LAS VEGAS — Electrolux is riding on a head of steam, and not just from its steam-cleaning laundry products.
North American sales and operating income are up sharply this year and last, as the company benefits from an improving housing market, increased marketing spend, a mix shift to more premium SKUs, new domestic manufacturing capacity, its entry into Home Depot, and a slew of new product introductions across all price segments and distribution channels.
TWICE caught up with Jack Truong, president/CEO of Electrolux Major Appliances North America, at the recent BrandSource buying group show, here. Now entering his third year at the helm, the former chemical engineer shared his thoughts on the U.S. majap market and Electrolux’s place in the appliance pantheon.
TWICE: Digital technology is playing a greater role in major appliances. Does that give CE stalwarts LG and Samsung an advantage?
Jack Truong, Electrolux: Electronics alone are not a true benefit unless they provide a feature that serves a true need. The iPhone, for example, is truly benefit driven.
We are a manufacturer but we are also a consumer marketing company. Our job is to understand the true and unarticulated needs of consumers in order to provide benefit-driven innovation vs. technology-driven innovation. We have invested in technology to improve quality and service, shorten the product cycle, and bring our pro kitchen and commercial laundry innovations to retail for consumers.
TWICE: How have the new Wi-Fi-controlled appliances fared?
Truong: Beyond the early adopters, acceptance has been slow. It’s a new behavior, and you have to build a level of trust with consumers when they’re turning on a dishwasher away from home. It will take time to change behaviors but ultimately we aim to simplify consumers’ lives so they can spend more time with their families.
TWICE: Will rising mortgage rates short-circuit the majap industry’s revival?
Truong: When mortgage rates go up, fewer people buy new homes — that’s when you have churn in the appliance industry. Short term, lots of people want to buy homes now, before rates go up further, although further rate hikes could curtail business.
TWICE: Where are the growth opportunities?
Truong: The builders’ channel only represents 15 percent of shipments, but it’s up double-digits, compared to a low- to mid-single-digit increase for the retail channel. So even though the big numbers are from retail, there’s very good growth on the builders side, and we will grow that business by leveraging our U.S. factories and distribution infrastructure to deliver a full line of products to the job site.
TWICE: Frigidaire has long been a favorite of independent dealers. Was there any push-back from the channel when you extended distribution to The Home Depot last year?
Truong: Our role as a consumer-driven company is to provide different brands that will provide our channel partners with different solutions. For example, we developed a 30-SKU Frigidaire assortment that’s exclusive to independent dealers which will ship late in the third quarter.
Frigidaire has always been a mass brand, although Frigidaire Professional and Frigidaire Gallery have done a very nice job of bringing innovation to the industry. Independent dealers tend to skew toward the mass premium segment, represented by Electrolux, and Electrolux Icon is our premium brand.
Together they form a continuum for the consumer, whom we hope to capture right out of college at the entry level.
That said, independent dealers are the backbone of the U.S. market. There are thousands of dealers in nooks and crannies across the country, and they are very, very important because the successful ones know the consumer they serve, they know how to provide value, and they create and expand jobs in local communities.
We want our brands to resonate across large groups of consumers to attract more customers, but there’s a balance between volume and quality of service. Big-box retailers provide customers convenience and dealers are adept at the upsell.
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