14953 Fri, 07/25/2008 - 11:37am
By David Gill and Nathan Weber
NEW YORK–For the nation’s top retailers of major appliances, these are the times that try men’s souls.
Five of the top 10 retailers in this category saw their sales fall from 2006 to 2007, according to data from HFN’s research department. The most precipitous drop was posted by Best Buy, whose appliance sales plummeted by nearly 23 percent between the two years. (HFN’s estimates include sales of small appliances).
The pain was felt by both national and regional appliance stores. HHGregg Appliances & Electronics, whose stores are in the South and Midwest, saw its appliance sales dive by 15 percent. Home Depot’s appliance sales fell by more than 14 percent.
The bursting of the housing bubble is the prime reason for the declines experienced by the retailers. “Large kitchen appliances tend to be most impacted by trends in the housing market, in both favorable and unfavorable economic conditions,” Euromonitor said. “Manufacturers have been forced to cut down on shipments as retailers have been left with excess inventory, unable to sell at the same rates as their peak periods of years past.”
In such an environment, the few consumers who are shopping for major appliances tend to gravitate to the stores with the lowest prices. This is reflected in Wal-Mart’s 23 percent gain in appliance sales from 2006 to 2007, and in the less-spectacular but still strong 6.6 percent increase posted by Sam’s Club.
The major appliance industry is hardly a beacon of hope when it comes to imports and exports either. For the first four months of this year, the United States has imported almost three times as much in appliances—measured in dollars—as the nation has exported.
Data from the U.S. Commerce Department show that for this period, the United States imported more than $3.4 billion worth of white goods. In the same period, the United States exported $1.2 billion, or about a third of the imports.
The situation is much different when looking at all categories of goods and services, taken as a whole. Instead of importing more than three times as much as the country exported, the United States imported only around a quarter more than it exported; that is, exports of all products and goods amounted to 72 percent of imports.
This is certainly not to say that the major-appliance industry in this country is the culprit in the balance-of-trade deficit. There may well be other categories that show an even steeper deficit. But it does reflect the reality that U.S.-manufactured appliances are not holding up too well in the international market.
The Euromonitor study predicted that this year will continue to be difficult for the U.S. appliance industry. “Large kitchen-appliance manufacturers will be producing and shipping fewer products until signs point to a healthier economy and housing market,” the report said. It also said the industry expects a recovery to begin next year.