Housewares Weighs Business Conditions Amid Pandemic

NEW YORK— The effects of the COVID-19 pandemic in the U.S. seems to take on new dimensions daily. However, with a greater sense of what’s needed in response to the crisis, and at least some feeling that it is beginning to peak in the initial hot zones, one inevitably must turn to what happens when the disruption ends and what may or may not guide actions.

The change from initial response to more considered action has taken place at Amazon, which, in mid-March, informed vendors that it would temporarily close its fulfillment centers to incoming products other than household staples, medical supplies and related high-demand needs. On March 27, Amazon began informing vendors that it would begin selectively bringing more supplies into its facilities where capacity existed, with factors such as heavy demand, inventory conditions and the need to meet health guidelines all factoring into the equation.

Regarding how it would manage fulfillment centers going forward, an Amazon spokesperson responded, “We continue to focus on receiving and shipping high priority products that customers need at this time. Although we have more limited capacity due to the extensive health and safety measures we are taking across the network, we have begun selectively bringing more products from our selling partners into our fulfillment centers.”

The evidence suggests that the housewares industry, whether on the vendor or retail side, is reaching a level of accommodation with the changed marketplace as companies better grasp what is happening and what they need to do in response. Under those circumstances, it’s natural to consider how events will change the marketplace when COVID-19 is no longer the dominant issue.

Inna Kuznetsova, interim CEO of 1010data, which itself has formulated a virtual dashboard to help its clients track market shifts under the coronavirus, said it is time companies develop and review what’s happening and where it might lead so they can respond quickly to developments when consumers begin to function more normally again. Although it’s still impossible to precisely determine what will happen and when, Kuznetsova said, modeling for various scenarios making various assumptions can ready businesses for the emergence from the current COVID-19 crisis.

“The sooner businesses start doing this the better off they will be,” she said.

It’s critical to evaluate the effect of the outbreak on products and services that have gotten response in the crisis.

“We’ve seen an acceleration of trends that had been picking up momentum, like click and collect, growing consistently over the course of a few weeks,” said Andy Mantis, 1010Data chief business officer. “It has accelerated hugely.”

He noted, however, that evaluation should not range too generally on what consumers do as lockdowns and store closings end but should focus on tracking those consumer cohorts that demonstrate substantive and even exceptional shifts in behavior.

Although preparation for market changes is important, jumping the gun may be problematic.

Tracy Thie, co-founder and principal of consulting firm Powerplay Retail, said retailers have paused many of their renovation and even reset plans due to the changing business they have faced in the pandemic. Even when consumers start shopping their stores again, retailers won’t be ready to position and promote innovation in the way they might otherwise do. Even online, retailers have been reacting to changing circumstances and will take time to get fully back on track when a more normal climate prevails.

“We’ve been telling everyone, based on all the unknowns and few knowns, they should be sticking to as conservative plan as possible for success,” Thie said. “They want to focus on that one simple task: sales.”

Despite the uncertainty going forward, pandemic-driven trends do suggest that some product segments will wind up with a boost from lockdown conditions, said Joe Derochowski, home industry advisor at The NPD Group.

For example, cleaning products will probably continue to do well but with a shift from products related to sanitizing to those addressing floor care. Why? Pets.

Derochowski said it’s important to connect the dots when looking at trends that have taken off as consumers have gotten locked down. Consumers have gone on a pet purchasing, adoption, fostering spree since their movement restrictions began, so they’ll need to clean up after their new pets.

Kitchen appliance sales also have gained, such as products for the preparation of bread and pasta, which suggests items associated with those foods will get a lift.

A close eye to what consumers purchase under lockdown will give retailers and vendors a better idea of their state of mind and emerging priorities.

“We’re living in a focus group,” he said.

Derochowski pointed out that enhanced outdoor product purchasing suggests that consumers will be anxious to get out of the house and reconnect with loved ones in the aftermath of shelter in place. The fact that they will probably get a pass in mid spring or in early summer makes it the more likely outdoor-oriented housewares will surge.

Consumers will take the effects of their coronavirus confinement into the next phase of life but at first will be looking to catch up with what they’ve been missing rather than striking out in new directions. Retailers and vendors have to continue thinking about consumer lifestyles and look to provide solutions that enhance those living situations, Derochowski emphasized, adding that the COVID-19 crisis may be one of those pivot points that come every 10 or 15 years to send the marketplace in a new direction.

Even if major change doesn’t happen immediately, the home goods sector should keep a tight focus on the consumer to stay in touch with behavioral changes.

As consumers escape their coronavirus cocoons, Rob Kay, Lifetime Brands CEO, pointed out, the first step is addressing immediate needs.

“Many, including Lifetime, believe there will be an increased focus on the traditional high-velocity SKUs and basic items that people use in their home every day,” Kay said, but he also noted that ongoing innovation will have a role in the emergence from these lockdown days into a market future that will be influenced by the outbreak but still respond to consumer decisions about what they might purchase to make their lives better.

“The new product introduction cycle is not measured in weeks or months, but rather in years,” Kay said. “We have some projects that last several years, and others that will be completed within a year. We will be introducing new products in 2020 that have already received placement in many retailers. Notwithstanding the meaningful store closures that have occurred this year related to the COVID-19 pandemic, business is proceeding, and we have frequent and numerous conversations with our retail customers to discuss new and existing programs and placements.”

However, even when consumers emerge from their homes again, the impact of COVID-19 won’t end. The supply chain may remain in turmoil for some time, and that will influence how retailers and vendors can respond to market demand.

Jim Ziozis, CEO at the Linon/Powell Group, pointed out that manufacturers in China and in other manufacturing nations such as Vietnam are not only getting hit with cancellations, payment arrears and other business disruptions tied to the effect of COVID-19 in here but elsewhere as well, including Europe, where many customers have cut back orders from factories severely.

In China, and from the purely economic perspective, Ziozis said, the effect of the COVID-19 pandemic elsewhere “could be worse than with their bout with coronavirus in the country.”

Even factories that can hold on can be forced to lay off or furlough workers, further complicating matters and making a return to normalcy more complicated.