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Brand Source Exec Says Majap Outlook Improving

LAS VEGAS — Brand Source sees light at the end of the white-goods tunnel.

John White, major appliance VP for the $11 billion buying organization, outlined several factors that bode well for majaps in an address to members during the group’s summer convention here last month.

Despite the prolonged majap malaise, sales are generally improving, White said, particularly within the retail channel which is now close to flat. In contrast, it is the home builder business, along with the cooking and dishwasher categories, that continue to absorb the biggest body blows.

What’s more, despite the decline in year-over-year sales (see below), 2008 will likely prove to be a top 10 year for appliance volume, he said, with laundry outperforming all other categories.

White also anticipates that the shortened life cycle of major appliance products will help drive increased replacement sales. The era of 10- or 20-year-old appliances has ended as manufacturers, starting in 2000, were forced to use more plastic parts and cut manufacturing costs to absorb increases in the price of raw materials and, more recently, energy. Average appliance life cycles will now range from five to six years, he said, which will create new sales opportunities for dealers.

Another change he foresees is the shift to online shopping for white goods. Currently, about 4 percent to 5 percent of majaps are purchased online, although that figure is expected to rise to 30 percent by 2012 as Generation Y shoppers, who are accustomed to e-commerce, enter their prime earning years.

To help capture that demographic, Brand Source has beefed up its consumer Web site (see TWICE, Sept. 3, p.1) and will begin shifting its print-ad expenditures online.

Still, the group promises “more aggressive” promotional inserts next year to counter big-box circulars, which tend to focus on holiday weekends. Sears only generates volume during its 10-percent- and 15-percent-off weekend promotions, White said, and Brand Source is prepared to go off map by printing how much consumers will save on select products rather than printing their price.