By Andrea Lillo
Manufacturers are buckling down for the tough road ahead in 2009, and for many that means promoting product to entice consumers.
A bright spot is that consumers might be willing to spend at least a little, manufacturers said, as they do more cooking and entertaining at home.
Restaurant sales are struggling “mightily,” for example, said Phil Brandl, president of the International Housewares Association, as people are making more meals at home. This is in part due to “consumers’ flight to the home, which is a haven for them,” he said, adding that cooking and storage are strong categories that will “help buttress housewares for 2009.”
“We’re seeing that the business is there,” said Teri Haymer, president of Spring Switzerland USA. “It’s just requiring discounts to get it.” Though the company remains “optimistic,” she added, she’s become conservative on her expectations of growth for next year, at about 5 percent. “If you asked me mid-this year, I would have said 10 to 15 percent.”
“Everyone at retail has a conservative outlook now,” said Andrew Hill, president and chief executive officer of Jarden Consumer Solutions. “The things that are selling now are those that are being highly promoted and discounted,” he said. However, the company also launched the Skybar Wine System, priced at $1,000, and “We can’t keep it in stock, so there’s demand for products that people are passionate about. Fashion and luxury still drive consumers and we need stylish products for them.”
Ethan Hamme, national sales manager for Messermeister, said the company’s strategy is to “stay the course, do promotions, [keep] advertising and cultivate customers—it’s still a relationship business.” He added that the company will hold prices on items, but, “You almost have to come out with an aggressive promotion,” with dollar discounts combined with gifts with purchase.
Brian Maynard, director of brand marketing for KitchenAid, is among the manufacturers that believe a down economy leads people to spend more time at home, which could bode well for housewares. “But it’s true that consumers are not buying at the levels that would allow us as companies to enjoy the growth we have enjoyed over the past few years.” He added, “It’s a volatile market out there, and that makes forecasting difficult. … Who would have thought that oil prices would have dropped the way they have, from $150 a barrel several months ago to less than $45 a barrel?”
“We still have to have new in this business,” said Bob Reichenbach, president of the cutlery division for Lifetime Brands. “Every retailer needs new and fresh merchandise to talk about, whether Damascus steel, German steel, titanium coatings or ceramic knives.” He sees lots of opportunities in cutlery in the coming year, particularly in subcategories such as shears, cutting boards and eco-friendly products.
During this type of environment, “More people will look at their dollars and how to best spend it,” said Joseph Hodorowicz, vice president of sales for Trudeau Corp., and focus on buying “need-to-haves, rather than want-to-haves.” The products that focus on home entertaining and food prep will be several of the areas that will do well, he added.
Henckels is another company that plans to focus on promotions this year, said Kathleen McDonnell, marketing director, and hone in on the gourmet element. “Given the economy, it’s hard to be enthusiastic about the coming year.” Fortunately, Henckels sells to a wide variety of channels, but unfortunately “all areas are suffering and I don’t see that changing this year.”
Henckels has expanded its field organization to work with its accounts on merchandising and other matters. “It’s back to basics—good training, good follow-through,” McDonnell said.
Cuisinart is pressing ahead with its expanded marketing and advertising campaign—featuring its enhanced Web site and e-mails to consumers highlighting products and applications—which it introduced earlier this year, said Mary Rodgers, director of marketing communications. “In light of the challenging economy, it is more important than ever for kitchen-electrics manufacturers to connect with consumers and show how their products are distinctive and represent great design along with being a good value for the dollar.”
For Spring Switzerland, small electrics are doing well, said Haymer, and it will debut a portable induction burner at next March’s International Home & Housewares Show. However, cookware “is a bit of a challenge,” Haymer said. “It’s very price-driven, and consumers are trading down.” The company is looking at ways to convey the message that good-quality cookware is worth paying for, she said, and that could be in terms of merchandising and packaging. Spring Switzerland’s sets are about $400, and it’s seeing consumers pick up competitors’ sets for $100 to $200—cheaper, but not the same quality, she added.
For Imusa, larger-sized pieces of cookware—such as its 20-, 24- and 32-quart pots—have been “doing fantastic,” said Manny Gaunaurd, president. He has also seen Hispanics moving from some areas that have typically had larger Hispanic populations to other regions because of the immigration laws, he added, and that shift “was dramatic this year.” Georgia was one state that saw a decline, he said, as some Hispanics there moved to Alabama and Tennessee, for example.
Some of the drivers for home comfort in 2008 will continue in 2009, said Kayla Murata, product manager of comfort appliances for De’Longhi. “People are looking to save money but are also putting their comfort first,” she said. “ ‘Green’ initiatives will be an important driver next year, and energy efficiency is both a cost-saving and environmental issue.”
“Next year will be where the manufacturer and retailer partnership extends,” said David Williams, group marketing manager for personal care and professional products at Panasonic. “It has been tough out there, and we have to hope that a good holiday season this year can benefit our retailer partners going into next year.” He added that there is still growth at the high end, “which is boosted by technology and by people who can invest in quality. … As long as manufacturers continue to innovate and give people a reason to buy, and it’s not a me-too product, the high end will remain in demand.”
Conair agrees. “Technology and innovation will always be a predominant factor in the market,” said Robin Linsley, director of marketing. “Women are willing to give up things, but when it comes to looks they’re not willing to give up, even in a weak economy.” — David Gill and Allison Zisko contributed to this report.