The Recession Proof Premium Market

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The Recession Proof Premium Market Powered By Docstoc
					                                                                                                                                       Fall 2009

The Recession-Proof Premium Market
By Peter Goldman, The NPD Group, Inc.

                                               personal care, home

B
       ased on the extended recession,
       consumer spending is in the dol-        environment and major
       drums. High unemployment fig-           appliance categories.
ures and risk to job security are primary      Nearly two years later,
drivers influencing consumers’ purchase        and a year or more
decisions. As would be expected for most       (depending on how you
consumers and most categories, these pur-      count it) into this con-
chase decisions are changing.                  sumer recession, con-
                                               sumers now tell us price
   In the first half of 2007, consumers told
                                               is the primary factor in
us features were the primary reason for pur-
                                               the decision-making
chases made across the kitchen electrics,
                                               process, and features
                                               are secondary. In try-
                                               ing economic times,
About Housewares MarketWatch                   especially during an
  Housewares MarketWatch reports               extended recession, it
both point-of-sale (POS) and consumer          should be no surprise
data from NPD databases. The quarterly         that most purchases are
data covers various product categories
                                               driven by price.
within the divisions of Small Appliances
                                               However, additional
and Non-electric Housewares.
                                               influences make their
   The information contained on the                                                             are helping to drive forward the premium
                                               way into the mix and continue to play a sig-
following pages is offered as a snapshot                                                        segment. Although the premium segment is
                                               nificant role.
of a category’s performance, both from                                                          flat or declining in many appliance cate-
the retailer (POS) and consumer                   Whether it is the general population, or
                                                                                                gories, it accounts for 20 percent or more
perspectives. The POS data covers the          the smaller percentage of consumers who
                                                                                                of the dollars. In the categories where the
retail channels of mass/national chains,       can still afford to make premium purchases,
                                                                                                higher price points are performing well and
department store, specialty store and drug     price and necessity are the clear factors
store (personal care and home
                                                                                                average selling price is increasing, it is clear
                                               behind most appliance purchase decisions.
environment only). Each issue of                                                                what consumers seek and how they are will-
                                               In speaking of needs, we are mainly refer-
Housewares MarketWatch will feature                                                             ing to spend their money.
                                               ring to replacement purchases. For exam-
several categories from the Small                                                                   Compared to last year, the premium end
                                               ple, as a coffee drinker, I must have a coffee
Appliances and Housewares divisions.                                                            of many appliance categories grew in the
                                               machine at home. Similarly, most con-
  Complete data on a category can be           sumers can’t live without a washing              first six months of 2009. These include
purchased by visiting NPD’s website at                                                          refrigerators, laundry, dishwashers, toaster
                                               machine.
www.npd.com.See the Data and                                                                    ovens, electric shavers and canister vacuums
Methodology section on page 8 for an                                                            – each of which addresses consumers’ basic
explanation of how the data is compiled.
                                               Innovation Drives
                                               Premium Market                                   needs. The major appliance industry has
                                                                                                always been reasonably prevalent in con-
                                                  Most of these needs-based replacement
                                                                                                sumer media, and in recent years we have
                                               purchases are driven by price. However,
                                                                                                seen increased focus on design, new technol-
                                               technology, innovation and specialization
                                                                                                                           continued on page 7
Small Appliances: KITCHEN ELECTRICS
MARKET SIZE
QUARTER TWO • 2009                                                            DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                                       Unit Volume Share
                                                                                              6 months ending — June 2009
              ET
            RK L
        M AO TA
          T




           19,261                             GE P/        ELECTRIC GRILLS & GRIDDLES • BUYER GENDER
                                                                    Percentage purchased by buyer gender versus census
                                           RA RE
                                         VE P
                                       BE OOD




                                                                                                                                               ELECTRIC GRILLS & GRIDDLES
                                         F
                             TR G
                                  S




                                                                                                                                               CENSUS (PERCENT OF POPULATION)
                           EC IN
                               IC
                         EL OOK




                                        11,606
                           C




                                                                                                                                                      62.4 %
                                                                                                                                                                                     51.1 %
                           7,655                                                                         48.9 %

                                                                            37.6 %


Source: Consumer Tracking Service



                            SLOW
                           COOKERS
           ■    Slow cookers with a capacity of                                               Male                                                                      Female
                4.1-5.0 quarts represent 22% of
                                                      Source: Consumer Tracking Service
                Q2’09 category unit sales,
                compared to just 12% in Q2’08.
               Source: Retail Tracking Service
                                                                                     FOOD PROCESSORS • REGION
                                                                            Percentage purchased in region versus census

                                                                                                                                                        FOOD PROCESSORS
                                                                                                                                     18.6 %
                                                                                                                            18.2 %
                                                                            17.2 %




                           VACUUM                                                                                                                       CENSUS (PERCENT OF
                                                                                                                                                        POPULATION)
                                                                                                15.9 %




                           SEALERS


                                                                                                                                                                                                           15.7 %
                                                                                               15.5 %




                                                                                                                                                                                                  14.2 %
                                                                                     14.1 %




       ■       Vacuum sealers with bag storage
                                                                                                                                                               12.6 %




               gained share in Q2’09 compared
                                                                                                                                                                         11.3 %




               to the same time last year, now
               accounting for 60% of unit sales.
               Source: Retail Tracking Service
                                                                                                                                                                                  8.4 %
                                                                                                            7.1 %
                                                                                                                    6.8 %




                                                                                                                                                                                          6.6 %
                                                                                                                                                      6.0 %
                                                                    4.9 %




                                                                                                                                              3.8 %




                      BREADMAKERS
                                                            3.0 %




   ■   Multi-purpose breadmakers traded
       places with the breadmaker-only
       product in the second quarter of
       2009, now representing the majority                    New            Middle           East North West North           South           East South West South Mountain                        Pacific
       of the dollar sales at nearly 53%.                   England          Atlantic          Central    Central            Atlantic          Central    Central
               Source: Retail Tracking Service        Source: Consumer Tracking Service


Source: The NPD Group                                                                2
Small Appliances: PERSONAL CARE
MARKET SIZE
QUARTER TWO • 2009                                                                      DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                                                  Unit Volume Share
                                                                                                         6 months ending — June 2009
               ET
             RK L
         M AO TA
           T




                                                                     ELECTRIC TOOTHBRUSHES • AGE OF BUYER
                                                       R
                                                 RE HE
                                              CA OT
         42,924                                                            Percentage purchased by age of buyer versus census
                                            AL E &




                                                                                                                     23.9 %
                                         ON AR
                             NG /




                                                                                                                                                              ELECTRIC TOOTHBRUSHES
                                       RS C
                           MI RE


                                     PE RAL
                        OO CA




                                                                                                                                                              CENSUS (PERCENT OF POPULATION)
                                       O
                      GR AIR




                                                                                                                                          19.8 %
                       H




                                                                                                                                                                          17.2 %
                                      23,214




                                                                                                                                16.8 %
                       19,710




                                                                                                                                                   18.9 %
                                                                                               14.8 %




                                                                                                                                                               14.8 %




                                                                                                                                                                                                                          14.7 %
                                                                                                        11.7 %




                                                                                                                                                                                             11.7 %
                                                                  10.0 %




                                                                                                                                                                                     9.1 %
                                                                              9.0 %




Source: Consumer Tracking Service




                                                                                                                                                                                                               7.6 %
                        WOMEN’S
                        SHAVERS

  ■   Although epilators only represent 19%                       13 – 17                      18 – 24                25 – 34              35 – 44             45 – 54                55 – 64                     65
      of category unit sales, they accounted                       years                        years                  years                years               years                  years                    years +
      for 40% of dollar sales in Q2’09.                    Source: Consumer Tracking Service
            Source: Retail Tracking Service
                                                                                                        IRONS • HOUSEHOLD SIZE
                                                                     Percentage purchased by household size versus census
                                                                                                           30.3 %




                      HAIRDRYERS                                                                                                                              IRONS
                                                                                                                                                              CENSUS (PERCENT OF POPULATION)
                                                                                                                       26.3 %




        ■   Nearly 50% of all hairdryers sold
                                                                                                                                                                                   22.6 %



                                                                                                                                                                                                      21.8 %


            in Q2’09 had no attachments                                                                                                                                                                                21.4 %
            included, accounting for 40% of
                                                                                                                                         19.3 %

                                                                                                                                                     19.3 %




            dollar sales.
                                                                                                                                                                        17.1 %




            Source: Retail Tracking Service
                                                                     11.4 %

                                                                                      10.3 %




               MEN’S TRIMMERS
        ■   Multi-purpose men’s trimmers
            still represent the largest portion
            of the category at 42% of dollar
            sales, but they have lost some
            share to nose/ear trimmers, pen                                 Single                                 Two                       Three                          Four                      Five or More
            trimmers and body groomers.                                    Member                                Members                    Members                        Members                      Members
            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 TWO • 2009                                               DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                  Unit Volume Share
                                                                         6 months ending — June 2009
                         ET
                       RK L
                   M AO TA
                     T




                    23,355                                               FANS • BUYER GENDER
                                                     Percentage purchased by buyer gender versus census
                                                                                                              FANS
                                                                                                              CENSUS (PERCENT OF POPULATION)

                                                                                                                54.7 %
                                                                                                                                       51.1 %
                                                                                   48.9 %
                                                            45.3 %




Source: Consumer Tracking Service




                                                                         Male                                                 Female
                                           Source: Consumer Tracking Service


                                                                         FANS • HOUSEHOLD SIZE
                                                   Percentage purchased by household size versus census
                      WATER
                                                                                   26.3 %




                   FILTRATION                                                                                 FANS
                                                                          29.3 %




                     DEVICES                                                                                  CENSUS (PERCENT OF POPULATION)
                                                                                            21.8 %

                                                                                                     19.3 %




                                                                                                                                         19.1 %
                                                                                                                     18.3 %

                                                                                                                              22.6 %




                                                                                                                                                  21.4 %

         ■   In-line water filtration
             devices represented 15%
             of unit sales in Q2’09.
                                                   11.5 %

                                                            10.3 %




         Source: Retail Tracking Service




                                                        Single                 Two              Three                    Four             Five or More
                                                       Member                Members           Members                  Members             Members
                                           Source: Consumer Tracking Service


Source: The NPD Group                                                4
Small Appliances: FLOOR CARE
MARKET SIZE
QUARTER TWO • 2009                                                        DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                                    Unit Volume Share
                                                                                           6 months ending — June 2009
                             ET
                           RK L
                       M AO TA




8,000
                         T




7,000                                                                                 HAND VACUUMS • REGION
                         7,339
6,000
                                                                        Percentage purchased in region versus census




                                                                                                                               24.8 %
5,000                                                                                                                                             HAND VACUUMS

4,000
                                                                                                                                                  CENSUS (PERCENT OF POPULATION)




                                                                                                    15.9 %




                                                                                                                                                                                                              15.7 %
3,000




                                                                                                                                        18.6 %
                                                                                  14.1 %




                                                                                                                                                                   13.8 %




                                                                                                                                                                                                     12.9 %
2,000
                                                                         12.0 %




                                                                                                                                                                            11.3 %
                                                                                           11.3 %
1,000




                                                                                                             8.5 %




                                                                                                                                                  8.1 %
   0




                                                                                                                      6.8 %




                                                                                                                                                                                        6.6 %
Source: Consumer Tracking Service




                                                                                                                                                          6.0 %




                                                                                                                                                                                     5.4 %
                                                               4.9 %
                                                       3.2 %




                                                         New              Middle           East North West North                 South           East South West South Mountain                        Pacific
                                                       England            Atlantic          Central    Central                  Atlantic          Central    Central
                                                 Source: Consumer Tracking Service

                                                                                      HAND VACUUMS • INCOME
                                                                        Percentage purchased by income versus census

                     EXTRACTORS/                                                                                                                  HAND VACUUMS
                      DEEP CARPET                                                                                                                 CENSUS (PERCENT OF POPULATION)
                       CLEANERS
                                                                                                                                                                   21.7 %
                                                                                  16.6 %




                                                                                                                                                 16.6 %
                                                                                                    16.1 %
                                                                                           13.8 %




                                                                                                                      13.7 %




        ■   21% of all full-sized vacuums sold
                                                                                                                                                          13.2 %
                                                                         13.1 %




            between April and June 2009 were
                                                                                                                                        11.5 %




                                                                                                                                                                            11.3 %
                                                               11.1 %




            extractors/deep carpet cleaners.
                                                                                                             10.4 %



                                                                                                                               9.8 %




              Source: Retail Tracking Service
                                                       7.2 %




                                                                                                                                                                                             6.5 %
                                                                                                                                                                                     5.1 %



                                                                                                                                                                                                     2.3 %
                                                                                                                                                                                                               0.0 %




                                                        Under $15,000 – $30,000 – $45,000 – $60,000 – $75,000 – $100,000 – $150,000 + Teens with
                                                       $15,000 29,999    44,999    59,999    74,999    99,999    149,999              No Income
                                                 Source: Consumer Tracking Service


                                                                                  5                                                     Source: The NPD Group
Housewares: NON-ELECTRIC
MARKET SIZE
QUARTER TWO • 2009                                                                  DEMOGRAPHIC ANALYSIS
UNIT VOLUME IN THOUSANDS                                                                               Unit Volume Share
                                                                                                      6 months ending — June 2009
        9,446




                                     DINNERWARE
                                     BEVERAGEWARE
                   7,781




                                     COOKWARE               STOVETOP COOKWARE • HEAD OF HOUSEHOLD AGE
                                     BAKEWARE                 Percentage purchased by age of head of household versus census
                                     FLATWARE
                                     CUTLERY                                                                                                   STOVETOP COOKWARE




                                                                                                                    23.4 %
                                                                                             22.8 %




                                                                                                                             18.9 %
                                                                                                                                               CENSUS (PERCENT OF POPULATION)
                            3,281




                                                                                                        16.8 %
                                    2,744




                                                                                                                                                              15.5 %




                                                                                                                                                                                             14.7 %
                                            1,639

                                                    1,581




                                                                                                                                      17.4 %

                                                                                                                                                17.2 %




                                                                                                                                                                                    11.9 %
                                                                           11.7 %




                                                                                                                                                                       11.7 %
                                                                   8.9 %




Source: Retail Tracking Service



                                    CUTLERY

  ■   Single-piece sales were the largest                           18 – 24                   25 – 34                 35 – 44           45 – 54                55 – 64              65 years +
      segment in terms of cutlery dollar sales                       years                     years                   years             years                  years
      in Q2’09, at 35%. 14-piece sets are                   Source: Consumer Tracking Service
      next in line with a 10% dollar share.
                Source: Retail Tracking Service                            OVEN OR MICROWAVE BAKEWARE •
                                                                             HEAD OF HOUSEHOLD GENDER
                                                                                             Percentage purchased by gender of
                           DINNERWARE
                                                                                              head of household versus census

        ■       The housewares dinnerware                                                                                                      OVEN OR MICROWAVE BAKEWARE
                segment continues to dominate                                                                                                  CENSUS (PERCENT OF POPULATION)
                the category with more than half
                of the dollar share, however
                there was some gain on the part                                                                                                      81.8 %
                of the quality casual segment, up
                to 25% dollar share in Q2’09.
                Source: Retail Tracking Service                                                                  48.9 %                                                         51.1 %




                           BEVERAGEWARE                                             18.2 %

  ■   Price, good value and appearance
      were the top ranked motivators behind
      beverageware purchases in Q2’09.                                                                Male                                                       Female
                Source: Retail Tracking Service             Source: Consumer Tracking Service


Source: The NPD Group                                                                 6
The Recession-Proof Premium Market
Continued from page 1

ogy, features and functionality. These appli-      spending more and more time in, and per-        need and competitive pricing is part of what
ances are all relatively significant, long- term   haps even taking on household chores that       will help differentiate the winners and los-
purchases; with consumers spending more            were done by professionals in the past.         ers. If a product can differentiate itself by
time at home, appliances’ appearance and              Additional categories where premium          demonstrating benefits to the consumer, it
placement becomes even more important.             products are strong are stand mixers, slow      will be even more successful. Design and
                                                   cookers and garment care, where premium         technological evolution, as well as consumer
    As an example, we’ve witnessed the evo-
                                                   products represent 71 percent, 36 percent       education and awareness, have been effec-
lution of a refrigerator into something that
                                                   and 37 percent of their respective category     tive tactics in navigating some products
is energy-efficient, visually appealing, highly
                                                   dollar sales for the first half of 2009. Oral   through the current recession, helping to
functional and stylish – attributes that com-
                                                   care, curling irons/stylers, and men’s trim-    blur the lines between need and price.
bine to drive consumers’ willingness to
spend more on their purchase. This trend is        mers are three categories where the premi-         Peter Goldman is president of the
not unique to refrigeration, and these same        um segment is relatively small, but where       Home Section at The NPD Group. These are
drivers account for an average selling price       we have seen some recent unit share             the opinions of Goldman and NPD. For
increase of anywhere between two 2 percent         growth.                                         more information, contact Goldman at
and 10 percent, depending on the category.            These are categories that help consumers     516-625-6136.

     Considering items like toaster ovens,         make more of their time, allow them to per-
electric shavers and canister vacuums, we see      form tasks easily as an alternative to paying
                                                   professionals or simply help them look and
a consistent pattern which indicates that
                                                   feel good. These products meet consumers’
innovation, design and functionality are
                                                   needs and consumers find value in that.
driving the premium segment, all building
                                                   However, they also are items consumers can
on generally need-based purchases. A toast-                                                           March 14 - 16 • McCormick Place, Chicago
                                                   go without or defer purchasing for a while,
er oven is useful for a variety of tasks, from
                                                   so they may be less likely to
making toast in the morning to heating up
                                                   make the added investment
leftovers for a quick dinner. With recent
                                                   right now.
design changes, these appliances have really
become countertop ovens with much versa-               On the flip side, categories
tility. This helps consumers justify their         like wine cellars and specialty
spending, giving the the sense that their          cleaning have dropped in
dollars are going farther.                         average selling price com-
                                                   pared to this time last year (5
Long-Term vs Disposable                            percent and 10 percent,
                                                   respectively). These are not
   Electric shavers also have undergone            necessities and fewer of
some design and feature changes over               today’s consumers will decide
recent years, allowing them to go head-to-         to spend money on luxuries
head with their disposable cousins. The dif-       or “nice-to-have’s”. If they do
ference is that the electric version is a one-     spend on these categories,
time purchase that will last, with minimal         they may compromise on fea-
replacement requirements. Long-term, this          tures to help bring down the
is more appealing to consumers who have            price.
become less impulsive and more aware in
                                                      Replacement purchases
their spending habits; they’ve also begun to
                                                   now represent a larger por-
think more about the future.
                                                   tion of many appliance cate-
   This long-term view is also applicable to       gories’ sales than they did in
premium canister vacuum sales, with a focus        the past. Striking the balance
on quality, taking care of the home you are        between meeting a consumer

                                                                         7                          Source: The NPD Group
DATA AND METHODOLOGY                              These data also produce estimates of sales by
                                                  product and retail channel. More importantly,
  NPD has a standard data model that is used
                                                  the consumer surveys capture information
for all categories that incorporates both con-
                                                  about each purchase, such as buyer demo-           ABOUT THE
sumer and point-of-sale (POS) databases.
                                                  graphics, the product's intended use and a         NPD GROUP, INC.
These two data sources are highly comple-
                                                  variety of other characteristics. These facts         The NPD Group, Inc. (NPD) is a glob-
mentary and are used to support one another.
                                                  help clients understand why products are sell-     al market information company that
   Point-of-Sale (POS) databases are assem-       ing and consumers' motivations.                    measures product movement and con-
bled from retailers' records of actual sales by
                                                                                                     sumer behavior across a broad range
product as collected at the cash register.        CONSUMER METHODOLOGY                               of industries -- apparel, automotive
These databases are highly reliable and pro-
                                                     Most consumer data in the U.S. are gath-        products, consumer electronics, cosmet-
vide census counts of sales by product and
price for participating retailers. The complet-   ered from periodic samples of individuals who      ics and fragrances, food, foodservice,
ed sales data are valuable to clients trying to   are asked about their recent purchases.            footwear, housewares, information tech-
understand which products or items are sell-      Respondents report certain details about the       nology, interactive entertainment, toys
ing well and which are not, at which prices       type and nature of their purchases in a survey     and music. NPD's clients, many in the
and in which channels. The finished POS           administered via the Web. The responding           Fortune 500, use this insight to uncover
data describe the product, retail channel and     sample is demographically weighted and pro-        market opportunities, strengthen chan-
price. They do not, however, address the          jected through a series of steps to represent      nel relationships and benchmark indus-
buyer of the product.                             the Total Adult (18+) and, for appliances,         try performance. Since 1967, NPD has
                                                  Total Teen (13-17) U.S. population.                introduced numerous industry firsts,
   Consumer databases are developed using
                                                     Each week, over 35,000 individuals are          most recently combining and calibrating
product purchase surveys completed by a
                                                  selected from the NPD online consumer panel        information from consumer panels and
large-scale rotating sample of consumers.
                                                               to participate in the appliance       point-of-sale tracking via its flagship
                                                               study. Each month, over 30,000        services, the NPD Worlds. The firm has
                                                               U.S. households are selected for      offices and affiliations in 60 countries.
                                                               the housewares study.                 For more information on The NPD
                                                                                                     Group, visit www.npd.com.
                                                                  The NPD online consumer
                                                               panel is composed of pre-
                                                               recruited individuals who have
                                                               agreed to participate in NPD
                                                               online surveys and have com-
                                                               pleted a comprehensive demo-
                                                               graphic questionnaire. The use        Deborah A. Teschke, Senior Editor
                                                               of an established online panel        Peter Goldman, Contributing Editor
                                                               assures good cooperation levels       Janine Marshall-Bolton, Contributing Editor
                                                               and predictable demographic           Tom Goodman, Design
                                                               balance among cooperators.            Published by IHA
                                                                                                     For more information, contact
                                                               POS METHODOLOGY
                                                                                                     Debbie Teschke at 847-692-0110; or
                                                                  NPD collects point-of-sale         dteschke@housewares.org
                                                               retailer data from selected retail-
                                                               ers. These data are the actual
                                                               sales for the chain on an SKU-
                                                               by-SKU basis. The data are
                                                               combined with data from other
                                                               retailers to produce reports on
                                                               certain categories by channel,
                                                               where a sufficient number of
                                                               retailers are cooperating and
                                                                                                     6400 SHAFER COURT, STE. 650
                                                               where sufficient market demand
                                                                                                     ROSEMONT, IL 60018 USA
                                                               exists for the database.
                                                                                                     TEL: 847-292-4200 FAX: 847-292-4211
                                                                                                     www.housewares.org

Source: The NPD Group                                                   8

				
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