Striking Balance in an Unbalanced Market

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					                                                                                                                                 Winter 2008

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


        n a challenging economy it’s no sur-       As of October 2008,

   I    prise that consumer behavior shifts.
        Beyond that, preferences and priori-
ties seem to shift as well. When consumers
                                                92 percent of consumers
                                                surveyed by The NPD
                                                Group thought the U.S.
are challenged with making decisions            economy was in or headed
between what they want and what they need,      for bad economic times.
the lines may begin to blur as the impulsive,   This was a nine-point
extravagant purchases lose their luster and     increase over September.
those that serve a necessary purpose take       About half of respondents
priority.                                       indicated they planned to
                                                spend less on items like
                                                appliances, home textiles
                                                and home improvement in
About Housewares MarketWatch                    the coming months.
  Housewares MarketWatch reports
                                                Apparel and footwear,
both point-of-sale (POS) and consumer           necessities for all con-
data from NPD databases. The quarterly          sumers, appear to be hold-
data covers various product categories          ing on to customers who
within the divisions of Small Appliances        plan to spend the same
and Non-electric Housewares.                    amount of money on
   The information contained on the             these items as they have in
following pages is offered as a snapshot        the past.
of a category’s performance, both from                                                         of coupons to save money, while men are
the retailer (POS) and consumer                    With the unemployment rate hitting
                                                                                               more likely not to do anything different.
perspectives. The POS data covers the           6.5 percent in October, 1.7 percentage
                                                                                               However, men expressed more of an
retail channels of mass/national chains,        points above what it was the same time a
                                                                                               interest in discount/membership programs
department store, specialty store and drug      year ago, 72 percent of consumers told us
                                                                                               than women. Consumers under retirement
store (personal care and home                   they were somewhat or very concerned for
                                                                                               age were more likely than their older coun-
environment only). Each issue of                the security of their job/income. This
Housewares MarketWatch will feature                                                            terparts to take advantage of some kind
                                                demonstrates the recognition of a personal
several categories from the Small                                                              of money-saving promotional event
                                                reality, an uneasiness that goes beyond just
Appliances and Housewares divisions.                                                           or program.
                                                acknowledging a challenging economy.
  Complete data on a category can be            The increased concern over personal               Across small appliances price has long
purchased by visiting NPD’s website at                                                         been one of the most important reasons
                                                employment will likely tighten belts even
www.npd.com.See the Data and
                                                further during the critical holiday period.    for purchase. This has become even more
Methodology section on page 8 for an
                                                                                               evident in recent months. In the three
explanation of how the data is compiled.
                                                Coupons, Price Affect Purchases                months ending August 2008, for the first
                                                                                               time in three years, NPD’s Consumer
                                                   The survey also told us women are
                                                                                               Tracking Service showed price outpacing
                                                significantly more likely to take advantage
                                                                                                                       continued on page 6
Small Appliances: KITCHEN ELECTRICS
MARKET SIZE
QUARTER THREE • 2008                                                         DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                                     Unit Volume Share
                                                                                         6 months ending — September 2008
                 ET
               RK L
           M AO TA
             T




20,000

            19,885                                                         SLOW COOKERS • REGION
                                          GE P/

                                                                    Percentage purchased in region versus census
                                       RA RE
                                     VE P




15,000                                            20
                                   BE OOD




                                                                                                                                         17.1 %
                                                                                                                                                                            SLOW COOKERS




                                                                                                                                                                                                                               16.2 %
                                     F




                                                                                                          15.9 %




                                                                                                                                                                                                                                          15.7 %
                                                                                                                                                  18.6 %
                          TR G




                                                                                                 15.3 %
                                                                                                                                                                            CENSUS (PERCENT
                               S
                        EC IN
                            IC




                                                                                                                                                                            OF POPULATION)
                      EL OOK




                                                                                      14.1 %
10,000                             11,970
                                                  15
                        C




                                                                                                                                                                                     14.7 %
                                                                            11.4 %




                                                                                                                                                                                              11.3 %
                       7,915
 5,000
                                                  10




                                                                                                                        8.0 %




                                                                                                                                                                                                          7.8 %
                                                                                                                                6.8 %




                                                                                                                                                                                                                   6.6 %
                                                                                                                                                            6.1 %
                                                                                                                                                                    6.0 %
    0
                                                                 4.9 %




Source: Consumer Tracking Service
                                                        3.5 %




                                                   5

                       COFFEE
                      GRINDERS                     0
                                                          New               Middle              East North West North                      South            East South West South Mountain                                          Pacific
     ■   Blade-type coffee grinders                     England             Atlantic             Central    Central                       Atlantic           Central    Central
         represented 76% of dollar sales          Source: Consumer Tracking Service
         for the category in Q3’08.
           Source: Retail Tracking Service
                                                                WAFFLE IRONS • AGE OF BUYER
                                                         Percentage purchased by age of buyer versus census
                                                                                                                                                           WAFFLE IRONS
                                                                                                                                                           CENSUS (PERCENT OF POPULATION)
                                                  20
                                                                                                               17.8 %




             SANDWICH MAKERS
                                                                                                                          16.8 %




                                                                                                                                                                                                                           19.7 %
                                                                                                                                        16.1 %




                                                                                                                                                                                                 16.1 %
                                                                                                                                                  18.9 %




               ■   68% of sandwich makers

                                                                                                                                                                                                                                        14.7 %
                                                                                                                                                               17.8 %




                   sold in Q3’08 had a
                                                                                                                                                                            17.2 %




                   cool touch feature.            15
                                                                                               11.7 %




                                                                                                                                                                                                          11.7 %




           Source: Retail Tracking Service
                                                                                     9.1 %
                                                                    9.0 %




                                                  10


   ESPRESSO/CAPPUCCINO
                                                         3.3 %




          MAKERS                                   5
               ■   Almost 8% of espresso/
                   cappuccino makers sold
                   in Q3’08 were 1 cup/            0
                   single serve models                  13-17 years              18-24 years                 25-34 years                35-44 years           45-54 years                     55-64 years                  65+ years
           Source: Retail Tracking Service        Source: Consumer Tracking Service


Source: The NPD Group                                                                2
Small Appliances: PERSONAL CARE
MARKET SIZE
QUARTER THREE • 2008                                                        DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                                    Unit Volume Share
                                                                                        6 months ending — September 2008
               ET
             RK L
         M AO TA




50000
           T




                                           R
                                  RE HE
                               CA OT                                MASSAGING APPLIANCES • REGION
         45,561
40000
                                                                   Percentage purchased in region versus census
                             AL E &




                                                                                                                                                                                                                            18.3 %
                                               20
                           ON AR
                           NG /
                         MI RE




                                                                                                                                                                            MASSAGING
                         RS C
                      OO CA


                      PE RAL




                                                                                                         15.9 %
                                                                                                                                                                            APPLIANCES




                                                                                                                                                                                                                                       15.7 %
30000




                                                                                                                                                 18.6 %
                                                                                                                                        18.1 %
                    GR AIR


                        O




                                                                                     14.1 %
                                                                                                                                                                            CENSUS (PERCENT
                     H




                                               15                                                                                                                           OF POPULATION)


                                                                           12.3 %
20000                          24,102




                                                                                                12.1 %




                                                                                                                                                                                             11.3 %
                    21,459




                                                                                                                                                            9.9 %



                                                                                                                                                                                     9.2 %
10000
                                               10




                                                                                                                                                                                                       8.0 %
                                                                                                                               6.8 %




                                                                                                                                                                                                                6.6 %
                                                     6.3 %




                                                                                                                                                                    6.0 %
    0



                                                                                                                       5.7 %
                                                               4.9 %




Source: Consumer Tracking Service
                                                5

                HAIR SETTERS
            ■   Hair setters with 20            0
                rollers accounted for                  New                  Middle             East North West North                      South             East South West South Mountain                                       Pacific
                half of the unit sales               England                Atlantic            Central    Central                       Atlantic            Central    Central
                in Q3’08.                      Source: Consumer Tracking Service

         Source: Retail Tracking Service
                                                     MEN’S ELECTRICAL SHAVERS • AGE OF BUYER
                                                     Percentage purchased by age of buyer versus census
                                                                                                                                                           MEN’S ELECTRICAL SHAVERS
                                                                                                              23.7 %




                                               25                                                                                                          CENSUS (PERCENT OF POPULATION)
                 HAIR DRYERS
            ■   A quarter of hair dryers
                                                                                                                                                  18.9 %




                sold in Q3’08 used             20
                                                                                                                                                                            17.2 %
                                                                                                                          16.8 %




                                                                                                                                                               16.2 %




                ceramic technology,
                                                                                                                                       15.8 %
                                                                                     15.7 %




                                                                                                                                                                                                                                     14.7 %
                and almost 70% used
                ionic technology.
                                               15
                                                                                                                                                                                                                        11.9 %
                                                                                                                                                                                                       11.7 %
                                                                                              11.7 %




         Source: Retail Tracking Service
                                                                   9.0 %
                                                       8.4 %




                                                                                                                                                                                               8.2 %




                                               10

             MEN’S TRIMMERS
            ■   7% of men’s trimmers            5
                sold in Q3’08 were
                body groomers.
                                                0
                                                     13-17 years                    18-24 years             25-34 years                35-44 years            45-54 years                    55-64 years                65+ years

         Source: Retail Tracking Service       Source: Consumer Tracking Service


                                                                                    3                                                            Source: The NPD Group
Small Appliances: HOME ENVIRONMENT                                                                                             ( E X C L U D I N G VA C S )



MARKET SIZE
QUARTER THREE • 2008                                                DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                         Unit Volume Share
                                                                             6 months ending — September 2008
                        ET
                      RK L
                  M AO TA
                    T




25000
                                                        AIR PURIFIERS • BUYER GENDER
                     24,331
                                                 Percentage purchased by buyer gender versus census
20000
                                           60                     AIR PURIFIERS
                                                                  CENSUS (PERCENT OF POPULATION)                                                     54.6 %
15000
                                           50                                                                                                                                      51.1 %
                                                                                                       48.9 %
                                                                  45.4 %
10000
                                           40

5000
                                           30

    0                                      20
Source: Consumer Tracking Service

                                           10


                                            0
                                                                                      Male                                                                           Female

                                           Source: Consumer Tracking Service



                                                                 AIR PURIFIERS • INCOME
                                                         Percentage purchased by income versus census
                                           20
                        HEATERS                                                                       AIR PURIFIERS
                                                                                                      CENSUS (PERCENT OF POPULATION)
                                                                    17.8 %




                                                                                                                                                                          17.6 %
                                                                             16.6 %

                                                                                             13.1 %




                 ■   30% of heaters
                                                                                                       16.1 %




                                           15
                                                                                                                 12.1 %




                                                                                                                                                       15.0 %




                     sold in Q3’08
                                                                                                                                            11.5 %




                                                                                                                                                                                   11.3 %
                                                         11.1 %




                     used ceramic
                                                                                                                          13.7 %




                                                                                                                                                                13.2 %
                                                                                                                                    9.9 %




                     heat technology.
                                           10
                                                 7.8 %




                                                                                                                                                                                            6.7 %




         Source: Retail Tracking Service
                                                                                                                                                                                                    6.5 %




                                            5



                                            0
                                                  Under            $15,000 –            $30,000 –               $45,000 –          $60,000 –          $75,000 –          $100,000 – $150,000 +
                                                 $15,000            29,999               44,999                  59,999             74,999             99,999             149,999
                                           Source: Consumer Tracking Service


Source: The NPD Group                                                  4
Small Appliances: FLOOR CARE
MARKET SIZE
QUARTER THREE • 2008                                           DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                      Unit Volume Share
                                                                          6 months ending — September 2008
                         ET
                       RK L
                   M AO TA




10000
                     T




                                                     CANISTER VACUUMS • BUYER GENDER
 8000                9,133                       Percentage purchased by buyer gender versus census
                                           60
                                                            CANISTER VACUUMS
                                                                                                                       56.6 %
 6000                                                       CENSUS (PERCENT OF POPULATION)
                                           50                                                                                                51.1 %
                                                                                       48.9 %
 4000                                                        43.4 %
                                           40

 2000
                                           30

    0
                                           20
Source: Consumer Tracking Service

                                           10


                                            0
                                                                            Male                                                  Female

                                           Source: Consumer Tracking Service



                                                   CANISTER VACUUMS • HOUSEHOLD SIZE
                                                Percentage purchased by household size versus census
               HAND VACUUMS                40
                                                                                                                    CANISTER VACUUMS
               ■   Cyclonic hand
                                                                              37.1 %




                                           35
                   vacuums now                                                                                      CENSUS (PERCENT OF POPULATION)
                                                                                       26.3 %




                   represent less than     30
                   half of units sold,
                                                                                                                                   22.6 %




                                                                                                                                                         21.4 %

                   46% as of Q3’08,        25
                                                                                                 20.1 %

                                                                                                           19.3 %




                   compared to 53%
                   in Q3’07.
                                                                                                                                                15.9 %




                                           20
                                                                                                                         13.9 %
                                                   12.9 %




         Source: Retail Tracking Service
                                           15
                                                             10.3 %




                                           10

                                            5

                                            0
                                                  Single Member              Two Members        Three Members           Four Members        Five or More Members

                                           Source: Consumer Tracking Service


                                                                      5                                   Source: The NPD Group
Housewares: NON-ELECTRIC
MARKET SIZE                                                Housewares: Weathering Through the Economic Storm
QUARTER THREE • 2008                                       Continued from page 1
UNIT VOLUME IN THOUSANDS
                                                           features as consumers’ most
                                                           important purchase factor.
                                          DINNERWARE
         10,430




                                                           When considering the vari-
12000                                     BEVERAGEWARE
                                                           ous segments within the
                                          COOKWARE         small appliance industry, fea-
10000                                     BAKEWARE         tures and price are consis-
                                          CUTLERY          tently the top two reasons
                  6,262




8000
                                          FLATWARE         for purchase.
                                                              Kitchen electrics follows a
                          4,080




6000
                                  3,373




                                                           similar pattern to the indus-
                                                           try in total with price outpac-
                                           2,090




4000
                                                   1,713




                                                           ing features. Home environ-
2000                                                       ment appliances have been
                                                           consistently driven by price
   0                                                       over the last year – more so
Source: Retail Tracking Service                            than any other segment.
                                                           Personal care appliances con-
                                                           tinue to be a feature-driven
                                                           business, with features still
                          COOKWARE                         outweighing price.
                  ■   18% of cookware                         For kitchen categories
                      dollars came from fry                consumers perceive to be
                      pans/skillets in Q3’08.
                                                           necessities, make a task easier,
                                                           or can be used in more than
           Source: Retail Tracking Service                 one way, features still trump
                                                           price. Some examples are drip coffeemak-       Attitudes and Behaviors report. When
                                                           ers, stand mixers, food processors, toaster    asked about green home products, con-
                                                           ovens and slow cookers.                        sumers offered this type of feedback:
                          FLATWARE                                                                        “Make it more environmentally-friendly
                  ■   Casual flatware                      “Green” Loses its Cache                        while keeping the cost down” and
                      accounted for 58% of                                                                “Especially in today’s economy, I cannot
                      dollar sales in Q3’08.                   With regard to price and its impact
                                                                                                          afford to spend a lot more to be eco-
                                                           on decision-making, environmentally-
                                                                                                          friendly.” While this economic landscape
                                                           friendly or “green” products are a strong
                                                                                                          seems to be opportunistic for CFL light
           Source: Retail Tracking Service                 and timely example. At a time when many
                                                                                                          bulbs, a clear cost-cutting opportunity,
                                                           consumers are concerned about the envi-
                                                                                                          it will be interesting to see whether
                                                           ronment but also concerned with the econ-
                                                                                                          energy- and water-efficient, front-loading
                                                           omy, the decision to buy a product because
                                                                                                          washing machines and steam dryers can
                                                           it is “green” may not have the cache it did
                                                                                                          sustain their remarkable growth.
                                                           just six months ago. Given difficult choic-
                          BAKEWARE
                                                           es, the consumer may have to sacrifice envi-       Products with tangible benefits are
                  ■   Glass bakeware                       ronmental benefits and good “green”            the ones that have endured the test of time
                      represented 18% of                   intentions in lieu of financial constraints.   – and it’s likely they’ll withstand the adver-
                      dollar sales in Q3’08.
                                                                                                          sities of today’s economy, too. Fads have
                                                              Consumers weighed in on this point
           Source: Retail Tracking Service                                                                come and gone many times over, but items
                                                           in NPD’s recent Green 2008: Consumer

Source: The NPD Group                                                           6
with features based in functionality remain.          The growth of jar openers, though           on the items that they feel will make that
NPD tracks sales of various specialty            still a relatively small category, is notewor-   time more enjoyable.
kitchen electric categories such as electric     thy at 75 percent. This is a product that
                                                                                                     At the same time, consumers are wary
kettles, popcorn makers, pizza ovens and         fills a need, perhaps making an everyday
                                                                                                  of making changes and heading in new
chocolate fountains. By definition these         task easier for the large number of aging
                                                                                                  directions, as demonstrated by the caution
products are specialized, often times to         baby boomers in the U.S.
                                                                                                  expressed over environmentally-friendly
just a single use, which makes this an inter-
                                                    Regarding tea makers, according to            products and the investment necessary for
esting category to watch during challeng-
                                                 NPD’s National Eating Trends, per capita         many of these categories. In the headier
ing economic times when consumers want
                                                 or per person consumption of tea in the          days of 2005 to mid-2007, consumers
to get the most for their money.
                                                 home has been steadily increasing over           migrated up the price spectrum and premi-
                                                 the past five years (12 months ending May        um products sold very well. The higher-
Specialty Products Show Growth                   2008). Between the health benefits being         income consumers who drive the premium
    The specialty kitchen categories that        promoted and the cost of buying a cup of         price segments are not making changes yet.
exhibited double-digit growth this past year     tea at a local café, it’s no surprise that tea   However, those consumers who were trad-
(12 months ending August 2008 vs. prior          makers and electric kettles are demonstrat-      ing up to make aspirational purchases in
12 months) are jar openers, popcorn mak-         ing significant growth.                          recent years are now facing the question
ers, tea makers and electric kettles. All four                                                    of whether “good” is “good enough.”
                                                    When it comes to appliances, and
of these categories perform a specific task
                                                 specifically small appliances, consumer              They’re realizing that in this economy,
in an efficient manner for the consumer.
                                                 purchase behavior in terms of the types          it’s all about striking that delicate balance
With the exception of popcorn makers,
                                                 of items they are buying has not changed         between wants and needs.
these specialty products may be used daily
                                                 dramatically in the most recent six months
to enhance the quality of our everyday                                                                Peter Goldman is president of the Home
                                                 of this economic downturn. Consumers             Section at The NPD Group. These are the opinions
lives, particularly in this environment of
                                                 are spending more time at home and they          of Goldman and NPD. For more information,
increased “cocooning” and “stay-cations.”
                                                 are selectively continuing to spend money        contact Goldman at 516-625-6136.




                                                                       7                           Source: The NPD Group
DATA AND
METHODOLOGY
   NPD has a standard data model that is used        administered via the Web. The responding
for all categories, although it is modified to       sample is demographically weighted and pro-       ABOUT THE
suit the needs or characteristics of each. The       jected through a series of steps to represent     NPD GROUP, INC.
standard model incorporates both consumer            the Total Adult (18+) and Total Teen (13-17)         The NPD Group, Inc. (NPD) is a glob-
and point-of-sale (POS) databases. These two         U.S. population.                                  al market information company that
data sources are highly complementary and               Each week, over 145,000 individuals are        measures product movement and con-
are used to support one another-each making          selected from the NPD online consumer             sumer behavior across a broad range
the other stronger.                                  panel to participate in one of three weekly       of industries -- apparel, automotive
   Point-of-Sale (POS) databases are assem-          studies. The NPD online consumer panel is         products, consumer electronics, cosmet-
bled from retailers' records of actual sales by      composed of pre-recruited individuals who         ics and fragrances, food, foodservice,
product as collected at the cash register.           have agreed to participate in NPD online sur-     footwear, housewares, information tech-
These databases are highly reliable and pro-         veys and have completed a comprehensive           nology, interactive entertainment, toys
vide census counts of sales by product and           demographic questionnaire. The use of an          and music. NPD's clients, many in the
price for participating retailers. Not all retail-   established online panel assures good cooper-     Fortune 500, use this insight to uncover
ers participate, however, so informed esti-          ation levels and predictable demographic bal-     market opportunities, strengthen chan-
mates are made for product sales in non-par-         ance among cooperators.                           nel relationships and benchmark indus-
ticipating retailers in a process called "projec-       Most survey work is completed via the          try performance. Since 1967, NPD has
tion" or "POS projection." The completed             Internet. Internet users are known to have        introduced numerous industry firsts,
sales data are valuable to clients trying to         certain demographic and behavioral biases not     most recently combining and calibrating
understand which products or items are sell-         found in the total population, though these       information from consumer panels and
ing well and which are not, at which prices          are rapidly diminishing over time. A process      point-of-sale tracking via its flagship
and in which channels. The finished POS data         of sample selection and respondent weighting      services, the NPD Worlds. The firm has
describe the product, retail channel and price.      is used to control demographics, however,         offices and affiliations in 60 countries.
They do not, however, address the buyer of           reducing some of the biases in the sample.        For more information on The NPD
the product.                                         Extensive research has shown that by effec-       Group, visit www.npd.com.
   Consumer databases are developed using            tively weighting the sample, the Internet
product purchase surveys completed by a              yields superior data quality (coverage) than do
large-scale rotating sample of consumers.            offline methodologies.
These data also produce estimates of sales by
product and retail channel, as does a POS            POS METHODOLOGY
database. More importantly, however, the                NPD collects point-of-sale retailer data       Deborah A. Teschke, Senior Editor
consumer surveys capture information about           from selected retailers. These data are the       Peter Goldman, Contributing Editor
each purchase not available in the POS data-         actual sales for the chain on an SKU-by-SKU       Janine Marshall-Bolton, Contributing Editor
bases, buyer demographics, the product's             basis. The data are combined with data from       Tom Goodman, Design
intended use and a variety of other character-       other retailers to produce reports on certain     Published by IHA
istics. These facts help clients understand why      categories by channel, where a sufficient         For more information, contact
products are selling well or poorly and help         number of retailers are cooperating and where     Debbie Teschke at 847-692-0110; or
them better understand consumers' motiva-            sufficient market demand exists for the data-     dteschke@housewares.org
tions. One additional advantage to the con-          base.
sumer surveys is that there are no "missing            Data are not available from all retailers,
retailers" from the database since the informa-      however. The available data are projected to
tion is gathered from panelists directly and no      cover the missing (non-cooperating) retailers
retailer cooperation is required.                    within each channel in most of NPD's cate-
                                                     gories. In certain circumstances, brand share
CONSUMER METHODOLOGY                                 weights are applied as well to compensate for
  Most consumer data in the U.S. are gath-           missing retailers with a different brand mix,
ered from periodic samples of individuals who        to more accurately reflect the marketplace.       6400 SHAFER COURT, STE. 650
are asked about their recent purchases.              Those adjustments are generally guided by         ROSEMONT, IL 60018 USA
Respondents report certain details about the         inputs from either consumer panel data or         TEL: 847-292-4200 FAX: 847-292-4211
type and nature of their purchases in a survey       actual in-store audits.                           www.housewares.org

Source: The NPD Group                                                      8                                                          092408B/2100

				
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