Expo in Las Vegas : Housewares Industry Faces Challenges Amid Opportunities
It’s a rough field out there for housewares retailers and manufacturers as competition gets fierce and their target customers become fragmented into a proliferation of life styles, age and income levels.
“There are plenty of danger signals but the opportunities are tremendous,” said Malcolm Sherman in his keynote address to members of the housewares industry during the First House World Expo recently held at the Las Vegas Convention Center.
Director for the National Mass Retail Institute and former chairman of Zayre Stores, Sherman said that the end of a period of stability is nearing, with some deflation in retail prices. As a consequence, he said “a tough trade bill--almost a certainty, a continuing lower-value dollar increasing the cost of imports; higher oil costs, etc., all conspire to suggest some retail inflation is ahead just as we all have learned to live with stability or deflation.
“The low-cost operator will be king,” he continued. “Huge operations with very low margins such as Price Club and B. J.’s Wholesale Club are hitting pieces of the business.”
A Shrinking Market
Another trend affecting the industry is that the middle market that has given business to mass merchants and discounters has been shrinking.
“The middle class that used to be the bread and butter of the Sears and J. C. Penney’s of the world is getting squeezed, not quite through extinction, but certainly through rarity, by more affluent yuppies, dinks (double income no kids),” said Ike Lagnado, director of research and store statistics, Associated Merchandising Corp. during a conference session on consumer demographics.
Focusing merchandise groupings on specific targets or specialty retailing could be a successful route, Lagnado suggested. He cited as an example the fantastic growth of San Francisco-based Williams-Sonoma, which specializes in kitchen accessories.
Providing excitement inside the store can also get you that customer in addition to improving service, he added. Other industry leaders suggested the development of more eye-catching and colorful packaging--as the saying goes “unseen is unsold”--and identifying and weeding out slow growth lines (as some small electrics and cookware) more quickly.
The importance of the bridal registry was also stressed, with research showing the tremendous allegiance by consumers to it.
Popularity of Weddings
According to Carl Schichili, Midwestern and Western manager for Modern Bride magazine, marriage as an institution is far from being on the rocks and women want traditional expensive weddings. He estimated that $21 billion was spent last year on weddings, honeymoon trips and necessities. The bridal market also has the highest acquisition rates for kitchen electrics and all the good things the young couple have grown up with.
Another challenge for the housewares industry is to pick the right product trend while at the same time establishing the product’s uniqueness. In an attempt to forecast the hot product categories for 1988, a group of panelists in one of about 19 conference sessions discussed some housewares key points as well as 1987 trends:
“It’s important to remember that trends in housewares are very cyclical,” said Ian Gittlitz, editor in chief/publisher of Housewares magazine. And there is always some new item coming up, he said. “This is what keeps the industry very young: an Oskar food processor one year, a clothes shaver (a battery-operated tool for removing fuzz from clothing) the next.
“White and almond were the dominant housewares colors for the past several years,” added Gittlitz, who acted as chairperson at the session. “This year slate blue and mauve became strong as well as gray.”
Don Kracke, managing director of the Center for Homewares Design, agreed but said, “I cannot ever believe that a single design direction is going to satisfy everyone.” In appliances he strongly suggested interchangeable decorative insert paneling that could come as a kit and would offer design options to the consumer.
“Westwind” or Southwest style (vivid pastels and earth tones in geometric designs) which is doing well in fashion, is also being applied to home furnishings, textiles and area rugs, Kracke said. “There will always be country,” he added, and that the goose or duck will still be favored.
“At the end of 1988 to 1989 I see a dominant black and white with a major accent color. If I had one dart to throw, I’d go after a black-and-white cow,” he said.
Character licensing was another major trend. “For the past few years, its been widely believed that licensing was dead in housewares,” Gittlitz said, “suddenly along came Spuds Mackenzie this summer, a runaway success for Libbey Glass.”
“What’s good for the goose might not be good for the gander; Spuds Mackenzie has been good for us,” said John Meier, vice president, sales and marketing for Libbey Glass. He advised those who want to try licensing to either have the backing of a big toy company or a major consumer goods company such as Coca-Cola or Anheuser-Busch, which will perpetuate their own logo.
For character licensing, Meier sees “for the next 12 or 18 months, less combat toys or those crazy guys going to war. We see the Garfield . . . the Hanna-Barbera characteristic . . . a softer, more lively approach. America wants to laugh again.”
For royalty rates, Meier warns against going beyond 7%. “The retailer will also add it to his price, and Mrs. Jones in Peoria, Ill., who is working a second shift won’t buy it,” he said. “We all love the business that we get in Manhattan but we live and die in Peoria, Ill.”
The Most Popular Appliance
Greatly penetrating more households, more so than any other appliance, are microwave ovens, more common today than dishwashers or garbage disposers.
“Five years ago, the penetration of microwave ovens was less than 5%,” said Lewis A. Mendelson, vice president and director of Dazey Corp. “By the end of 1987 the penetration will have passed the 65% mark. And by 1992 it is expected to be 90%.
“We’ve reached the age of the fast-food kitchen,” Mendelson said. “Pots and pans are becoming giftware and open stock cookware sits on the shelves and gathers dust in many outlets. Almost every product category that is dependent on traditional kitchen usage is slipping.” Mendelson noted that more meals are now being eaten from take-outs at restaurants or from prepared food from the supermarket.
“Unfortunately for our industry you really don’t need very much in terms of microwave cookware products,” said Gittlitz. The most useful accessories according to Mendelson, are a paper towel and a paper plate. For the active working woman, none of the sophisticated upscale features of the microwave unit was found to be that important. Simplicity sold.
For people who don’t cook, fruit juicers and extractors are growing at a phenomenal rate, according to Mendelson. The same is happening with ice cream makers--manual or electric.
The Latest Trends
Also regaining in sales volume is the wok, and the trend is setting it at the table and cooking and eating together.
Getting hotter is the electronic toaster, one that offers the same color every time, whether 10 to 100 cycles.
Slow cookers will continue to sell well through 1988. Coffeemakers--drips and perks--should be a growth category as the soft drink generation ages, switching from a cold to a hot beverage in the morning.
Pressure cookers, according to Gittlitz, were a surprising hot seller, and manufacturers claim to see an upswing in sales this year as consumers have grown more knowledgeable and less fearful of the method.
Humidifiers and air and water cleaners are also moving. “Never before has the American consumer been so concerned with the home environment,” Mendelson said. “Although the table ultrasonic humidifiers dominate unit sales at less than $100, watch the room-size units grow in importance in 1988.”
Another trend affecting sales is cocooning, the tendency of consumers to stay at home. “The cocoon is a nice word for fortress,” Mendelson said. “The VCR has changed our entertaining pattern, of watching a show at your convenience.”
He also sees increasing sales of whirlpool spas, portable spas, Jacuzzis and predicts 1.5 million appliance units will be sold this year, a far cry from 100,000 appliances sold per year from 1966 to 1985.
Pastel pink spas for a teen-age daughter’s bathroom is his forecast for next year.
“In 1987, the American consumer will spend $13 billion on the bathroom. The expanded bath has a room for a stationary bike and TV set on the wall.” And what’s funny, Mendelson added, “a microwave oven and refrigerator, so you don’t have to walk 20 feet to get some calories after you’ve worked out on your exercise bike.”
