A strong economy has helped the housewares industry make new investments, despite continued uncertainty surrounding tariffs and cost pressures from the top and bottom. Many housewares suppliers in 2020 will be introducing new products that differentiate themselves from the competition, developing more ways to connect directly with consumers and continuing to fine-tune business operations.
“The economic environment right now looks and feels very positive, and I believe it will continue well into 2020,” said Howard Steidle Jr, CEO of John Ritzenthaler Co. and chairman of the International Housewares Association’s (IHA) board of directors. “Yet there’s a good amount of pressure on our industry— just as there is for most of those in consumer goods— to manage the cost of tariffs, the rapidly changing world of shopping, and consumers’ changing needs and wants.”
Global housewares spending rose to $394.3 billion, an increase of 8.3%, in 2018— the most recent available statistics, according to IHA’s new “IHA Market Watch” report. This continues a series of annual increases as the overall global economy expands.
Despite an ongoing trade war with China and signs of an economic slowdown throughout 2019, the U.S. is now experiencing the longest sustained economic expansion in U.S. history (126 months), as well as a 28% stock market increase from January 1, 2019, to December 31, 2019.
U.S. consumer spending rose at a 3.2% annualized rate in the third quarter of 2019, according to the U.S. Commerce Department. Census Bureau data shows that U.S. retail sales in the quarter grew by 4% over the same quarter last year, and holiday shopping from November 1 to December 24, 2019, was up 3.4% over last year, according to Mastercard SpendingPulse.
Going into 2020, many questions remain about the status of the U.S. economy and the long-term effect of current tariffs on goods from China, as well as the uncertain future of these tariffs, the possibility of new tariffs on goods from other countries, and sometimes tenuous global relations. Yet many housewares executives say there’s much to be learned from having to manage in uncertain times.
“2019 taught us all some good lessons in dealing with uncertainty,” said Paul Cosaro, CEO of Picnic Time Inc. “Most of all, people got more accustomed to change. You can’t be paralyzed by all the ‘what ifs,’” noting that his company tapped into technology to help them stay nimble and competitive.
Other companies took the opportunity to re-evaluate their business models, sourcing relationships, retail partnerships and/or supply chain management to manage their margins.
That compression management is key these days, according to Thom Nichols, president of Pretika Corporation, since there are significant forces hitting housewares suppliers from both the top and bottom.
Housewares companies so far largely have absorbed the cost of tariffs, while also managing rising costs related to shipping and labor, as well as consumers who are focused on price-value relationships.
While online sales still account for only 11.2% of total retail, online sales increased 5% in the third quarter of 2019 (over the previous quarter), according to the U.S. Census Bureau. During 2019’s holiday season, online sales expanded 18.8% over last year, according to Mastercard SpendingPulse.
Nichols added, “If you look at the traditional 5 P’s of marketing (product, price, promotion, place and people), place is totally being redefined right now.”
Some brick-and-mortar retailers have made significant strides in e-commerce, and there are more direct-to-consumer businesses starting to show up online.
“The key however is getting eyes on the site to support the sales or generate the sales,” pointed out Bill Endres, president of Select Brands.
In general, many housewares executives say they continue to watch closely how—and which— brick-and-mortar retailers find ways to capture synergies with their omnichannel strategies.
Standing Out From The Crowd
As the retail landscape continues to change, as well as consumers’ shopping patterns, many housewares companies are looking for ways to stand out from the crowd.
“Vendors with a unique point of view are catching the eyes of the retail community,” said Lisa Knierim, chief business development officer of Eleven75. “Retailers are looking for anything that can help them differentiate, create value and stand out from their competition.”
“I think we’re at a tipping point…brand is as important today as ever before,” said John Collins, president/CMO of Neatfreak Group, adding that brands need to get out there and aggressively tell their story on social media and through retailers.
“Consumers are always going to be motivated by what a brand says about them,” stated Picnic Time’s Cosaro, adding that Millennials and Generation Z are especially motivated by companies that are socially conscious. “Some of the questions they’re asking are: ‘Who is this company? Do they have a soul? Do they give back? Do they have a conscience, or are they just in it for the money?’”
Impact Of U.S. Presidential Campaign/Election
So, what about the added uncertainty that typically surrounds a U.S. presidential election year? Many housewares executives are taking that in stride.
“There is typically a window in the months leading to an election where uncertainty is a factor and investment wanes,” said Steve Greenspon, CEO of Honey-Can-Do International. “If the result is unexpected, then there will be some temporary volatility in the equity markets. But housewares companies are generally resilient and have survived and often thrived no matter who and which party is president or controls Congress.”
“There will inevitably be some negativity in the campaign, but it’s important to not get distracted by it,” said Cosaro. “As an industry, we need to focus on what is important and that is the consumer.”
“The result of the election likely will impact us immensely,” added Nichols, specifically citing the global economy, U.S. employment rate and U.S. stock market. “But we’ve been successful in the past in navigating all different political environments, so we will just continue to do just that.”
The Inspired Home Show will take place March 14-17 in Chicago.