winter 2008 striking a balance in an unbalanced market · sustain their remarkable growth. products...

continued on page 6

As of October 2008,92 percent of consumerssurveyed by The NPDGroup thought the U.S.economy was in or headedfor bad economic times.This was a nine-pointincrease over September.About half of respondentsindicated they planned tospend less on items likeappliances, home textilesand home improvement inthe coming months.Apparel and footwear,necessities for all con-sumers, appear to be hold-ing on to customers whoplan to spend the sameamount of money onthese items as they have inthe past.

With the unemployment rate hitting 6.5 percent in October, 1.7 percentagepoints above what it was the same time ayear ago, 72 percent of consumers told usthey were somewhat or very concerned forthe security of their job/income. Thisdemonstrates the recognition of a personalreality, an uneasiness that goes beyond justacknowledging a challenging economy.The increased concern over personalemployment will likely tighten belts evenfurther during the critical holiday period.

Coupons, Price Affect PurchasesThe survey also told us women are

significantly more likely to take advantage

of coupons to save money, while men aremore likely not to do anything different.However, men expressed more of an interest in discount/membership programsthan women. Consumers under retirementage were more likely than their older coun-terparts to take advantage of some kind of money-saving promotional event or program.

Across small appliances price has longbeen one of the most important reasons for purchase. This has become even moreevident in recent months. In the threemonths ending August 2008, for the firsttime in three years, NPD’s ConsumerTracking Service showed price outpacing

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.

In a challenging economy it’s no sur-prise that consumer behavior shifts.Beyond that, preferences and priori-

ties seem to shift as well. When consumersare challenged with making decisionsbetween what they want and what they need,the lines may begin to blur as the impulsive,extravagant purchases lose their luster andthose that serve a necessary purpose takepriority.

Striking a Balance in an Unbalanced MarketBy Peter Goldman, The NPD Group, Inc.

Winter 2008

Marketwatch_winter:Marketwatch 1/9/09 3:42 PM

2Source: The NPD Group

MARKET SIZEQUARTER THREE • 2008UNIT VOLUME IN THOUSANDS

Small Appliances: KITCHEN ELECTRICS

Source: Retail Tracking Service

ESPRESSO/CAPPUCCINOMAKERS

■ Almost 8% of espresso/cappuccino makers soldin Q3’08 were 1 cup/single serve models


SANDWICH MAKERS■ 68% of sandwich makers

sold in Q3’08 had a cool touch feature.


COFFEEGRINDERS

■ Blade-type coffee grindersrepresented 76% of dollar salesfor the category in Q3’08.

0

5,000

10,000

15,000

20,000

TOTA

LMARKE

TCO

OKING

ELEC

TRICS

FOOD P

REP/

BEVER

AGE

Source: Consumer Tracking Service

19,885

7,915

11,970

SLOW COOKERS • REGIONPercentage purchased in region versus census

DEMOGRAPHIC ANALYSISUnit Volume Share

6 months ending — September 2008

0

5

10

15

20


WAFFLE IRONS • AGE OF BUYERPercentage purchased by age of buyer versus census

0

5

10

15

20


9.0

%

11.7

%

16.8

%

18.9

%

17.2

%

11.7

%

14.7

%

3.3

%

9.1

%

17.8

%

16.1

%

17.8

% 16.1

%

19.7

%

13-17 years 18-24 years 25-34 years 35-44 years 45-54 years 55-64 years 65+ years

4.9

%

3.5

%

New England

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain Pacific

14.1

%

11.4

%

15.9

%

15.3

%

6.8

%8.0

%

6.0

%

6.1

%

11.3

%

14.7

%

6.6

%7.8

%

15.7

%

16.2

%

18.6

%17.1

%

WAFFLE IRONS

CENSUS (PERCENT OF POPULATION)

SLOW COOKERS

CENSUS (PERCENTOF POPULATION)


New England

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain Pacific

3 Source: The NPD Group

Small Appliances: PERSONAL CARE



HAIR SETTERS■ Hair setters with 20

rollers accounted for half of the unit sales in Q3’08.


HAIR DRYERS■ A quarter of hair dryers

sold in Q3’08 usedceramic technology, and almost 70% usedionic technology.


MEN’S TRIMMERS■ 7% of men’s trimmers

sold in Q3’08 were body groomers.

0

10000

20000

30000

40000

50000 TOTA

LMARKE

THAIR

CARE/

GROOMING

ORAL CARE &

OTH

ER

PERSO

NAL CARE


45,561

21,45924,102

MASSAGING APPLIANCES • REGIONPercentage purchased in region versus census



0

5

10

15

20


MEN’S ELECTRICAL SHAVERS • AGE OF BUYERPercentage purchased by age of buyer versus census

0

5

10

15

20

25


MASSAGING APPLIANCES


MEN’S ELECTRICAL SHAVERS


4.9

%6.3

%

14.1

%

12.3

%

15.9

%

12.1

%

6.8

%

5.7

%

6.0

%

9.9

%

15.7

%

18.3

%

11.3

%

9.2

%

6.6

%8.0

%

18.6

%

18.1

%

13-17 years 18-24 years 25-34 years 35-44 years 45-54 years 55-64 years 65+ years

9.0

%

11.7

%

16.8

% 18.9

%

17.2

%

11.7

%

14.7

%

8.4

%

15.7

%

23.7

%

15.8

%

16.2

%

8.2

%

11.9

%




Small Appliances: HOME ENVIRONMENT(EXCLUDING VACS)

0

5000

10000

15000

20000

25000


TOTA

LMARKE

T

24,331AIR PURIFIERS • BUYER GENDER

Percentage purchased by buyer gender versus census



0

10

20

30

40

50

60


AIR PURIFIERS • INCOMEPercentage purchased by income versus census

0

5

10

15

20


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 +

7.8

%

11.1

%

17.8

%

16.6

%

13.1

%

16.1

%

12.1

%

13.7

%

9.9

% 11.5

%

15.0

%

13.2

%

17.6

%

11.3

%

6.7

%

6.5

%

45.4 %48.9 %

51.1 %54.6 %

FemaleMale

AIR PURIFIERS


AIR PURIFIERS



HEATERS

■ 30% of heaterssold in Q3’08used ceramic heat technology.



Small Appliances: FLOOR CARE



HAND VACUUMS■ Cyclonic hand

vacuums nowrepresent less thanhalf of units sold,46% as of Q3’08,compared to 53% in Q3’07.

0

2000

4000

6000

8000

10000


TOTA

LMARKE

T

9,133

CANISTER VACUUMS • BUYER GENDERPercentage purchased by buyer gender versus census



0

10

20

30

40

50

60


CANISTER VACUUMS • HOUSEHOLD SIZEPercentage purchased by household size versus census

0

5

10

15

20

25

30

35

40


37.1

%

26.3

%

20.1

%

19.3

%

13.9

%

22.6

%

15.9

%

21.4

%

Single Member Two Members Three Members Four Members Five or More Members

43.4 %

48.9 %51.1 %

56.6 %

FemaleMale

CANISTER VACUUMS


CANISTER VACUUMS


10.3

%12.9

%



FLATWARE■ Casual flatware

accounted for 58% ofdollar sales in Q3’08.


COOKWARE

■ 18% of cookware dollars came from frypans/skillets in Q3’08.

0

2000

4000

6000

8000

10000

12000


10,4

30

6,26

2

features as consumers’ mostimportant purchase factor.When considering the vari-ous segments within thesmall appliance industry, fea-tures and price are consis-tently the top two reasonsfor purchase.

Kitchen electrics follows asimilar pattern to the indus-try in total with price outpac-ing features. Home environ-ment appliances have beenconsistently driven by priceover the last year – more sothan any other segment.Personal care appliances con-tinue to be a feature-drivenbusiness, with features stilloutweighing price.

For kitchen categoriesconsumers perceive to benecessities, make a task easier,or can be used in more thanone way, features still trumpprice. Some examples are drip coffeemak-ers, stand mixers, food processors, toasterovens and slow cookers.

“Green” Loses its CacheWith regard to price and its impact

on decision-making, environmentally-friendly or “green” products are a strongand timely example. At a time when manyconsumers are concerned about the envi-ronment but also concerned with the econ-omy, the decision to buy a product becauseit is “green” may not have the cache it didjust six months ago. Given difficult choic-es, the consumer may have to sacrifice envi-ronmental benefits and good “green”intentions in lieu of financial constraints.

Consumers weighed in on this point in NPD’s recent Green 2008: Consumer

Attitudes and Behaviors report. Whenasked about green home products, con-sumers offered this type of feedback:“Make it more environmentally-friendlywhile keeping the cost down” and“Especially in today’s economy, I cannotafford to spend a lot more to be eco-friendly.” While this economic landscapeseems to be opportunistic for CFL lightbulbs, a clear cost-cutting opportunity, it will be interesting to see whetherenergy- and water-efficient, front-loadingwashing machines and steam dryers cansustain their remarkable growth.

Products with tangible benefits are the ones that have endured the test of time– and it’s likely they’ll withstand the adver-sities of today’s economy, too. Fads havecome and gone many times over, but items



Housewares: NON-ELECTRIC

DINNERWARE

BEVERAGEWARE

COOKWARE

BAKEWARE

CUTLERY

FLATWARE

4,08

0

3,37

3

2,09

0

1,71

3

Housewares: Weathering Through the Economic StormContinued from page 1


BAKEWARE■ Glass bakeware

represented 18% ofdollar sales in Q3’08.



with features based in functionality remain.NPD tracks sales of various specialtykitchen electric categories such as electrickettles, popcorn makers, pizza ovens andchocolate fountains. By definition theseproducts are specialized, often times to just a single use, which makes this an inter-esting category to watch during challeng-ing economic times when consumers wantto get the most for their money.

Specialty Products Show GrowthThe specialty kitchen categories that

exhibited double-digit growth this past year(12 months ending August 2008 vs. prior12 months) are jar openers, popcorn mak-ers, tea makers and electric kettles. All fourof these categories perform a specific taskin an efficient manner for the consumer.With the exception of popcorn makers,these specialty products may be used dailyto enhance the quality of our everydaylives, particularly in this environment ofincreased “cocooning” and “stay-cations.”

The growth of jar openers, though still a relatively small category, is notewor-thy at 75 percent. This is a product thatfills a need, perhaps making an everydaytask easier for the large number of agingbaby boomers in the U.S.

Regarding tea makers, according toNPD’s National Eating Trends, per capitaor per person consumption of tea in thehome has been steadily increasing over the past five years (12 months ending May2008). Between the health benefits beingpromoted and the cost of buying a cup oftea at a local café, it’s no surprise that teamakers and electric kettles are demonstrat-ing significant growth.

When it comes to appliances, and specifically small appliances, consumer purchase behavior in terms of the types of items they are buying has not changed dramatically in the most recent six monthsof this economic downturn. Consumersare spending more time at home and theyare selectively continuing to spend money

on the items that they feel will make thattime more enjoyable.

At the same time, consumers are wary of making changes and heading in newdirections, as demonstrated by the cautionexpressed over environmentally-friendlyproducts and the investment necessary formany of these categories. In the headierdays of 2005 to mid-2007, consumersmigrated up the price spectrum and premi-um products sold very well. The higher-income consumers who drive the premiumprice segments are not making changes yet.However, those consumers who were trad-ing up to make aspirational purchases inrecent years are now facing the question of whether “good” is “good enough.”

They’re realizing that in this economy,it’s all about striking that delicate balancebetween wants and needs.

Peter Goldman is president of the HomeSection at The NPD Group. These are the opinionsof Goldman and NPD. For more information,contact Goldman at 516-625-6136.



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.

092408B/2100

NPD has a standard data model that is usedfor all categories, although it is modified tosuit the needs or characteristics of each. Thestandard model incorporates both consumerand point-of-sale (POS) databases. These twodata sources are highly complementary andare used to support one another-each makingthe other stronger.

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. Not all retail-ers participate, however, so informed esti-mates are made for product sales in non-par-ticipating retailers in a process called "projec-tion" or "POS projection." The completedsales 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 POS datadescribe the product, retail channel and price.They do not, however, address the buyer ofthe 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, as does a POSdatabase. More importantly, however, theconsumer surveys capture information abouteach purchase not available in the POS data-bases, buyer demographics, the product'sintended use and a variety of other character-istics. These facts help clients understand whyproducts are selling well or poorly and helpthem better understand consumers' motiva-tions. One additional advantage to the con-sumer surveys is that there are no "missingretailers" from the database since the informa-tion is gathered from panelists directly and noretailer cooperation is required.

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 survey

administered via the Web. The respondingsample is demographically weighted and pro-jected through a series of steps to representthe Total Adult (18+) and Total Teen (13-17)U.S. population.

Each week, over 145,000 individuals areselected from the NPD online consumerpanel to participate in one of three weeklystudies. The NPD online consumer panel iscomposed of pre-recruited individuals whohave agreed to participate in NPD online sur-veys and have completed a comprehensivedemographic questionnaire. The use of anestablished online panel assures good cooper-ation levels and predictable demographic bal-ance among cooperators.

Most survey work is completed via theInternet. Internet users are known to havecertain demographic and behavioral biases notfound in the total population, though theseare rapidly diminishing over time. A processof sample selection and respondent weightingis used to control demographics, however,reducing some of the biases in the sample.Extensive research has shown that by effec-tively weighting the sample, the Internetyields superior data quality (coverage) than dooffline methodologies.

POS METHODOLOGYNPD collects point-of-sale retailer data

from selected retailers. These data are theactual sales for the chain on an SKU-by-SKUbasis. The data are combined with data fromother retailers to produce reports on certaincategories by channel, where a sufficientnumber of retailers are cooperating and wheresufficient market demand exists for the data-base.

Data are not available from all retailers,however. The available data are projected tocover the missing (non-cooperating) retailerswithin each channel in most of NPD's cate-gories. In certain circumstances, brand shareweights are applied as well to compensate formissing retailers with a different brand mix,to more accurately reflect the marketplace.Those adjustments are generally guided byinputs from either consumer panel data oractual in-store audits.

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

DATA ANDMETHODOLOGY


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