Remember when the kitchen was for cooking and we entertained family and friends in the living room and dining room? Well, not anymore.
Market conditions bear it out: the kitchen is becoming the primary gathering space for American families. Those households that may have spent six figures on a custom home theater setup in the ‘80s are now pumping that money into improving their kitchens and outdoor spaces instead. And most of the action is on the high-end appliance side.
The renaissance of the kitchen has reached a perfect storm of favorable macroeconomics, a vibrant retail scene and the rapid rise of the connected home.
According to the U.S. Government, housing starts are at a 6-year high, as is consumer confidence and intent to spend. According to the National Association of Builders, retrofits and remodels with tickets over five figures are also the highest since the Great Recession. While U.S. families are spending less on luxuries like vacations, new cars or new wardrobes, spending on upgrades to the home are soaring.
“There is no better investment for a homeowner than an upgrade to a kitchen or outdoor entertaining space,” said Suzanne Chiefa, a leading Century 21 realtor in Central New Jersey. “More and more homeowners are tearing down walls between their kitchens and living rooms, creating large, open, airy entertainment spaces that are instantly attractive to perspective home buyers.”
The statistics underscore the point. The major appliance industry got off to a solid start in the new year, with more than 6 percent growth year over year so far in 2017, according to the Association of Home Appliance Manufacturers (AHAM), with growth in every single category the group tracks.
Another trend: online sales of major appliances grew (a lot) last year. According to The NPD Group, consumers spent $4 billion on majap purchases online in 2016, a 38 percent increase vs. 2015. Every category saw growth, with refrigerators increasing 40 percent and ovens rocketing 69 percent.
Peak holiday promos had a significant effect on the sales, with 9 percent of the year’s increase stemming from the weeks containing Black Friday and Cyber Monday, the market research firm said. Consumers spent about 8 percent more during these weeks than they do the rest of the year, NPD said, noting that this trend is only growing stronger each year: Sales during last year’s Black Friday and Cyber Monday weeks were 37 percent higher than the comparable 2015 period.
Other 2016 sales spikes for major appliances were found in the holiday weeks of Memorial Day, Independence Day and Labor Day.
A good chunk of the significant growth in major appliances sales is coming from independent retailers.
According to Nationwide Marketing Group (NMG) senior executive Patrick Maloney, “The industry was up about 5.5 percent in 2016 and we expect the same in ‘17 and ‘18.” NMG’s leadership also sees more opportunity with new initiatives in outdoor lifestyle, which the group calls “cooking, heating and seating.”
Finally, another contributing factor to the in-home renaissance is the growth of smart-home adoption. According to Parks Associates, 19 percent of U.S. broadband households plan to buy a smart major appliance in the next 12 months.
On that front, as the appliance industry continues its push into smart home, vendors are increasingly looking to the voice-control ecosystems of Amazon and Google to help extend their beachheads. High-end brands such as Jenn-Air are linking control of their cooking appliances to Alexa and Google Home control. Appliance owners will be able to control such functions as preheating and timers, and change temperatures and cooking modes, via voice commands over the home’s Wi-Fi network.
The trend is clear, selling major appliances is clearly an investment worth pursuing for stores large and small.