What’s been the biggest boon to appliance retailers this past year?
You’re probably thinking income growth, job gains, tax cuts, or promotion and pricing. Well, those are probably contributing factors to another good year for appliance retail sales. But where did $1.9 billion worth of business come from? It didn’t come from any of those.
If you guessed the Sears business, plus the exit of hhgregg, you’re correct. Sears and hhgregg provided retailers with a huge slice of the 2017 market to gobble up. Between 2016 and 2017, Sears, and its prodigal child Sears Hometown Stores, have given up close to $1 billion in appliance sales. Add in another $950 million from gregg and you get a sense of the size of the opportunity for remaining retailers.
Where did that $1.9 billion of appliances go in 2017? If you guessed the Big Three of Lowe’s, The Home Depot and Best Buy, you’d be partially correct. Estimates indicate that more than half of that $1.9 billion went to the majap troika, with the remainder picked up by local and regional retailers. And yes, location matters, and not all Sears and gregg business was absorbed, due to many factors (although clearly Sears is not making any changes that would help them keep their fair share).
In fact, market share estimates of the combined Sears businesses show them to be below 20 percent on a dollar basis. For a retailer that pretty much owned the appliance retail market a few years ago with a close to 40 percent market share, that’s sad.
Sears has been driving appliance retailers to greater growth than consumers and manufacturers could on their own. There’s close to another $4 billion left to pick up and no signs of a tourniquet for the bleeding, which means the company will continue to be classified under the adage of “The gift that keeps on giving.”
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Bob Tancula is a principal of Senex, a Louisville, Ky.-based industry research and analysis firm founded in 2016 to provide greater clarity into markets, and opportunities for entities involved in product development, mergers and acquisitions, retailing, and product design. Tancula has helped compile the TWICE retail rankings since 2006.
