Appliances Addressing Consumer Lifestyles

LAS VEGAS— Renovation, innovation and aspiration will be the 2004 watchwords in major appliances, according suppliers gathering here for the annual International Builders Show. As they start the New Year, consumers are time-starved, home- centered and rejuvenated in their quest for products that will address their individual lifestyles, major appliance suppliers agree. “Consumers are really looking for innovative product,” said Daniel Lee, manager national advertising, public relations for LG Appliances. “At the same time they are not looking for innovation for innovation sake, but for products that can make their lives a little more convenient.” Suppliers were optimistic heading into the show with the economy, and in particular the stock market, showing signs of renewed vigor as 2003 came to a close. Most believe the market will continue to improve, and Americans will again begin spending discretionary dollars for products that offer added value. Industry pundits noted, however, that value in the current environment is not code for “low price” but instead represents the consumer’s individual calculation of a product’s price value relationship— one that encompasses design, feature content and technological sophistication. “To put it simply, people are realizing that you get what you pay for,” said Dale Persons, vp/public affairs at Viking. Leslie Redford, program manager, marketing media, GE Consumer Products, said, “At the end of the day it’s all about style and innovation. The consumer wants great looking product, with the best materials and the best finishing touches, but they also want first and foremost, a product that is going to perform to their expectations.” And they are willing to pay more for it, said suppliers, noting that the high end of the appliance business continues to perform strongly and should continue performing well throughout 2004. From a lifestyle standpoint, suppliers noted that the kitchen is playing an increasingly important role within consumers’ lives, often replacing family rooms as the centerpiece of the home. “The kitchen is now a multi-purpose room with space for cooking, eating, socializing or doing homework,” said Erica Young, marketing relations manager BSH, distributor of Bosch appliances. “What that means is more open areas with work spaces and free-floating islands that flow into surrounding areas.” Some noted there is also growing anecdotal evidence that as consumers spend more time in their homes and specifically living in and around their kitchens that multi-generational cooking experiences are also on the rise. Viking’s Persons, for example, noted that the company is seeing an increase in the number of people who are bringing their children with them for cooking classes at the company’s culinary centers. Suppliers also noted that consumers are more home-centric in general, utilizing the home as gathering place, entertainment venue and increasingly a place for shopping. “I’ve seen articles that suggest home [direct-selling] parties are increasing significantly,” said Young. “According to the direct-selling association home parties accounted for $8.3 billion in sales in the U.S. last year.” As a result, many consumers have higher expectations for the look of their home appliances. Basic, boxy shapes and flat, ordinary finishes are no longer as appealing. With consumers spending more time in the home, they want to surround themselves with products that enhance their surroundings. “People really want design,” said LG’s Lee. “They want to be proud of how their kitchen looks or proud of how their laundry room looks.” This increasing emphasis on design, aesthetics and lifestyle is carrying over to the stores that consumers look to when they are thinking of making a major appliance purchase. When they shop for home appliances, consumers are looking as for a pleasant experience, as well as for a product for their home, said suppliers. “We’re moving away from a time when people are just going out and buying a box of metal,” said Viking’s Persons. “We’re seeing more dealers doing demonstrations and classes, using displays that show product in their natural settings to give consumers ideas and show them how these products can be integrated into their lives.” The way consumers integrate appliances into their homes is also changing, according to suppliers. The basement or garage-based laundry room of the past is being replaced by a laundry closet, often located alongside bedrooms. While this makes the product more accessible to the consumer, it is also placing new demands on product design. “Noise level is much more important,” said Bosch’s Young. Overall suppliers say the major appliance business should enjoy significant growth in 2004 with the industry as a whole becoming more consumer-centric in its product design and marketing efforts. The days of selling the consumer whatever they wanted, as long as it was what a company could manufacture, have passed. The retailers and suppliers that will be most successful going forward, industry observers agree, are those that can better understand and fulfill the consumers lifestyle aspirations.