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issue: January 2008 APPLIANCE Magazine

International Housewares Association Editorial
Small Appliance Market Will Stay Strong


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by Phil Brandl, president, International Housewares Association (IHA)

We’re all familiar with the slowdown in a housing market that was white hot until recently. The question is how that and other economic factors in play right now will impact the small appliance sector of the housewares industry.

Phil Brandl

The good news is, in part, a history lesson. Time has shown us that when growth of the U.S. economy slows, consumer spending on housewares remains steady. We tend to stay home as we tighten our belts, and in those times consumers still purchase home goods. As long as consumers live in houses, they will see the need to fill them with modern, convenient appliances that save time and energy. And since the home is their “castle,” they will continue to purchase appliances that add functional capabilities to their kitchens, bathrooms, and other frequently used spaces.

“While the economy will impact their fine-dining frequency, consumers will continue to prepare more gourmet-style meals at home for their friends and family,” says David J. Svec, director of national account sales for KitchenAid Portable Appliances. “Small appliance manufacturers will respond to this by launching more new products and by offering new products within existing, basic, food-preparation categories. Consumers and retailers are trending toward higher-quality and higher-priced kitchen essentials, but have shown themselves to be finicky about new fads in food preparation, many of which have had short shelf lives.”

Housewares industry watchdog Peter Goldman of the NPD Group Inc. also sees resiliency in the industry’s ability to “adapt and evolve with change.” In the Fall 2007 Housewares MarketWatch, Goldman says, “Month-to-month, year-to-year, different factors come into play, either positively or negatively affecting sales performance.”

If the housewares industry were mainly anchored in high-end, extensive remodeling or major home renovation, there would be more reason for concern. An economic retail forecast for home goods to 2011 by consulting firm TNS Retail Forward, for instance, sees choppy waters ahead for building materials, hardware, and garden supply stores. Even in that sector, TNS Retail Forward says, growth will begin to improve in 2008 “as the housing market gradually begins to right itself, credit availability increases, and job and income growth begin to pick up.”

TNS Retail Forward senior consultant Nick McCoy notes that many companies are striving to improve their home products business with innovative strategies that could boost small home appliance sales into 2008. “Given all the efforts across all lines of trade, with emphasis on the home, small appliances will benefit,” he says.

According to the TNS Retail Forward home goods report, any falloff in kitchen and household appliance spending will be also cushioned by replacement buying “amid an aging housing stock.” Heightened competition should also help “restrain category inflation that has flared up recently amid rising commodity prices,” its housewares report said.

Retail Forward forecasts a compound annual growth rate for kitchen and household appliances of 3.5% during 2006–2011, which is lower than the rate of 4.6% for 2001–2006, but considerably higher than the 2.9% rate for 1996–2001. That snapshot underscores the cyclical nature of the housewares market.

Another trend that bodes well for appliance sales: When we surveyed our HIPster Consumer Advisory Council earlier this year, participants made it clear that the addition of an outdoor kitchen is the hottest outdoor home-improvement trend. And two-thirds of the architects, designers, manufacturers, and marketing experts surveyed by National Association of Home Builders (NAHB) this year said outside kitchens would be significant for the upscale home. According to the NAHB survey, outside kitchen features of the upscale home will include: grills (76%), sinks (65%), cooking islands (60%), refrigerators (58%), and beer dispensers/wine coolers (47%).

Shifting product preferences also have an impact on the small appliance market.

“This varies by product category,” says Keith Jaffee, CEO of Focus Products Group LLC and an IHA board member. “What’s going on in coffee, for example, is impacted by the continued development in the single-serve category and new, high-end super espresso machines… Margarita makers [also] proved to be an attractive niche.”

Jaffee agrees that innovation, which many manufacturers have now made a part of their strategic plan, can help offset a sluggish economy and improve the outlook into 2008 and beyond. In part, that’s because consumers are still willing to trade up for innovation and multiple uses that add value along with a higher price tag.

Beginning last year, many appliance manufacturers shifted their focus to full lines that can be coordinated with other appliances and counter space to imbue kitchens with “counter-worthiness.” It’s still too early to know whether the accompanying higher price points were a successful strategy, but if a “lining the nest” mentality indeed takes form given current economic indicators, that concept could hold much potential for appliance makers.

Small appliances, one market under the resilient housewares industry umbrella, will always be in demand, sluggish economy or not. As Goldman notes, it may be that some categories of that market will do better than others for a time due to shifting preferences and changing demands, but every segment of the industry has historically shown an ability to shift and change with the times as well.

We look forward to continued growth in 2008 and to showcasing the designs and innovations that drive that growth at the 2008 International Home + Housewares Show, March 16–18 in Chicago.

 

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