By David Gill
Small-electrics manufacturers have begun the year with an outlook that can be described not so much as “optimistic” as “un-pessimistic.”
Despite the bad economic news, many said there are reasons to look upon 2009 with at least a sliver of hope.
Much will depend on what the new presidential administration tries to do with its economic stimulus package.
Steve Fox, director of consumer products for Bosch Home Appliances, asked, “Which campaign promises will [newly inaugurated president Barack Obama] keep? I think the uncertainty over Obama’s plans will keep consumers cautious, which means the first half of 2009 will be soft. Hopefully, then, all of the economic stimuluses will take effect and by fall, we’ll see better business.”
The proper attitude, some said, is to try to avoid a gloom-and-doom viewpoint.
“All of the prognosticators talk about how bad the year will be, and it becomes a self-fulfilling prophecy,” said Brian Maynard, director of brand marketing for KitchenAid. “Sure, consumers aren’t buying at the levels that would allow us as companies to enjoy the growth we have enjoyed over the past few years. But certain segments will do better than others, like products that make cooking more efficient.”
In fact, small-electrics vendors are hoping that the recession drives American consumers away from big-ticket purchases such as cars, vacations and going out to eat and back into their homes.
“Restaurant sales are struggling mightily,” said Phil Brandl, president of the International Housewares Association. “Right now, when you look at consumers’ eating habits, you see people spending more time at home making meals for themselves and their friends.”
For this reason, home entertaining is viewed in several quarters as a saving grace for small electrics in 2009.
“Consumers are foregoing vacations, turning their homes into an oasis of entertainment,” said Asoka Veeravagu, director of business development for Jarden Consumer Solutions. “In that context, they are looking for the tools to throw that party, which makes products like the Margaritaville [margarita maker] more relevant.”
Veeravagu added that Jarden plans to enlarge the number of products in the Margaritaville brand this year, including a portable version that will be unveiled at the International Home & Housewares Show in March. Down the road, the brand will include products that Veeravagu said are “logical extensions” to the current margarita makers, including products for beer, mixed drinks with spirits, more outdoor products and tailgating products.
Other items kept the small-electrics industry in at least a low-growth mode in 2008, and will provide some of the industry’s fuel this year as well.
“Single-serve coffee is still a hot category,” Fox said. “We’ll be introducing new products at the Housewares Show, expanding on our single-serve coffee offerings. Outside of the small-electrics basics, I don’t think anything sold last year other than coffee, and in this segment, single-serve was the shining star.”
Even with the economy struggling, consumers continue to purchase higher-end small electrics, according to Adele Schober, director of communications for Breville.
“We’re in the eye of the storm,” Schober said, regarding the industry’s overall health. “But consumers seem willing to make the investment in one higher-end product as opposed to buying a series of lower-end products. Of course, consumers have to perceive the value in such a product if they’re going to spend a lot on it. But thanks to this trend, we’ve been able to hold up in this scary time.”
Given the stormy business climate, it’s natural to look upon the industry’s major trade show with a speculative eye. For IHA, the signs are positive. In a statement issued last month, Brandl said the early indicators, including exhibitor sign-ups, early buyer registrations and hotel commitments, “are markedly ahead of last year,” and that “the show will provide the impetus for renewed growth in 2009.”
IHA also said a number of suppliers that had not exhibited at the show for a number of years—including Clorox, Krups and Rowenta—would be returning to the show this year.
Some vendors exhibiting at the show are also hopeful.
“We’re going to have demonstration kitchens, so we expect a lot of people,” said Deb O’Connor, KitchenAid’s senior manager of the brand experience. “We also know that celebrity chefs who have product lines will be displaying them at the show. Everybody knows it will be a difficult year, but we feel it’ll be a good show.”
Not all of the vendors that will be at the show are so glowing in their expectations. “I see it as being subdued,” Fox said. “The economy alone has changed the dynamic. Both manufacturers and retailers are all looking at their costs, at what we get out of our expenditures. Retailers will be playing it close to the vest. But it’s still the biggest show of the year, and I’m thinking it will still be productive.”