0.0|
|(a) Store type classifications were developed jointly by TWICE and the Consumer Electronics Association.|
|(b) All sales information, except for that supplied by publicly held companies that break out line-of-business sales for major appliances, is based on TWICE Market Research estimates.Source: TWICE Market Research ©TWICE 2003|