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issue: January 2004 APPLIANCE Magazine

Association Forecasts - International Housewares Association
Design, Innovation, New Technology are Key to 2004 Growth


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by Philip Brandl, president, International Housewares Association

Design, innovation, branding, and new technology are the keys to growth and profitability in today's changing retail environment. Each will be critical as suppliers strive to build product uniqueness and consumer loyalty - and not incidentally, profitability.

That's the consensus among top executives at International Housewares Association (IHA) member companies, but 2004 economic forecasts diverge. "Cautious optimism" is the mood expressed often, but individual forecasts range from "double-digit sales gains" to "a tough, slow-growth year."

For small appliance producers, the first two-thirds of 2003 was "slow" or "stable," but strong holiday sales are expected to boost year-end results. In all fairness, 2003 sales growth was being measured against what IHA's 2003 State of the Industry Report shows as a strong 2002, in which IHA members reported 15.2-percent sales gains on average.

As for 2004, there are a number of questions: Will strong 2003 holiday sales lead consumers to tighten purse strings during the first two quarters of 2004? Will the usual focus on the economy during an election year dampen consumers' urge to spend?

Linda Graebner, president/CEO of Tilia, Inc., observes that, "We have this elusive recovery, but we're not there yet. I am getting a sense from our customers that they're optimistic about a good holiday season, and I think people are cautiously optimistic that we're moving out of the recession into a better economy."

Continued consumer interest in at-home entertaining and purchasing up-to-date household products is encouraging to Ms. Graebner. And, unless interest rates jump, the pace of home buying, remodeling, and refurbishing will continue to stimulate sales of household goods.

Industry Challenges

The sales outlook is more difficult for companies producing mature products and/or lower-priced "commodity" lines, which are affected by mass-merchant-driven reverse auctions. To counter that trend, Matthew L. Andis, president of the Andis Company, thinks the big challenge and opportunity going forward will be to establish and build a company's brand with those same merchandisers.

"The disappearing middle" - the disappearance of mid-priced product lines - also impacts housewares retailers and suppliers.

"In general, there are only two ways the market will go forward," says David Sabin, chairman of Salton, Inc. "Either you're going to be in the commodity, opening price-point business, which will be driven by who's the most efficient at cost, or you're going to have to uptrend with the best item, the best features, the best customer-recognized brand - which allows both vendor and retailer to maximize dollars per square foot."

Mark Bissell, president and CEO of Bissell, tells about retail rebounding at lower price-point levels, but he also sees a lot of higher-priced introductions from names like Dyson and Electrolux. "Retailers and manufacturers realize that chasing the dollar down is not the way to keep our businesses viable," Mr. Bissell says. "Price points have actually moved up some. The challenge is to differentiate your company, to offer a value-added product."

Innovation/Technology

Innovation and technology are differentiating products for personal care electrics manufacturer Andis, which is winding up a strong 2003 and anticipating double-digit sales gains in 2004.

"We're taking new technologies - including digital readouts, ceramics, built-in shock protection - that have been successful in our professional lines and applying them to retail in products such as hair dryers, curling irons, flattening irons, and hair clippers," says Mr. Andis. "This will help move price points upward and increase the brand's value to retailers. It's not easy for consumers to accept higher prices, but as they understand the technology, they will pay for it."

The outlook for 2004 will be bright for manufacturers that continue to innovate. We look forward to sharing the results of their continuing creativity at the 2004 International Home & Housewares Show, March 20-22, at McCormick Place, Chicago, IL, U.S.

 

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