HFN Staff Report
NEW YORK–Though housewares has certainly seen its share of challenges in the past year, with continuing rising material costs and issues with China, the category still performed in the positive for the year, seeing a 3.2 percent climb over 2006 to $17.9 billion.
Even with the housing slump, manufacturers hope housewares is one area consumers will turn to when renovating their homes if moving is no longer an option.
Design still plays an important role in the category, and as people watch cooking and home shows and become more educated about the category, they want the equipment in their homes to be just as good. But now, consumers are expecting a lot of bang for their shrinking buck, and want features and functionality they wouldn’t have expected before.
The strongest categories for 2007 were air cleaners, bakeware and kitchen tools/gadgets, with gains of 8.4 percent, 6.6 percent and 6.0 percent, respectively. Men’s and women’s shavers and heaters fell the most, in the low negative digits. Market share also virtually remained unchanged within the channels of distribution, with mass merchants and clubs still taking up almost half.
Despite continuing concerns with raw material cost increases, both the cookware and bakeware categories saw mid-digit increases for 2007. Bakeware performed especially well, becoming one of the top-performing categories in housewares for last year with its 6.6 percent climb over 2006. Cookware, on the other hand, saw a 3.7 percent climb.
The higher cost of stainless steel and nickel has obvious effects on cookware, and which may result in more aluminum product at retail, or nickel-free stainless steel. Cast iron, though a small part of the category overall, continues to grow at retail, and may be one group that could benefit from this.
Even with all of the attention given to people’s health concerns with non-stick coatings, non-stick cookware continues to sell well in the marketplace. But consumers who want other alternatives may see more in the future, as non-stick coatings manufactured without PTFE begin to hit the market.
Design touches include attention to handles, which may be curved or kept cool during use with a split-V design. Other handles are detachable for ease of storage, or come with silicone grips. Regardless of the design, however, it has to have the performance the customer is looking for as well.
Silicone continues to be important in bakeware, and has evolved into other kitchenware products as manufacturers want to take advantage of this hot material.
Thanks to the Food Network and other channels, as well as the entertaining trend, the consumer is more educated now about cooking and cookware. In a lot of cases, this means they are also looking for higher-end product and are willing to pay for it. Collections backed by celebrity chefs also have influence at retail.
As with many housewares categories, growth in the sales of small electrics slowed to a crawl in 2007. Taken together, sales of toasters, coffeemakers and food processors each hit slightly less than 3 percent last year, less than the growth rate toted up by these categories in 2006.
The deceleration in sales growth for the category as a whole doesn’t reflect what some industry observers see as solid opportunities for increased sales in individual categories going forward. As Peter Goldman, president of the home for The NPD Group, noted in an interview with HFN, products such as espresso makers, coffee grinders, rice cookers and juicers posted good sales numbers on a dollar basis last year, and should continue to do so in 2008.
Goldman said NPD has observed growth in two price segments of small electrics: the premium, $100-and-more segment and the bottom end. In the upper tier, consumers continue to aspire to the gourmet lifestyle in their choices of foods and beverages, and in the products used to prepare them. At the other end, there has been significant growth in sales of food-preparation products priced $20 and less at retail, from consumers who are feeling the pinch from the economic slowdown.
Executives among small electrics manufacturers believe that the economic slowdown will be one of the industry’s main challenges in 2008. More specifically, rising manufacturing costs and the weak U.S. dollar will continue to pressure both the top and bottom lines for the manufacturers. Many vendors have upped the ante on design and innovation in each of these categories, especially in multifunctional machines, and will have to continue on this path this year.
In spite of the many product innovations and designs introduced last year, sales of the personal care product categories tracked by HFN, taken together, rose just 2.2 percent in 2007. That was about half the growth rate registered for this sector in 2006.
Among some of the more notable findings in this year’s research, the growth rate in sales of massagers fell from 9 percent in 2006 to just 2 percent last year. Comments from industry executives indicate how difficult the massager market has become, with manufacturers being forced to absorb increases in costs of labor and raw materials, while retailers have been lowballing the prices of many of these products.
The growth rates for hair-care products also dropped significantly in 2007, with the increase in sales of hair dryers dropping from 5 percent in 2006 to 1.5 percent, and sales growth for hair-styling appliances falling from 6.5 percent to 3.3 percent. Executives among the manufacturers said the fact that “doom and gloom” stories about the economy have become prevalent in the media has made it a challenge for hair-care manufacturers to get consumers motivated to spend on their products.
Both categories of shavers, men’s and women’s, posted declines in sales last year, following a similar performance in 2006. The dropoffs here are somewhat surprising, considering how much effort manufacturers put into new designs and technology, and into products that carry higher retail price points.
Executives among shaver manufacturers believe that there is room for even more product innovation in 2008. There’s also the feeling that innovation can extend beyond the design of shavers and into the way they are merchandised on the retail floor.
Sales growth in vacuum cleaners revved downward in 2007. The industry topped the $2.6 billion mark in sales last year, up 2.5 percent over 2006, according to HFN’s research; but that growth rate was a downgrade from the 3.7 percent the industry achieved in 2006.
Looking ahead in 2008, vacuum cleaner manufacturers will face several challenges. Executives with manufacturers said bringing top-quality products to the market, with even more innovative features, will remain a priority this year. At the same time, however, vendors will have to face the pressure of rising manufacturing costs, which is a particularly difficult situation given consumer attitudes.
According to some executives, consumers have taken on the perception that they should be able to purchase high-level, feature-rich vacuums for between $100 and $150 at retail. The challenge for manufacturers will be to prove to consumers that the vacuums that they will unveil this year at higher prices carry the value that justifies those prices.