Electrolux North America and its CEO Jack Truong are having a particularly good year, with earnings rising 11 percent in the third quarter.
While a great deal of this can be attributed to the improving housing market, no small measure of credit has to be given to Truong, who has spent his short tenure at the top boosting the presence and resilience of the world’s No. 2 major appliance vendor.
Truong, who entered his current position in July 2011, said Electrolux’s excellent performance this year is the end result of several previously implemented programs coming to fruition.
The changes run the gamut from improving product quality, adding new retailers and trying to entice people to upgrade their appliances even when that device is working fine.
Truong said the company has spent the last two years boosting quality, which includes now constructing about 90 percent of its core products in the United States. In addition, the company has launched TV, print and online branding campaigns for its Electrolux and Frigidaire lines.
2013 is also the first full year that Electrolux products were available in Home Depot, giving the company a presence across all retail outlets, Truong said. The company also sells its line to home improvement rival Lowe’s.
“The key is not just being present in the store, but to understand the consumer needs for each of our retail outlet types,” he said.
With that said, Truong noted the need for the independent major appliance dealer has not weakened. He cited the independent’s ability to follow the sale all the way from initial customer contact, to sale, to installation and finally to servicing the device.
“The key here is they know their customers better than anyone else and have a broad selection,” Truong said, adding that “60 percent of appliance buyers have to replace a broken appliance. The most important thing is can the retailer deliver it to the home within 48 hours?”
The ability to quickly and directly handle consumer problems is what enabled the independent appliance dealer to survive when the vast majority of small mom-and-pop computer and consumer electronics dealers have fallen by the wayside, Truong said, adding that CE and computer products are “wants” and not a “need.”
“When your refrigerator breaks, you get it replaced, and the consumer needs the major appliance dealer’s expertise with appliances, and it is hard for a national to give that hands on approach.”
Over and above the policies put into operation at the company level, Truong credited the improving housing market for Electrolux’s improved numbers. The company in North America saw its profits rise 11 percent to $86 million on revenues of $1.3 billion, an 8 percent jump in the just-completed third quarter.
New-home construction and rising home prices mean people will turn over their homes, which leads to more appliances being purchased by either the seller or buyer, Truong said.
“When a consumer is buying a new home, they go right to the kitchen,” Truong said, adding that new appliances can help boost a home’s value in the eye of the buyer.
There is also a pent-up demand from people looking to replace their old appliances.
Truong predicted that all these factors should lead to a 9 percent annual growth going forward. The company will also be taking several proactive measures to help boost sales and take advantage of people looking to upgrade their appliances, particularly in the kitchen.
“Traditionally appliances have always been functional and not for entertainment, but cooking products are the heart of the home, and that is due for a big push due to the replacement cycle,” Truong said.
The goal is to be more like the automotive market, which convinces people it’s worth spending money to upgrade to a newer and more exciting model, he said.
Electrolux hopes to make hay on the incredible popularity of cooking and entertaining at home that is driven by the myriad TV shows and networks on the topic.
To accomplish this, Electrolux plans to utilize its professional division. Truong said it will take technologies developed for commercial kitchens and push them down to the consumer level. This is being tied to a recent TV campaign that will deliverer a lifestyle-oriented message.
To this end, next year Electrolux will offer cooking products that are more stylish, with curved lines and an overall trendy look, rather than just a rectangular box. Truong said.
Furthermore, the company will not ignore the technology inside. Electrolux has been adding wireless connectivity capability to its models for some time now, and this will continue; however, Truong added it will be done in a very deliberate manner.
“We have to figure how to convey the right benefit of this to the consumer. For example, with air conditioning we can say it can be turned on before you get home, there can be programmable dishwashers that can be set to run when utility prices are lower,” Truong said.
“This [connectivity] is going to happen. Everything will be tied in,” he said.