2017 was another dynamite year for the white-goods business, but you wouldn’t know it looking at the TWICE Top 50 Major Appliance Retailers Report.
Despite stunning double-digit sales gains by dealers large and small, the cumulative sell-through of our Top 50 appliance retailers — which represent better than 90 percent of all U.S. majap sales at retail — was blunted by a bloodletting at three top 10 chains.
But first to the numbers: Total appliance sales for the country’s 50 largest white-goods dealers rose a modest 2.3 percent last year, to a record $28.7 billion. The results represent a retreat from the industry’s more typical 4 percent increase, reported for 2016, and a rare recent instance where sales growth in majaps actually trailed that of consumer electronics (up 3.3 percent, according to TWICE’s latest Top 100 CE Retailers Reports, released last month).
So what happened? In a word, Sears, the once unquestioned queen of appliances, whose well-documented challenges stymied the Top 50 sales totals. Reflective of its woes, sales of the company’s core category fell 19 percent last year, to $3 billion, as nearly 150 stores closed and over $700 million in majap revenue was shed.
As a result, Sears dropped another peg in the rankings, to fourth place, allowing Best Buy to rise to No. 3. The process could accelerate even faster now that Sears chairman/CEO Eddie Lampert is actively working to acquire Kenmore, the company’s private-label jewel in the crown.
Also tamping down Top 50 growth was Sears’ Hometown and Outlet Stores spin-off (No. 5), the closest thing to a national appliance specialty chain, which saw its white-goods sales sink 15.5 percent last year, to $1.3 billion.
Missing from the rankings but still making an impact is hhgregg, which shut its doors one year ago last week. Even in its death throes the chain accounted for nearly $1 billion in appliance sales, placing it at No. 7 on last year’s charts. But as we learned from the electrical fire that was Circuit City, when big ships sink their treasure is never fully recovered, and some degree of gregg’s retail market share is simply gone.
Other pain points included Sears’ sister chain Kmart (No. 39), and Pirch, the high-flying luxury bath and appliance palace that fell from grace (and last year’s 18th-place ranking) in a retrenchment that shuttered more than half its stores and landed it at No. 35.
But those were truly the exceptions in a year that otherwise rewarded merchants for their investment in the appliance business. With the economy growing, job market stabilizing, stock market soaring, housing market re-heating and Sears ceding share, most Top 50 players found themselves in the plus column last year, with some, like Costco (No. 9), downright on fire.
The leading warehouse club leaped into the top 10 with a 28 percent sales surge, to $347 million, fueled by its first cogent appliance presentation in this member’s memory: an array of compact branded displays for kitchen and laundry products by Whirlpool, Samsung, LG and GE.
Costco was bested in sales growth only by the Army-Air Force Exchange (rebranded simply as Exchange), which entered the Top 50 arena at No. 48 on a 29 percent revenue rush.
But sometimes a strong macroeconomic backdrop can be a mixed blessing. Mike Heintz, co-principal at University Electric Home Appliance Center in Santa Clara, Calif. (one up from Exchange at No. 49), reported that a blazing hot real estate market in the Bay Area bogged down deliveries as customers waited on backlogged contractors to remodel their kitchens. And a spate of bad weather aside, University was also impacted by “exploding” housing prices, which forced new homeowners to put appliances on the back burner.
Meanwhile, at the other end of the retail spectrum, Lowe’s maintained its first-place ranking with a comfortable billion-dollar cushion between it and No. 2 The Home Depot, although the latter outpaced its rival in sales growth, 11 percent vs. 8 percent.
But here’s the real kicker: Lowe’s, Home Depot, Best Buy and the two Sears entities — the majap top five — together command nearly 76 percent of all Top 50 majap dollars, while the two home improvement chains alone accounted for nearly half (49.6 percent) of the home appliance pie.