Fall 2009 The Recession-Proof Premium MarketUnit Volume Share 6 months ending — June 2009 Source:...

continued on page 7

personal care, homeenvironment and majorappliance categories.Nearly two years later,and a year or more(depending on how youcount it) into this con-sumer recession, con-sumers now tell us priceis the primary factor inthe decision-makingprocess, and featuresare secondary. In try-ing economic times,especially during anextended recession, itshould be no surprisethat most purchases aredriven by price.However, additionalinfluences make theirway into the mix and continue to play a sig-nificant role.

Whether it is the general population, orthe smaller percentage of consumers whocan still afford to make premium purchases,price and necessity are the clear factorsbehind most appliance purchase decisions.In speaking of needs, we are mainly refer-ring to replacement purchases. For exam-ple, as a coffee drinker, I must have a coffeemachine at home. Similarly, most con-sumers can’t live without a washingmachine.

Innovation Drives Premium Market

Most of these needs-based replacementpurchases are driven by price. However,technology, innovation and specialization

are helping to drive forward the premiumsegment. Although the premium segment isflat or declining in many appliance cate-gories, it accounts for 20 percent or moreof the dollars. In the categories where thehigher price points are performing well andaverage selling price is increasing, it is clearwhat consumers seek and how they are will-ing to spend their money.

Compared to last year, the premium endof many appliance categories grew in thefirst six months of 2009. These includerefrigerators, laundry, dishwashers, toasterovens, electric shavers and canister vacuums– each of which addresses consumers’ basicneeds. The major appliance industry hasalways been reasonably prevalent in con-sumer media, and in recent years we haveseen increased focus on design, new technol-

About Housewares MarketWatchHousewares MarketWatch reports

both point-of-sale (POS) and consumerdata from NPD databases. The quarterlydata covers various product categorieswithin the divisions of Small Appliancesand Non-electric Housewares.

The information contained on the following pages is offered as a snapshotof a category’s performance, both fromthe retailer (POS) and consumer perspectives. The POS data covers theretail channels of mass/national chains,department store, specialty store and drugstore (personal care and homeenvironment only). Each issue ofHousewares MarketWatch will featureseveral categories from the SmallAppliances and Housewares divisions.

Complete data on a category can bepurchased by visiting NPD’s website atwww.npd.com.See the Data andMethodology section on page 8 for anexplanation of how the data is compiled.

Based on the extended recession,consumer spending is in the dol-drums. High unemployment fig-

ures and risk to job security are primarydrivers influencing consumers’ purchasedecisions. As would be expected for mostconsumers and most categories, these pur-chase decisions are changing.

In the first half of 2007, consumers toldus features were the primary reason for pur-chases made across the kitchen electrics,

Fall 2009

The Recession-Proof Premium MarketBy Peter Goldman, The NPD Group, Inc.

Source: The NPD Group 2

Small Appliances: KITCHEN ELECTRICS

MARKET SIZEQUARTER TWO • 2009UNIT VOLUME IN THOUSANDS

TOTA

LMARKE

T

COOKI

NGEL

ECTR

ICS

FOOD P

REP/

BEVER

AGE19,261

7,655

11,606

Male Female

NewEngland

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain Pacific

ELECTRIC GRILLS & GRIDDLES

CENSUS (PERCENT OF POPULATION)

ELECTRIC GRILLS & GRIDDLES • BUYER GENDERPercentage purchased by buyer gender versus census

DEMOGRAPHIC ANALYSISUnit Volume Share

6 months ending — June 2009

Source: Consumer Tracking Service

FOOD PROCESSORS • REGIONPercentage purchased in region versus census


3.0

%

4.9

%48.9 %

37.6 %

62.4 %51.1 %

18.6

%

15.7

%

12.6

%

3.8

%

18.2

%

6.8

%

7.1

%

15.9

%

15.5

%

14.1

%

17.2

%

6.0

%

11.3

%

8.4

%

6.6

%

FOOD PROCESSORS

CENSUS (PERCENT OFPOPULATION)

14.2

%

■ Multi-purpose breadmakers tradedplaces with the breadmaker-onlyproduct in the second quarter of2009, now representing the majorityof the dollar sales at nearly 53%.

Source: Retail Tracking Service

BREADMAKERS

■ Vacuum sealers with bag storagegained share in Q2’09 comparedto the same time last year, nowaccounting for 60% of unit sales.


VACUUM SEALERS

■ Slow cookers with a capacity of4.1-5.0 quarts represent 22% ofQ2’09 category unit sales,compared to just 12% in Q2’08.


SLOW COOKERS


Source: The NPD Group3

Small Appliances: PERSONAL CARE


TOTA

LMARKE

T

HAIR C

ARE/

GROOMING

ORAL CARE &

OTH

ER

PERSO

NAL CARE


42,924

19,71023,214

13 – 17 years

18 – 24 years

25 – 34 years

35 – 44 years

45 – 54 years

55 – 64 years

65 years +

Single Member

Two Members

Three Members

Four Members

Five or MoreMembers

IRONS


ELECTRIC TOOTHBRUSHES


ELECTRIC TOOTHBRUSHES • AGE OF BUYERPercentage purchased by age of buyer versus census




IRONS • HOUSEHOLD SIZEPercentage purchased by household size versus census


9.0

%10.0

%11

.4 %

18.9

%

23.9

%

16.8

%

11.7

%

19.8

%

14.8

% 17.2

%

9.1

%

11.7

%

7.6

%

14.7

%

14.8

%

30.3

%

26.3

%

19.3

%

19.3

%

17.1

%

22.6

%

21.8

%

21.4

%

10.3

%

■ Multi-purpose men’s trimmersstill represent the largest portionof the category at 42% of dollarsales, but they have lost someshare to nose/ear trimmers, pentrimmers and body groomers.


MEN’S TRIMMERS

■ Nearly 50% of all hairdryers soldin Q2’09 had no attachmentsincluded, accounting for 40% ofdollar sales.


HAIRDRYERS

■ Although epilators only represent 19%of category unit sales, they accountedfor 40% of dollar sales in Q2’09.


WOMEN’SSHAVERS


Small Appliances: HOME ENVIRONMENT(EXCLUDING VACS)



TOTA

LMARKE

T

23,355

■ In-line water filtration devices represented 15% of unit sales in Q2’09.


WATERFILTRATION

DEVICES

Male Female

Single Member

Two Members

Three Members

Four Members

Five or MoreMembers

FANS


FANS


FANS • BUYER GENDERPercentage purchased by buyer gender versus census




FANS • HOUSEHOLD SIZEPercentage purchased by household size versus census


11.5

%48.9 %

45.3 %

51.1 %54.7 %

10.3

%

26.3

%

29.3

%

21.8

%

19.3

%

18.3

%

19.1

%

21.4

%

22.6

%

Source: The NPD Group5

Small Appliances: FLOOR CARE


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


TOTA

LMARKE

T

7,339

■ 21% of all full-sized vacuums soldbetween April and June 2009 wereextractors/deep carpet cleaners.


EXTRACTORS/DEEP CARPET

CLEANERS

NewEngland

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain Pacific

HAND VACUUMS


HAND VACUUMS


HAND VACUUMS • REGIONPercentage purchased in region versus census




HAND VACUUMS • INCOMEPercentage purchased by income versus census


3.2

% 4.9

%

13.1

%

16.6

%

13.8

% 16.1

%

10.4

%

13.7

%

9.8

% 11.5

%

16.6

%

13.2

%

11.3

%

5.1

% 6.5

%

0.0

%

2.3

%

7.2

%

11.1

%

24.8

%

18.6

%

8.1

%

6.0

%

13.8

%

11.3

%

5.4

% 6.6

%

12.9

%

15.7

%

6.8

%8.5

%

11.3

%

15.9

%

12.0

% 14.1

%

21.7

%

Under$15,000

$15,000 –29,999

$30,000 –44,999

$45,000 –59,999

$60,000 –74,999

$75,000 –99,999

$100,000 –149,999

$150,000 + Teens withNo Income


Housewares: NON-ELECTRIC



9,44

6

7,78

1

2,74

4

1,63

9

1,58

1

DINNERWARE

BEVERAGEWARE

COOKWARE

BAKEWARE

FLATWARE

CUTLERY

3,28

1

■ Price, good value and appearancewere the top ranked motivators behindbeverageware purchases in Q2’09.


BEVERAGEWARE

■ The housewares dinnerwaresegment continues to dominatethe category with more than halfof the dollar share, howeverthere was some gain on the partof the quality casual segment, upto 25% dollar share in Q2’09.


DINNERWARE

■ Single-piece sales were the largestsegment in terms of cutlery dollar salesin Q2’09, at 35%. 14-piece sets arenext in line with a 10% dollar share.


CUTLERY

Male Female

OVEN OR MICROWAVE BAKEWARE


STOVETOP COOKWARE


STOVETOP COOKWARE • HEAD OF HOUSEHOLD AGE Percentage purchased by age of head of household versus census




OVEN OR MICROWAVE BAKEWARE •HEAD OF HOUSEHOLD GENDER

Percentage purchased by gender of head of household versus census


18.2 %

48.9 %

11.7

%

51.1 %

23.4

%

22.8

%

17.4

%

17.2

%

18.9

%

16.8

%

15.5

%

11.7

%

11.9

%

14.7

%

8.9

%

18 – 24 years

25 – 34 years

35 – 44 years

45 – 54 years

55 – 64 years

65 years +

81.8 %

spending more and more time in, and per-haps even taking on household chores thatwere done by professionals in the past.

Additional categories where premiumproducts are strong are stand mixers, slowcookers and garment care, where premiumproducts represent 71 percent, 36 percentand 37 percent of their respective categorydollar sales for the first half of 2009. Oralcare, curling irons/stylers, and men’s trim-mers are three categories where the premi-um segment is relatively small, but wherewe have seen some recent unit sharegrowth.

These are categories that help consumersmake more of their time, allow them to per-form tasks easily as an alternative to payingprofessionals or simply help them look andfeel good. These products meet consumers’needs and consumers find value in that.However, they also are items consumers cango without or defer purchasing for a while,so they may be less likely tomake the added investmentright now.

On the flip side, categorieslike wine cellars and specialtycleaning have dropped inaverage selling price com-pared to this time last year (5percent and 10 percent,respectively). These are notnecessities and fewer oftoday’s consumers will decideto spend money on luxuriesor “nice-to-have’s”. If they dospend on these categories,they may compromise on fea-tures to help bring down theprice.

Replacement purchasesnow represent a larger por-tion of many appliance cate-gories’ sales than they did inthe past. Striking the balancebetween meeting a consumer

ogy, features and functionality. These appli-ances are all relatively significant, long- termpurchases; with consumers spending moretime at home, appliances’ appearance andplacement becomes even more important.

As an example, we’ve witnessed the evo-lution of a refrigerator into something thatis energy-efficient, visually appealing, highlyfunctional and stylish – attributes that com-bine to drive consumers’ willingness tospend more on their purchase. This trend isnot unique to refrigeration, and these samedrivers account for an average selling priceincrease of anywhere between two 2 percentand 10 percent, depending on the category.

Considering items like toaster ovens,electric shavers and canister vacuums, we seea consistent pattern which indicates thatinnovation, design and functionality aredriving the premium segment, all buildingon generally need-based purchases. A toast-er oven is useful for a variety of tasks, frommaking toast in the morning to heating upleftovers for a quick dinner. With recentdesign changes, these appliances have reallybecome countertop ovens with much versa-tility. This helps consumers justify theirspending, giving the the sense that theirdollars are going farther.

Long-Term vs DisposableElectric shavers also have undergone

some design and feature changes overrecent years, allowing them to go head-to-head with their disposable cousins. The dif-ference is that the electric version is a one-time purchase that will last, with minimalreplacement requirements. Long-term, thisis more appealing to consumers who havebecome less impulsive and more aware intheir spending habits; they’ve also begun tothink more about the future.

This long-term view is also applicable topremium canister vacuum sales, with a focuson quality, taking care of the home you are

7

The Recession-Proof Premium MarketContinued from page 1

need and competitive pricing is part of whatwill help differentiate the winners and los-ers. If a product can differentiate itself bydemonstrating benefits to the consumer, itwill be even more successful. Design andtechnological evolution, as well as consumereducation and awareness, have been effec-tive tactics in navigating some productsthrough the current recession, helping toblur the lines between need and price.

Peter Goldman is president of the Home Section at The NPD Group. These arethe opinions of Goldman and NPD. For more information, contact Goldman at 516-625-6136.

Source: The NPD Group

March 14 - 16 • McCormick Place, Chicago

8Source: The NPD Group

ABOUT THE NPD GROUP, INC.

The NPD Group, Inc. (NPD) is a glob-al market information company thatmeasures product movement and con-sumer behavior across a broad rangeof industries -- apparel, automotiveproducts, consumer electronics, cosmet-ics and fragrances, food, foodservice,footwear, housewares, information tech-nology, interactive entertainment, toysand music. NPD's clients, many in theFortune 500, use this insight to uncovermarket opportunities, strengthen chan-nel relationships and benchmark indus-try performance. Since 1967, NPD hasintroduced numerous industry firsts,most recently combining and calibratinginformation from consumer panels andpoint-of-sale tracking via its flagshipservices, the NPD Worlds. The firm hasoffices and affiliations in 60 countries.For more information on The NPDGroup, visit www.npd.com.

DATA AND METHODOLOGYNPD has a standard data model that is used

for all categories that incorporates both con-sumer and point-of-sale (POS) databases.These two data sources are highly comple-mentary and are used to support one another.

Point-of-Sale (POS) databases are assem-bled from retailers' records of actual sales byproduct as collected at the cash register.These databases are highly reliable and pro-vide census counts of sales by product andprice for participating retailers. The complet-ed sales data are valuable to clients trying tounderstand which products or items are sell-ing well and which are not, at which pricesand in which channels. The finished POSdata describe the product, retail channel andprice. They do not, however, address thebuyer of the product.

Consumer databases are developed usingproduct purchase surveys completed by alarge-scale rotating sample of consumers.

These data also produce estimates of sales byproduct and retail channel. More importantly,the consumer surveys capture informationabout each purchase, such as buyer demo-graphics, the product's intended use and avariety of other characteristics. These factshelp clients understand why products are sell-ing and consumers' motivations.

CONSUMER METHODOLOGYMost consumer data in the U.S. are gath-

ered from periodic samples of individuals whoare asked about their recent purchases.Respondents report certain details about thetype and nature of their purchases in a surveyadministered via the Web. The respondingsample is demographically weighted and pro-jected through a series of steps to representthe Total Adult (18+) and, for appliances,Total Teen (13-17) U.S. population.

Each week, over 35,000 individuals areselected from the NPD online consumer panel

to participate in the appliancestudy. Each month, over 30,000U.S. households are selected forthe housewares study.

The NPD online consumerpanel is composed of pre-recruited individuals who haveagreed to participate in NPDonline surveys and have com-pleted a comprehensive demo-graphic questionnaire. The useof an established online panelassures good cooperation levelsand predictable demographicbalance among cooperators.

POS METHODOLOGYNPD collects point-of-sale

retailer data from selected retail-ers. These data are the actualsales for the chain on an SKU-by-SKU basis. The data arecombined with data from otherretailers to produce reports oncertain categories by channel,where a sufficient number ofretailers are cooperating andwhere sufficient market demandexists for the database.

Deborah A. Teschke, Senior EditorPeter Goldman, Contributing EditorJanine Marshall-Bolton, Contributing EditorTom Goodman, DesignPublished by IHA

For more information, contact Debbie Teschke at 847-692-0110; [email protected]

6400 SHAFER COURT, STE. 650ROSEMONT, IL 60018 USATEL: 847-292-4200 FAX: 847-292-4211www.housewares.org

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