Items that save space are gaining - Electric Housewares

Discount Store News, July 23, 1984

Consumers are in an expansive mood, housewares merchandisers believe, willing to spend more on a fashion image and for space-saving small electrics.

To capture more of this free-spending market, discounters have spruced-up their own inhouse presentation to provide a more appropriate backdrop to display new trade-up products. Among the chains emphasizing fashion in 1984 are T.G. & Y., Fishers Big Wheel and especially K mart with its Kitchen Korner concept.

Typically, space-saving electrics cost $10-$15 more than their conventional counterparts. With consumers less price-conscious than in recent years, merchandisers are less inclined to erode margins by footballing prices.

These trends are expected to translate into more than $2 billion in sales, with full-line discounters accounting for $1.7 billion of that volume and catalogers accounting for just over $600 million.

To some extent, renewed consumer interest has pursuaded many full-line discounters to ease up on category promotions. As a result, while turns are slowing to 3.4 from 4.0 a year ago, average gross margins are improving to 21.4% compared to 16.1% a year ago. Initial markup is also higher: 33.2%, compared to 28.3% in 1983.

Merchandisers' most vexing problem with many of the space-saving electrics has been supply of the most popular models. The wall-mounted and under-cabinet appliances are popular with consumers and return healthy margins with attractive prices, but delivery problems have caused uncertainty about planning promotions--and have lost sales and profits for retailers because of out-of-stock situations.

But perhaps because of the popularity of these products and their relative scarcity, discounters have been spared having to deal with another perennial headache--widespread rebates. Because manufacturers have substantailly limited rebates for newer space-savers, paperwork nightmares and the problem of scheduling promotions to coincide with the rebates have been alleviated.

Hand-held vacuums, in chronically short supply last year, are far less frequently out-of-stock this year because discounters and catalogers alike are stocking and promoting multiple brands. While Dustbuster, because of Black & Decker's effective advertising, remains the leader, Consumers Distributing, for example, added two additional brands--Norelco and Douglas. A spokesman said the action was taken partly because of Dustbuster supply problems, but also because margins were particularly low. Still at least on hand-held vac is promoted in every mothlky Consumers Distributing flyer.

While the latest offerings from manufacturers include few truly innovative products,t the current refinements of old standards are attractive to consumer. Freeing counter space in small kitchens itself is gratifying to most consumers, and by combining functions, such as putting a clock in a coffeemaker, kitchens can be made even less cluttered.

While the pros and cons of space-savers may be merchandisers' hottest topic, buyers are also pleased by the performance of many other more staple lines. Basic coffeemakers, food processors, blenders, lower-priced microwaves and others are pushing department sales steadily higher.

Development Anticipated

At ALCO, for example, irons, which are hardly a trendy or fashion appliance, recorded a 55% sales increase in 1983, prom pting the chain to introduce higher-priced electronics this year to continue the gain. A spokesman attributed the rising popularity of natural fibers in apparel, which need more ironing, as a major factor influencing this growth.

Microwaves, especially now that prices have been substantially reduced from initial levels, have emerged as a department staple--one that has made possible much cross-merchandising of nonelectric accessories as well. Early safety concerns about microwaves have been almost totally forgotten by consumers because of the enormous convenience of the appliance, a Fisher Big Wheel spokesman observed.