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issue: January 2003 APPLIANCE Magazine

2003 Association Forecasts: International Housewares Association
IHA: Low Interest Rates Help Boost Housewares as Consumers Continue to Cocoon


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by Phil Brandl, president

According to a survey of International Housewares Association member key executives in the housewares industry, U.S. housewares sales stood up solidly through most of the third quarter, despite softness in the U. S. and other world economies. Looking forward, we see continuing growth based largely on two factors: low interest rates continue to bode well for both home sales and furnishings, and regardless of what one calls it, "cocooning," "nesting," or "just hanging around the house," consumers are looking to the home as a reassuring haven.

The U.S. housewares industry had entered 2002 on a strong note. Industry sales at U.S. retail rose to U.S. $75.3 billion in 2001, up from $69.5 billion in 2000. More encouragingly, the average sales growth on housewares over the last 5 years topped 7 percent per year according to the IHA's 2002 State of the Industry Report.

As we look toward the 2003 International Housewares Show, January 12-14 in Chicago , IL , U.S. , our attendees expect that the world's consumers, led by the irrepressible U.S. consumer, will continue to focus spending priorities on products for the home.

Early indications are that show attendance by U.S. and world retailers will reach record levels and the number of exhibitors will remain above 1,700, comparable to the previous show. In fact, we are pleased that more than 25 exhibitors who elected to sit out the 2002 show are returning in 2003.

The Executive Point of View

From the point of view of industry executives, 2002 has posed unique challenges.

"These times seem a bit uncertain, especially for the holiday season, but I don't think anything's changed about the nesting phenomenon," said Linda Graebner, president/CEO of Tilia, Inc., San Francisco, CA, U.S. "As consumers see their portfolios shrink, they're probably going to be inclined to nest more - which puts them in the kitchen and buying kitchen products. My expectation is that they'll go back to the tried and true, the brands they know, convenient products like ours (vacuum packaging systems) that save them money. They won't go for the faddish sorts of things."

While Mark Bissell, president and CEO of BISSELL, Inc., Grand Rapids , MI , U.S. , believes that the overall economy is "tough" for everyone - with no second half recovery visible - he sees a lot of opportunities. "The market in our industry is very dynamic," he said. "Just the fact that we have some new players coming in, which we haven't had for a while, is interesting. It's just not the same old business anymore. Product life cycles are short. You have to make your money quickly and move on to the next item. The retailer concentration going on also is a trend, and that's accelerated. The big box stores are dominating our business today."

Matt Andis, president of Andis Company, Racine , WI , U.S. , is looking for slight increases in volume through the second half of 2002. "We've had a very strong first part of the year, and things will probably not be quite as strong in the fourth quarter, but we're ready to count this year as a success," he said. "Our line is selling well across the board pretty much, but it's not what we'd expected. It's the lower end showing the strength you would expect in a bad economy, but people are still tending toward quality. So the upper end seems to be growing, and while the lower end is holding up, the middle price ranges have been hurt more."

Business Climate, Dock Strike Have Impact

According to a key housewares industry watcher one strong point in the economy is homegoods. "Housewares and especially electronics, are doing well," said Ira Kalish, chief economist for Retail Forward, a management consulting, market research, and executive development firm. "These categories are being positively affected by the strength of the housing market. The decline in short term interest rates has translated to an increase in discretionary dollars that is stimulating home buying and products related to the home."

As the industry heads into 2003 there will be new challenges, as well as lingering ones, such as the West Coast dock strike - which Mark Bissell observed, "showed how the world has become a global economy, how sensitive it is and how it doesn't take much to disrupt it."

"The strike has more major implications and has created a far ranging cause and effect on the total distribution system," said David Sabin, chairman of Salton Inc., Lake Forest , IL , U.S. "There is a constant flow of traffic over the ocean between our country and our trading partners. Closing down the ports is like shutting down the New Jersey turnpike. There is a huge cause and effect that has been created. Limited vessel space, limited containers, limited equipment to move containers, lack of warehousing at factories and a major period for Fall shipments, all add up to another struggle for both the vendor and retailer."

After meeting these challenges, the housewares industry is well positioned to continue the 7-percent average annual growth it has experienced over the last 5 years. With the consumer at home more often, a creative home and housewares products industry will be the beneficiary.

 

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