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Whirlpool’s Bitzer: Bumpy Road Ahead

On Jan. 1 Marc Bitzer, formerly head of Whirlpool’s U.S. operations, became president of the No. 1 appliance manufacturer’s North American business unit.

Bitzer assumes the corner office following three of the toughest years on record for the housing and majap markets, and just as the U.S. is beginning to claw its way out of recession. While his long-term outlook is bullish, as evidenced by a major investment in new appliance platforms and smart-grid-enabled products, he said business in the new year will likely be volatile.

Bitzer’s coming-out party, as it were, was last week’s International Builders’ Show (IBS), here, where he spearheaded the first wave of a massive, multi-brand product launch planned for the first half of the year. In a chat with TWICE on the eve of IBS, the new president shared his take on Whirlpool and the industry it plays in. Excerpts of the interview follow:

TWICE: First let’s go back a bit, to Black Friday. It turned out to be a big day for appliances.

Bitzer: Yes, it was more significant for the industry overall than in past years.

I think it is appropriate that the appliance industry participates in Black Friday. It generated increases and showed that there is a lot of pent-up consumer demand, which is encouraging. People came back for the right opportunity.

The key challenge, though, is how to tap into that during non-promotional periods. You have to present a product proposition that combines value with technological innovation and energy savings.

TWICE:Were margins challenged on Black Friday?

Bitzer: No one expects margins to be high on Black Friday. It’s a promotional period, an opportunity to phase out product, and everyone has to make their own tactical assessment. You need to be smart about it.

TWICE:Will Whirlpool reprise its Black Friday promotional strategy in November?

Bitzer: That will be determined during the May through June period, based on the sales environment at that time.

TWICE:Was Black Friday successful in cleaning out older inventory?

Bitzer: Right now there’s not a lot of inventory on the retail side, no excessive inventories. That’s good in terms of clearing the way for new product, but when demand goes up, you’ve got to be ready.

TWICE:How has demand been, post-holiday season?

Bitzer: I think the market will remain very volatile, very bumpy, with some weeks up and some weeks down.

That will require us to remain flexible internally. We’ve learned a lot about being more flexible in our supply chain, and need to be responsive to demand channels. Just adding inventory isn’t enough. It’s like being stuck in stop-and-go traffic — you need to be ready with both pedals.

TWICE:Earlier this month Bernie’s filed for bankruptcy, and some fear there will be additional consolidation within the independent dealer channel. What is your outlook for independent dealers, and what role do they play in Whirlpool’s go-to-market strategy?

Bitzer: The independent retailer plays a key role, particularly in those regions where they have a strong market position.

We have been monitoring the health of this channel, and despite the tough environment, most did fairly well and the number of bankruptcies was surprisingly low. Independent dealers have managed to cut back their costs and have found good business models that will enable them to survive.

We continue to watch the channel very closely, and are not any more nervous about it structurally than we were a year ago. We continue to support our independent dealers with some channel-specific SKUs and a full line of innovative products.

TWICE:Are you expecting a big boost from the Department of Energy’s rebate program?

Bitzer: While I am highly appreciative of the government’s intentions, the amount of the funding and the state-by-state implementation will dilute the impact of the program, and we will not get the same lift as the auto industry did from “cash-for-clunkers.”

TWICE:Whirlpool is maintaining a higher profile at IBS this year. Why?

Bitzer: We want to demonstrate our long-term commitment to the builder channel and to the industry. Even though we are watching our costs, we did not scale back our capital investment in new products, and have brought forward more innovation than past years. In fact, what we’re showing at IBS is only the first wave of a massive amount of new product we’re introducing this year. The beginning of the big wave will come in April and May.