Consumers continue to focus on the home

Discount Store News, Oct 25, 1999

Factors such as a booming U.S. economy, home offices, e-commerce and market consolidation make housewares a growth category.

The merger of home and office in America has already had a big impact on the housewares industry. Add to that mix the exotic tastes of consumers, growing interest in health care items, increased consumer spending and the Internet, and one begins to see the importance of determining the direction of an industry that last year totaled more than $62 billion in U.S. sales.

In 1998, the average American household spent $596 on housewares products, up nearly 6 percent from the previous year. That is still more than what Americans are spending on educational expenses ($580), fruits and vegetables ($484) and dairy products ($319). And many in the industry expect housewares sales to continue to grow.

"Our members are benefiting from the expanded economy. The savings rate is still very low, the credit rate is high and interest rates have leveled. Growth is being recycled back into the economy," says Perry Reynolds, director of marketing and trade development at the National Housewares Manufacturers Association. He also notes that retailers are "making a great deal of progress with well-known, higher-end brands."

Manufacturers and mass merchants are addressing key lifestyles issues that affect housewares more than most categories in the store. As consumers try to optimize space in their homes, storage containers and organizers figure prominently in store displays and circulars. Boomers are aging, so ergonomically designed gadgets and appliances are in greater demand. Our nation's fitness surge has blood pressure monitors pumping sales, scales weighing in with professional accuracy and upscale design appearing for the health-conscious consumer.

In addition, international influences are also creating a greater consumer interest in woks, espresso makers and other items, as Americans become more cosmopolitan in their own kitchens.

"We're beginning to see a blurring of national borders and a greater globalization of the house-wares business--not only in the taste levels and types of items people are buying--but in a larger amount of exporting by our member manufacturers," Reynolds says. "Nearly 16 percent of our members' business was done outside the United States in 1998. That's an effective doubling over the last five years. And we're about to embark on a project that will help us better define the level of U.S. housewares imports."

That housewares manufacturers are distributing abroad could bode well for their continued role in supplying Wal-Mart and any other chains that are expanding their international presence.

Trade consolidation is another significant trend where the housewares industry is beginning to mirror what's already occurred on the retail side. The industry has seen in the past year-and-a-half the bellwether creation of Newell Rubbermaid, the purchases by Corning of Ekco and General Housewares within one week of each other, Holmes' acquisition of Rival, Sunbeam's purchases of Mr. Coffee and Healthometer.

These mergers reflect a size race among manufacturers that are looking at new marketing and distribution efficiencies as distinguishing points in a crowded marketplace. They all seek to extract efficiencies from their mergers as ways to court retailers as trade partners and earn the coveted status of category captains.

As the category grows, retailers--particularly on the mass merchant level--are aiming at higher price ranges. For instance, more circulars show a push towards the $300 price range in electric floor cleaning. Target advertises the Fantom Lightning canister vacuum at $279.99, down from its everyday price of $329.99. It is a showpiece item in an ad of four of the brand's models.

Kmart also prices the Fantom Lightning canister vacuum at $279.99 in its circular, which also shows its ease of use through a photograph. Kmart shows a broader variety of brands, including an exclusive Hoover model meant to help the chain further differentiate its offerings.

Both Target and Kmart are pushing higher price points than Sears in this category. Yet Sears advertises a Sauder office armoire for $399.99, compared with its $499.99 everyday price.

And despite all this upscaling, mass merchants still aren't abandoning the high-traffic, high-replenishment end of the business.

Sears creates a $99.98 "your choice" theme, where customers can choose from one of eight items. Among those items are a high-end Waring bar blender, an 8-cup Bunn coffee maker, a six-slice DeLonghi toaster oven, a Littermaid electronic litter box, and Panasonic and Norelco electric shavers.

Kmart also offers a $9.99 "your choice" variety of storage containers, stacking drawers, hampers, ironing boards, garment racks and shoe racks in a recent circular. Target promotes vinyl shower curtain liners at $2, kitchen tools and gadgets at four for $5, and oven mitts and potholders at two for $5, although it can't resist advertising a $79 Sonicare toothbrush and a $94 Eureka canister vac on the same page.