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Daily News

Major Appliance Business Rebounded in 2003
Dec 31, 2003
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While consumer electronics retailers slogged it out during much of 2003, dealers whose assortment portfolios were balanced with major appliances found the industry going considerably smoother.

Thanks to historically low interest rates and a distrust of the financial markets, consumers refinanced their mortgages and re-invested the windfall in their homes. All this sat well with white goods merchants, who saw demand for better refrigerators, washers, ranges, and dishwashers soar along with their margins.

The story was somewhat different on the opening-price-point side of the equation, where aggressive pricing within the home improvement channel chipped away at the market share of industry leaders Sears and Best Buy, who scrambled to re-invigorate their appliance businesses. The latter turned to new-to-the-market brands like LG, Samsung and, more recently, Siemens, while Sears revamped its departments, merchandise mix, price structure, and Web site.

How all this will play out in 2004 remains to be seen, but based on the following recap of the year just passed, the industry is off to a good start.

  • January: For major appliance makers, the combination of robust new home construction and wavering retail sales lends an added urgency to the 2003 International Builders' Show at the Las Vegas Convention Center (Las Vegas, NV, U.S.). To ensure their fair share of the contract channel, vendors play up to the burgeoning luxury and custom home market with a host of super-premium products and brand extensions that defy the soft economy and blur the lines between mass market and high-end manufacturers.

  • February: While short on fundamental technological breakthroughs, the latest microwave oven offerings introduced at the 2003 International Housewares Show in Chicago, IL, U.S. raised the bar on convenience by offering full-sized rounded cavities, combo toaster options and, in lieu of actual bells or whistles, musical notes to cue the completion of the cooking cycle.

  • March: Electrolux names DuPont's Keith McCloughlin president of Electrolux Home Products (EHP) North America, the company's U.S.-based major appliance unit. The appointment fills a void left by the reassignment last summer of Frigidaire president Bob Cook as president of Electrolux's North American consumer outdoor products business. McCloughlin will report directly to Electrolux president/CEO Hans Straberg.

  • April:Thanks in large measure to Best Buy, which has demonstrated a willingness to embrace alternative white goods brands, Pacific Rim powerhouses Haier, LG, and Samsung have managed to establish a solid beachhead within the U.S. market in a relatively short time. Pressing their advantage, the trio introduces an expanded range of kitchen and laundry products at the Kitchen & Bath Industry Show (K/BIS) in Orlando, FL, U.S., in the hope that buying groups and regional chains might also enlist them as counterweights against the traditional brands now shared with the home improvement channel.

  • May: Buying groups, those organizations that enable small independents and regional powerhouses to compete with national electronics/appliance chains, are having a pretty good year so far, considering war, unemployment and a generally mediocre economy. The repositioning of buying groups to make them more valuable in the eyes of CE and major appliance manufacturers to sell higher-margined, higher-end products is working. Buying groups still believe that knowledgeable commissioned salespeople can explain the product features better to consumers, sell products with higher margins more effectively, as well as make service and installation go smoothly.

  • June: To fend off challenges to its majap hegemony and refresh its image as the best place to shop for appliances, Sears unleashes a multi-pronged counterassault that includes sharper pricing, more promotional products, new department designs, greater take-with inventory, and a marketing campaign to herald it.

  • July: Electrolux announces plans to celebrate the 85th anniversary of Frigidaire with special dealer and consumer promotions and a search for the longest-running Frigidaire dealerships in North America.

  • August: Nationwide's biannual meeting and convention at Caesar's Palace in Las Vegas, NV, U.S. is a bittersweet affair as the industry's biggest buying group bids farewell to a fallen leader and looks ahead to a challenging, though promising, future. The PrimeTime! convention kicks off with a moving tribute to president and group co-founder Lee Guttman, 65, who died suddenly of a heart attack two weeks prior to the show. Senior management stresses the status quo in calming any dealer or vendor qualms over succession.

  • September: General Electric will not be exiting the major appliance business anytime soon, according to its chairman/CEO Jeff Immelt, who is the keynote speaker at the AVB/Brand Source national convention at the Paris Hotel in Las Vegas, NV, U.S. Immelt, a 22-year GE veteran who worked as a GE appliance exec from 1989 to 1993, noted, "We have no interest in selling the GE Appliance business" in the foreseeable future. No one out there can run the business better than we can."

  • October: Perhaps confirming the start of the long-awaited economic recovery, but also reflecting last year's stagnant market, factory shipments of major appliances rocketed 15.2 percent last month during the year-ago period to 6.9 million units. According to the latest vendor sales data crunched by the Association of Home Appliance Manufacturers (AHAM), the cooking and home laundry segments lead the large appliance charge with gains of 17.1 percent and 16.5 percent, respectively.

  • November: Armed with a new management team and the return of its corporate nameplate, Electrolux's U.S. floor care subsidiary Eureka is making good on its mandate to shake up the marketplace. This fall, the company fires both barrels of a dual-branded assault on the imploding vacuum cleaner business with an overhauled Eureka mass merchant line and a freshly minted Electrolux platform designed to serve and expand the upper reaches of the market. Both collections employ new concepts, high performance and innovative features to better meet consumer needs, and to support the higher price points that, the company is gambling, will break it free of the industry's under-$100 rut.

  • December: In back-to-back Big Apple events, BSH Home Appliances launches new laundry and cooking products for its high-end Bosch and Gaggenau divisions. For Bosch, BSH introduces the brand's first freestanding convection ranges and innovative Nexxt laundry platform, while Gaggenau debuts a 36-in, five-burner gas cooktop. (Kiplinger.com)

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