With hot weather boosting air conditioner sales and first-half results looking better than expected, appliance manufacturers at the recent annual AHAM meeting in Washington, D.C., were upbeat about the rest of this year.
A number of high-level executives there told TWICE their personal predictions for 1999 white-goods volume have been revised upward. And shortly before the conference began, the Association of Home Appliance Manufacturers released a new ’99 industry forecast, calling for a 4.9% increase in manufacturers’ shipments for the year – quite a change from the virtually flat forecast issued in January.
An underlying theme of the AHAM meeting was change – both immediate, as in the association’s official move this month to a D.C. headquarters under new president Joe McGuire, and contemplated, as in talks about revitalizing AHAM’s value to its manufacturer members.
Executives, such as Maytag Appliances president Bill Beer, also called on the association and fellow suppliers to keep pace with the changing dynamics of the industry in general and consumer buying patterns in particular. “We need to move from a ‘wear-out’ consumer mind set to a ‘want-in’ attitude,” Beer said, “by giving the customer a compelling reason to buy appliances” through product innovation.
“If we as an industry do the same thing over and over again, we shouldn’t expect different results,” he continued. “The way we’ll accelerate the replacement cycle is with compelling products and compelling features. We have to get closer to consumers and understand not just how they use our appliances, but how they live their lives. We need to give people a reason to buy a new appliance even though they have one at home that works, by promoting our products in compelling and new ways.”
He also suggested that AHAM might be strengthened by bringing a stronger retail presence to the association and the industry, by obtaining retail sales data to link with the manufacturers’ shipment statistics, or by establishing a retail council as part of AHAM.
Like other execs at the meeting, Beer said he was pleased with the way first-half sales were wrapping up. Maytag has already boosted production of its new twin-oven Gemini range, which the company started shipping in mid-June, and the Neptune washer continues to be strong. “The first half of 1999 looks like another record half for us,” he said, “and the second quarter was the sixth record quarter in a row.”
Overall, Beer predicted an industry sales increase of 4% to 5% for the year, “and that’s being conservative.”
John Kelly, sales and marketing VP for Sharp Electronics’ appliance division, also was bullish on current sales trends. “Our business was very strong in the first half, especially in microwave ovens and, late in the half, in air conditioners,” he said, adding that Sharp had sold out its entire supply of room air units for this season by late June.
“Microwaves are enjoying tremendous growth, especially over-the-range models,” Kelly said. “We’re anticipating a double-digit increase in appliance sales for the first half.”
Also looking for a double-digit first-half sales gain was Dave Becker, VP of product management for Viking Range. “We’ve seen a lot of strength in cooking appliances,” Becker said. “A big part of that is coming from the growth in home remodeling, which is giving a big boost to sales of replacement appliances.”
With a June heat wave in the Northeast already bringing AC reorders from retailers in that area, Friedrich Air Conditioning marketing VP Brian Campbell was equally positive at the AHAM meeting. “Retail sales through June seemed to be off to a good start, and we’re forecasting a strong year for air conditioner sales,” Campbell said. “I’m very optimistic about the year. The pipelines were clean going into the system, so shipments will definitely be up, and the rest of the summer looks good.”
During the meeting, AHAM chairman Mike Todman, senior VP of sales and marketing for Whirlpool Appliances, noted the changes the organization is going through – beginning with the selection of McGuire to succeed longtime AHAM president Bob Holding after Holding declined to move to Washington when the association relocated. (Holding received an AHAM lifetime achievement award at the meeting’s closing banquet.)
Like Beer, Todman talked of the need to enhance consumers’ perception of the major appliance industry. “Our challenge is to better explain to consumers the value and role appliances play in their lives,” he said. “We also need to increase this industry’s share of the wallets and minds of consumers, and to make it fashionable to replace appliances more frequently.”
Todman added, “We need to ask, ‘Who trained these consumers to wait to buy until their current appliance breaks?’ We did, and now we have to train them to buy our latest and greatest.”