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Wednesday, October 7, 2009

Laundry sales remain flat. (home laundry appliances). USA, LLC

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The laundry business finds itself caught in the same economic rut that has dogged the rest of major appliance industry. However, industry suppliers remain confident that business will remain stable throughout 1991.

The catchword for 1991 laundry sales so far is "flat." Although washer and dryer shipments showed a glimmer of hope by rebounding briefly in April, overall washer shipments were down by 4.5 percent compared to the same six-month period last year, according to Association of Home Appliance Manufacturers figures. Dryers were down 4.4 percent.

In fact, home laundry has not had a solid year since 1989, when the industry sold a record 6.25 million units. Last year, sales of washers and dryers were down 1 percent compared to 1989, according to industry figures.

"We're anticipating that the total year for 1991, the industry will be down another percent," said KenPritchett, market planning manager for GE Appliances. "It's down again from last year, but actually we were expecting it to be worse than down a percent."

"If the economy does shift, it won't be significant, but there will be some improvement in the second half," said Randy Frederick, director of product marketing for wet products at Frigidaire Co. "You are going to see the laundry industry as a whole grow a little bit."

While suppliers offered personal theories to explain flat sales, nearly all attributed partial blame to a weak national economy and the uncertainties caused by the Gulf war. "I would put most of the blame on the war," said Pritchett. "I don't think we'd being doing so badly if that hadn't happened."

Jay McDonald, national merchandising manager, Speed Queen, described current soft laundry sales as a "seven-year cycle" that the industry traditionally goes through. The consequence: "Consumers are delaying purchases as long as they possibly can."

McDonald predicted laundry sales will be "flat to down" for the rest of the year, with recovery not coming until later in 1992.

Pritchett offered a more long-range view. "Our forecast guys are predicting a little uptake [in sales] next year, and then pretty flat for the next few years. Next year will pick up a little bit and that level of industry will be fairly stable for the next couple of years."

Steve Benton, director of builder sales and product programs for Maytag Co., pointed to a breakdown of consumer confidence fueled by a weak economy. "Consumer confidence has fallen off the chart," he said. He predicted the industry will give off mixed signals for the rest of the year.

Bill White, marketing manager at Whirlpool, agreed, blaming slow sales on the recession and the war. He said a rebound is tied to consumer confidence.

White said recession fears, exacerbated by media coverage, have produced a cautious buying public the past 12 months. "Nowadays people read that 17,000 people going to be let go at company A, and then more at company B-- that kind of shakes people up for awhile."

To try to assuage consumer jitters, most suppliers said they plan to beef up promotional campaigns in the second half of the year to stimulate sales.

For instance, Maytag will offer consumers a money-back guarantee on selected machines through to October. Benton said the firm also is offering a buy-back program on any Maytag machine a customer returns.

McDonald said Speed Queen has doubled efforts to add more dealers to its distribution list. In addition, the company said it plans to shy away from a national promotional program and will push plans for different parts of the country.

"We're still aggressive as always with promotions through our distribution channels through funding of consumer pull programs, cash-backs, and rebates" said White. Maytag has earmarked additional funds for customer rebates this year to boost sales.

Pritchett said GE has just completed a rebate program that offered $30 off its high-end Spotscrubber washers and $20 off electronic-sensor extra-capacity dryers that ran from May to July. He would not say if GE planned any rebate program for the fall.

Though traditional TV/appliance dealers still generate the bulk of laundry sales, distribution continues to shift with traditional independents disappearing and superstores expanding their positions.

"There's not too many new ones in the business," said White. "Bigger ones have gotten bigger; the Circuit Cities and the Silos are going to coast to coast now--so rather than a regional presence they had a few years ago, they have a national presence."

White said dealers who survive will all do one thing: promote.

"Be it small or large, that does the basics well, whether that be just the little guy who has a preferred customer sale, who mails something out to a listing.

"Those are the kind of people who ride through recessionary periods all right."

What a customer wants from a washer or dryer hasn't changed much, said most suppliers. Machines touting convenience, the ability to control water level and temperature, and offering several wash cycles are the top priorities for consumers. "They're [customers] still looking for clean clothes," explained White.

Frederick discerned a few trends: because laundry is moving out of the basement, sales of dryers are growing in relation to washers because people want matching units, said the Frigidaire official. White-on-white is more popular, and quiet is getting more attention. Laundry centers are moving into the kitchen.

Durability, reliability and capacity are the operative words for purchase priorities, said Pritchett. "They [customers] probably want reasonable capacity so they can do larger loads less often.

"People are buying typical kinds of features--they're looking for extra-large capacity in washers, two speeds, and permanent-press cycles are kind of big features."

Price still ranks as a priority for customers looking to replace their old machine, said Pritchett. "The price is the motherhood--that can always change anybody's preferences. Maybe that's overriding all the consumer cues."

What price range now generates the most business depends on what vendor you ask. "Probably the bulk of the business was being done in the low end to start the year off, and now we see that shift going back to the middle and the high [price range]," said White.

"Over the last few years, the mix of price points has moved up slightly" from entry-level products to mid-featured units, said Pritchett.

Frederick noted Frigidaire just began shipping a series of electronic models which offer consumers added value. "There's more happening in laundry than any other product categories."

"Laundry was line room air conditioning: not part of the kitchen, so there were no feature changes. Now laundry has started to come out of the basement. Electronics were introduced.

"There are many sensors. There are safeguards. You can't put hot water into delicates. Now there are precise temperatures. You see more customization of cycles or one-touch [controls] or child locks."

Benton agreed electronic controls will gain momentum this year because of gradual growing interest by consumers. However, the Maytag official predicted it will remain a niche market.

What's certain to loom larger are tougher energy-efficiency standards which machines will have to meet by 1994. The Department of Energy issued the standards in May, estimating the standards will increase manufacturers' per-unit costs by $14.60 for electric and gas dryers and $1 for clothes washers. The government said these added costs would be more than offset by reduced energy over the lifetime of the appliance.

Manufacturers will no doubt have to reduce the water capacity and increase the unit cost to meet those standards.

Frederick said the American desire for big capacity means many families wash eight pounds of clothes in a machine that holds 20 pounds.

The standards will translate into design features that actually cost more money, said the Frigidaire official. One possibility is manufacturers will shift to such features as auto-drying from time-drying.

However, for now, suppliers concur laundry will just maintain its typical conservative course. "In general, there's not a lot going on here," said GE's Pritchett. "This business is pretty traditional and just tends to go on its merry way [selling] basic product."

PHOTO : Frigidaire's Randy Frederick, above, and Maytag's Steve Benton agree electronic sensors are gaining in popularity

Source Citation:McConville, James A. "Laundry sales remain flat." HFD-The Weekly Home Furnishings Newspaper 65.n30 (July 22, 1991): 73(2). General OneFile. Gale. Alachua County Library District. 7 Oct. 2009

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