Mfrs. see bright new-item future; buyers skeptical

Discount Store News, April 1, 1985 by Al Heller

New products may be the lifeblood of the housewares industry, but manufacturers and retailers differ on whether the blood is flowing.

Suppliers say contraction in their ranks--which is stepping up head-to-head market share battles among Black & Decker, Sunbeam, Norelco and others--will tie-in with chain trade-up efforts to prompt what they expect to be a new era of new products starting in 1985.

Not all discounters are buying int.

Skeptical housewares merchadisers consider this spring's cordless introductions, and last year's under-cabinet offerings and electronic irons to be mere modifications of existing products that provide new features, not new function.

Bill Fields, vp, gmm, home furnishings, Wal-Mart, is skeptical: "They'll change color or add a feature, but won't change basic functions. How many ways can you chop food or dry hair? I'm not sure people have extra uses for a lot of new products."

Discounters expect little to change and aren't sure about believing manufacturers who claim they're ready to commit more monies to research and development. On the other hand, vendors blame retailers' price obsession for weak industrywide R&D efforts in the 80's; they say that caused them to channel engineering efforts toward cost cuts instead of new product design.

And so the debate rages on.

What rises above the rhetoric is that manufacturers have a greater stake in new products than discounters. New products contribute far more to suppliers' annual sales than to discounter housewares departments, according to many major full-liners, catalogers and appliance companies.

Further Considerations

Beside boosting sales on both sides of the fence, new products build margins and reduce emphasis on mature items that make up most electrics assortments. Discounters have been traditional laggards in stocking new products, however, because of untested consumer acceptance, fear of possible quality defects and high initial prices, they said.

Summing up that outlook, Heck's buyer Bill Eades said "manufacturers may be investing in their futures, but why should we invest in that and have products sit on shelves until the market's ready."

On the other side of the fence, underscoring the pivotal role new products will play in its own plans, Black & Decker vp-marketing kenneth Homa said "by 1988 we'll offer no products that predate the Spacemaker [under-cabinet appliances introduced in 1984]."

That product rotation has already begun, he added: In 1985, its new cordless

mixers and knives will account for 20% of housewares division sales; that follows last year's 25%-30% share produced by space-saving appliances, travel and electric irons debuted last spring.

He claims that B&D spends more than 10% of annual sales on product research and development, "roughly twice the dollar spending and three times the manpower commitment over when General Electric owned the business."

Observers recognize B&D's influence on new product activity since acquiring G.E.'s $300 million housewares business last year, noting the company's had to innovate or fail to gain trade acceptance among wary buyers who were about to be stripped of their strongest department brand name.

As early as next fall, B&D may introduce security and health care products while it works to upgrade kitchen appliance motors and design more space-saving items, though not under-the-cabinet, Homa said.

Discounters will eventually have different types of new products from Sunbeam, according to president Janes Connors, who cited items using advanced heat applications and moisture sensors as current areas of development. Trade observers speculated that could lead to the eventual appearance of cordless coffeemakers and blow dryers that detect hair wetness.

He claims Sunbeam will spend more than 5% of annual sales on R&D this year, about the same percentage as in 1984, though dollar spending will be higher because of 15% company sales gains.

Connors expects its newly introduced cordless can openers, knives and mixers to generate 25% of Sunbeam sales in 1985. In 1984, New products such as the downsized Oskar food processor and Monitor electronic iron accounted for 20% of the company's sales, hes said.

Sunbeam's also doubled its consumer advertising budget to support newly available products in the first half of 1985.

More head-to-head battles are also driving suppliers into categories they haven't been in before. Examples at the current housewares show include first entries by Norelco in fullsize irons, Toastmaster in microwave ovens, Hamilton Beach in toaster ovens and Cosmo in travel irons, rechargeable lights and hand-held vacuums.

In vacuums, product development centers heavily on electronic speed controls, which vary suction power according to surface and make drapery and furniture cleaning easier, said Eureka vp-marketing Gilbert Dorsey.

Although such features are limited now to $300 machines, and currently add as much as $25 per model, he said costs will come down.

That's about the same amount of money automatic shutoff sensors added to irons last year, a traditional $20-$30 item without that feature.