In a keynote address at the Nationwide Marketing Group's recent PrimeTime! convention here, Jim Campbell, president/CEO of GE Consumer & Industrial, urged white-goods dealers to consider the following Top 10 mega-trends in major appliances, and to plan their businesses accordingly.
1. Shifting purchasing patterns. Baby boomers are hitting their peak earning years now, Campbell noted, but will the next generation spend as freely?
2. Market polarization. The high and low ends of the market continue to grow as the midrange collapses. Indeed, 47 percent of industry sales fell within the premium segment last year, Campbell said, followed by the low end at 32 percent and the once-dominant middle at 21 percent.
3. Distribution shifts. The home improvement channel is growing (from a 22.6 percent majap share in 2004 to 25.5 percent in 2005); Sears is slowing (falling from 37.2 percent, to 34.2 percent, over the same period); and the independents — with an essentially flat but dominant 40.3 percent share — are holding their own, he said.
4. Globalization. The market share of global brands in the United States has grown from 0.5 percent in 2001 to 4.2 percent in 2005. Meanwhile, U.S. companies are moving production offshore in order serve the growing low-end market, making China and possibly Mexico major forces in white goods manufacturing.
5. Rising raw materials costs. Short-term fluctuations aside, cost pressures will continue to rise over the foreseeable future as China and India industrialize. To underscore the point, Campbell noted that 25 percent of the world's cement is now imported by China.
6. Compelling design. Manufacturers are placing more focus on design and feature sets to differentiate their products and “get out of the commodity trap.”
7. Energy efficiency. Energy-efficient appliances will become increasingly important as natural resources dwindle. Case in point: water. Only about 60 percent of the world's population will have sufficient access to water by 2030, Campbell noted, down from 90 percent today.
8. Mergers. Acquisitions and alliances on the retailer and manufacturer sides will have “very profound impacts” on the industry, Campbell predicted.
9. The Internet. “It's a powerful, powerful tool,” he noted, and its usage by consumers actually leads to more shopping at brick-and-mortar stores, studies show.
10. Changing customer base. Whites, compared to non-whites, are now a minority in the United States, and dealers should be ready to serve the ethnic marketplace.