15617 Fri, 11/14/2008 - 12:57pm
By David Gill
Rising home utility costs helped put the home-comfort products category on an upward growth curve during the past two years and are expected to continue fueling this industry going forward.
Research conducted by HFN found that U.S. retail sales of air cleaners, humidifiers and heaters rose by more than 4 percent from 2006 to 2007, to nearly $1.3 billion. Industry executives interviewed by HFN said they believe that sales have continued to grow into 2008, in spite of the troubled consumer economy.
Providing an overview into the home-comfort category in an interview with HFN, Shannon Baxley, director of marketing at Jarden Consumer Solutions, said, “People buying home-comfort products have gone from wants to needs, and some categories have benefited from this drastically.
“Heaters and humidifiers are performing really well because people see them as an alternative to the high cost of heating their homes,” Baxley said.
Referring to heaters, Kayla Murata, product manager for comfort appliances at De’Longhi USA, said, “Even when there’s an economic downturn, people’s comfort is a priority. It’s not a luxury that gets cut even when the levels of consumer spending are uncertain, as they are now. When you look to buy something you consider a staple, you’ll spend more on one that won’t break.”
As an added bonus for manufacturers, a lot of the action in the heater category is taking place in upper-end merchandise.
“Consumers have gravitated toward higher-end products,” said Mark Zarich, director of marketing for Vornado. “Our sell on this has been that it’s actually more efficient for them to spend the money on such a product.”
Another part of the attraction with upper-end heaters is that while the initial outlay may be high, their operation actually saves money for consumers along the way. They do so by allowing homeowners to set their thermostats lower and allowing them to do most of the work of heating rooms.
“Over the past few years, the costs of heating homes have risen across the country,” Zarich said. “These products prove that it’s more efficient and less costly for them to heat individual rooms.”
Murata added that “There is definitely a relationship between the demand for home-heating products and high fuel costs. Consumers are equating supplemental heating with ways to save money, and they like the fact that these are electrical products.”
This has provided a lift to humidifier sales as well, Baxley said. “The higher the humidity in your home, the warmer it feels, just like outside,” she said. “If you turn your thermostat down from 72 to 70 but add the humidifier, it’ll feel even warmer than 72.”
The cost-savings issue remains relevant to the heater category even now, in a period in which oil prices have dropped almost by half since the late stages of summer. “Consumers have shown they have a strong grasp of the word ‘efficiency,’ ” Zarich said. “Their purse strings are still tight, so they still need ways to save money.”
The trend has also favored higher-priced products in the air-cleaner category as well. Chan Tinkle, vice president of sales and marketing for BlueAir, said, “Our consumer tends to be in the higher demographic, more educated and with more disposable income. We haven’t had a decline in sales or in the popularity of our products.”
Just as consumers have shown themselves willing to pay more for products that heat their homes, so they apparently won’t skimp on products that create a healthier environment in their homes. Air cleaners “have always been good for asthma sufferers, and more and more children have been diagnosed with asthma,” Tinkle said. “Until about six or seven years ago, air cleaners were a seasonal item, but these children need clean air to be able to sleep at night. So now they’re in stores all year round.”
The “needs” orientation of consumers has helped boost this category, especially in allergy-relief products, Baxley said. “Consumers are looking for anything that can alleviate their allergies, and will continue to look for this going forward,” she said.
As enhancers of home comfort, heaters and air-quality products have assumed the “lifestyle” status, according to a report on the category by Specialists in Business Information. “More than just a dwelling, the American home has emerged as one of the primary extensions of individual and collective identity,” the report said. “With more air-quality products crossing over into the lifestyle, boutique, gift and specialty markets, manufacturers are able to establish a fresh context for their unique products, which, in the past, may otherwise have been mistaken for ordinary products that get the job done and nothing more.”
Even though much of the growth in home-comfort products has occurred at the high end, HFN’s research found that mass merchants and warehouse clubs owned the largest market share among retail channels in the category. In both 2006 and 2007, this combined channel accounted for approximately $2 of every $5 spent by consumers on these products. Home-improvement centers finished second among the channels in both years, representing 33 percent of sales in 2006 and 32 percent last year.
The winter season, naturally, is crucial to the heater business—and thus far, it has gotten off to a promising start this year.
“The weather has gotten colder earlier,” Zarich said. “Beginning in November, higher heating-fuel costs will mean that the market will pick up, especially on the East Coast.”
“The predictions for the weather for this coming winter call for colder-than-average temperatures,” Murata said. “Also, the predictions in the Farmer’s Almanacs I’ve seen say the winters to come will also be colder.”
In 2009 and beyond, Tinkle predicted that sales of air-cleaner products will continue to grow from 4 percent to 5 percent a year—with new home construction having much to do with this increase. In these new homes, “You can’t open a window so the air inside becomes more polluted,” he said. “This is true of both freestanding homes and condos. They do this so that the homes’ HVAC systems can operate more efficiently, but these systems lack the ability to clean the air.”
For heaters, Zarich said the economy will determine how sales track next year. “Consumers will have to decide how they want to spend their discretionary income,” he said. “I’m banking on them choosing for personal comfort. These products are a luxury, but the hope is that consumers will go for personal comfort over things like dining out.”