Buyers bullish on space-saving and cordless kitchen electrics

Discount Store News, April 1, 1985

Discounters and catalogers are optimistic that new cordless kitchen electrics and the older under-the-cabinet appliances will pave the way for a healthy sales year in kitchen appliances.

Although still posting strong sales, space-savers have lost some of their value as high margin producers as competing retailers beat price points down; additional manufacturers entering the fray with their own space-saving items have increased the competition and have detracted from the items' premium image.

This has not yet happened to rechargeable items, billed as hassle-free convenience appliances. Some retailers were carrying one or two pieces last year, most commonly a knife or iron, but for the most part, consumers are likely to think Dustbusters when rechargeables are mentioned.

Nevertheless, Bambi Guhl, dmm at Edison Jewelers & Distributors, had a good sell-through on a rechargeable knife from Hamilton Beach despite late delivery last November. Being in a major television market contributed to that success--coordinator Jewelcor did not report the same positive response.

The Texas-based cataloger has also done well with a cordless iron by West Bend, which gives margins of 28%, considered strong for kitchen appliances, as compared to overall margins on irons of 20%, said Guhl.

Edison now has on order a lightweight Handy Mixer by Black & Decker, which will be priced at between $30 and $35 on an everyday basis.

Second Thoughts

Guhl, explaining the high margins on the cordless items, said "there wasn't anything out there to compete with them." She said she would have to rethink the cataloger's pricing strategies as new cordless products enter the market this year.

For now, though, cordless items are being marketed at premium prices. T.G. & Y. is adding a West Bend cordless iron to be priced at $42.99 every day, in addition to the cordless knife already stocked. In contrast, the chain is now offering standard irons for $10 to $12 after rebate, said one merchandiser.

H. J. Wilson, the Louisiana-based cataloger, is also counting on consumers' trading in their order, but functioning appliances, for the novelty and convenience of the cordless items, as they did with under-the-cabinet appliances.

The cataloger, which carried only one cordless electric knife last year on an NIC (not-in-catalog) basis, in addition to cordless vacumms, will feature eight to 10 rechargeable appliances in its 1985-86 catalog.

"The rechargeable category is one we feel will be extremely big," said dmm Richard Portno. However, as when space-saving appliances were first introduced, "we think there will be a tremendous problem in getting them because demand will be very high," he added.

The cordless items will be featured by category rather than as a group. "We don't think a customer will come in and ask for our rechargeable section," he explained.

However, if the cordless feature wins over consumers as space-saving appliances did, that may not be that far down the road.

One chain, the W. virginia-based Heck's, at least doubled its kitchen electrics sales gain to nearly 14% last quarter since giving under-the-cabinet appliances their own permanent 10-12 ft. display area in small electrics and expanding sku's from two to seven.

Buyer Bill Eades said the chain now stocks four under-the-cabinet coffeemakers, two 10-cups from General Electric priced at $49.96 and $64.96 every day and $41.96 and $54.88 on sale, a 12-cup by Hamilton Beach for $46.86 every day and $37.99 on ad and a six-cup Norelco for $34.76. Margins run about 25% to 26% for these items, as compared to about 11% for traffic coffeemakers from Norelco and Mr. Coffee.

An under-the-cabinet can opener by G.E., selling daily for $22.87 and for $19.99 on sale, yields 17% margins, while Rebeson and Hamilton Beach models, both priced at $19.96 every day and at $14,88 on sale give 35% margins.

Margins on a space-saving knife by G.E., priced at $26.55 every day and $21.99 on ad, run about 25%.

These prices, however, will probably drop this fall to become more competitive, as will gross margins, said Eades.

Despite falling retails, H.J. Wilson's Portno is satisfied with space-savers' performances, and expects a 20% to 25% increase in their sales this year.

"Two years ago can openers were basically flat with no growth. Since G.E. introduced its Spacemaker can openers, we have seen a nice increase in can opener sales. The same thing is happening with coffeemakers," he said.