GE's Campbell: Smart Appliances Will Resuscitate Majap Biz

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— A new generation of smart appliances that can save consumers money by communicating with and reacting to the energy grid will help raise price points and restore margin within the majap industry.

That’s the good news.

The bad news, according to Jim Campbell, president/CEO of GE Apliances & Lighting, is that the scenario won’t begin to play out for another one to two years, as the economy continues to dig itself out of the recessionary hole.

In the meantime, independent dealer need to trade down their merchandise mix in order to remain competitive with national big-box chains.

“Our message had been to step up the mix, but the reality now with these large promotional events is that you have to play to be in the game,” Campbell said during a town hall address at this month’s Brand Source convention in Las Vegas. “If you lose shoppers, they won’t come back [and] you will lose to the big-box guys.”

GE has helped independent dealers compete in part by bringing some of its premium GE Profile models down to the mid-price tier and by providing “great Labor Day specials,” he said.

While consumer confidence is up from a year ago, shoppers have continued to cut back on spending and are increasingly selective about trading up, Campbell observed. “People are just replacing products with comparable models. They’re not really ready to make the step-up unless we give them a compelling reason,” such as better results or a new technology with an apparent benefit, as is the case with iPad or smart appliances.

Indeed, “green” still resonates with consumers, who are willing to pay a premium for energy-efficient appliances, making that category an important focus and opportunity for the industry.

Nevertheless, high unemployment and the ailing housing market have prolonged the recession, and GE now foresees “a very, very slow recovery for appliances. It could be a year or two before we see significant improvement.”

While the back-half of 2010 remains cloudy, GE is projecting industry growth of 5.4 percent this year, compared with an 8.2 percent decline in 2009, due to “the enormous impact” of the “cash-for-appliances” rebates. The federally funded program sent industry sales soaring 10 percent before flattening or falling, he said, while sales are expected to grow about 3 percent next year.

“We’re looking at a slow, gradual climb rather than a snap-back” typical of past recoveries.

Campbell’s advice: “We need to challenge ourselves every day to improve. Secret shop your store, access your operations critically, and change your business operation.

“You can’t let one sale walk out the door,” he concluded. “Consumers want to feel they got a deal, a bargain. Do that and you’ll close the sale.”


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