Times are certainly tough for housewares sales, but it would be a mistake for retailers to pull back on the category.
Like a picture hung in just the right spot, or a table setting placed a certain way, the appropriate touch can draw everything together successfully.
For United Supermarkets, Lubbock, Texas, and others, the right touch has been to focus on less-expensive gadgets and other products that link to grocery items found throughout the store.
“It seems our guests are buying less-expensive items,” said Vicki Gay, manager of United's Dish housewares section in Market Street banner stores. “To compensate for this, we are offering a larger selection of well-priced gift items and have scaled back on the purchase of larger pieces like serving pieces, large pottery items, top-of-the-line coffee makers and imported linens. Our target retail price range is $7.99 to $37.99.”
Consumers are indeed spending less, and studies show they're making fewer shopping trips as well. At the same time, though, they're opting to do more activities around the house, like cooking, cleaning and home improvement projects.
IN THE KITCHEN
Recent data from Mintel show that more than half of consumers are eating out less, and that 72% of consumers who cook regularly do so because it is the cheapest option available. This presents an opportunity for retailers to help out around the kitchen with cookware and other utensils.
But analysts warn that retailers have to be selective. For example, sales in bakeware and cookware categories dropped 4% in the past year, according to the NPD Group, Port Washington, N.Y. Yet within those segments was a shining star: cast-iron products, which saw a 27% sales increase.
Peter Goldman, president of NPD's home group, said that the influence of celebrity chefs is one of the biggest drivers in the category. Paula Deen, Rachael Ray, Bobby Flay and others — who are all marquee names in the latest celebrity chef movement — are using sophisticated cookware, such as cast iron, on their shows. In addition, they've rolled out their own branded lines of kitchen products. Deen, for one, sells a charcoal nonstick cookware set with a suggested retail price of $120.
“I think that there are a lot of aspirational chefs out there,” said Goldman. “They're watching Paula Deen on TV, and then trying to make that same recipe at home.”
The opportunity for supermarkets to step in and claim consumers looking for cookware and other household items is clear. Upscale housewares retailers like Williams Sonoma, which had a 24% drop in same-store sales during the fourth quarter of 2008, are seeing their customers trade down.
The best bet for supermarkets, sources said, is to cater to their core competency by offering value-priced cookware, as well as smaller items like lemon squeezers, paring knives and peelers that encourage cross-merchandising. Gay said that these types of gadgets are top sellers in her section. The same holds true at Nugget Market, a nine-store retailer based in Woodland, Calif., where housewares category manager R.J. Cushing likes to pair small utensils with fresh, in-season produce.
“We like to feature one item and go really hard with that one item while it's in season,” said Cushing. “While lemons are ripe and in season, for example, we'll put lemon squeezers in the produce department and promote that item.”
With an increase in cooking comes an increase in at-home entertaining. Goldman explained that this is part of an overall “cocooning effect” that's playing out with consumers. A.J. Riedel, president of Riedel Marketing Group, Phoenix, said it's also a sign that in tough times, people fall back on what's most important.
“The economy has made some people realize that their spending was out of control, they were eating out too much, they weren't building their community, and they were out of touch with their friends,” she said.
Again, though, NPD's data show that, as with cookware, only entertainment products that are perceived as a good value will perform. Glass dinnerware, for example, saw an 8% increase over last year, while more-expensive crystal and acrylic beverageware declined by 17%.
TOOL TIME
The stay-at-home trend also favors hardware products, especially those that help with small jobs.
A recent survey by Riedel Marketing Group showed that 81% of regular housewares buyers are either somewhat or very reluctant to take on a major home improvement in the current economy. But according to Mark Delaney, director of NPD's home group, they are more than willing to tackle minor tasks, like painting a room or fixing a piece of furniture. This bodes well, he said, for mass merchants and supermarkets, which can offer paint cans, brushes, light bulbs and other simple solutions on an endcap or in a display.
It doesn't bode well for big-name hardware stores like Home Depot and Lowe's. Home Depot's fourth-quarter 2008 earnings report showed a loss of $54 million in earnings, while Lowe's reported a 60% decline in earnings from the previous year.
“Small projects are taking the forefront vs. larger projects, which were dominating the scene a year or two ago,” said Delaney.
One hardware item that's doing particularly well right now, according to Delaney, is the compact fluorescent light bulb. This is because it gets high marks for both cost savings and energy efficiency. Indeed, the U.S. Environmental Protection Agency estimates that a compact fluorescent bulb uses 75% less energy than a conventional option, and that it can save more than $30 on electricity costs over the bulb's lifespan.
With “green” products like this, which were the fastest-growing segment in housewares before the recession hit, sales now hinge on the ability to provide cost savings, analysts said. Shoppers won't buy a product that uses fewer chemicals just because it's better for the environment. They want to see a lower utility bill, or quality that will, as with the compact fluorescent bulb, negate extra spending on conventional alternatives.
“It's like a win-win for them,” said Riedel. “They feel good, because they know they're doing something good for the environment, but the driving force is that they're saving money.”
TRADE-OFF
A category that's recently seen a boom in green-related products is household cleaners. With consumers looking for savings first, though, much of the category could be hung out to dry. According to Riedel, companies whose selling point is fewer dyes and chemicals could struggle, while those that offer concentrated formulas or other innovations that translate into fewer purchases over time could prosper.
“It's a trade-off between efficacy and the environment,” she said.
Just because the times are lean doesn't mean retailers should skimp on marketing. Meijer, Grand Rapids, Mich., recently partnered with television host and syndicated columnist Katie Brown to promote the company's housewares offerings. In her new role as “Home Solutions Advisor,” Brown helps market and develop new products, as well as offering how-to advice to shoppers.
“We're excited about the possibilities that Katie presents — from branded product lines to online programs,” said Dave Clark, vice president of brand and product development at Meijer, when the partnership was announced in November.
At the store level, it's important for retailers to carry out a colorful, creative merchandising plan around housewares products. Many of these lifestyle items tell a story or help shoppers express themselves, sources said, and so they work best in displays, demos and other lively arrangements.
Sophisticated merchandising like this doesn't have to be expensive for the retailer. At United Supermarkets, a little colorful packaging goes a long way.
“In our stores, packaging is everything,” said Gay. “Not only does it protect the merchandise, it's the eye candy that attracts the sale. I can't stress this enough, that color and packaging are key to making a good display and to making a sale.”
It's imperative that supermarkets get creative with their housewares offerings, especially since these products are, for many shoppers, on the periphery of the core food-buying experience. Cushing, of Nugget Market, said that his main strategy right now is cross-merchandising housewares with the food items they complement. Doing this not only makes the appropriate culinary connection — it offers up a product that many people didn't realize the retailer had in the first place.
“It's a convenience thing for the shopper,” said Cushing. “They're not really thinking lemon squeezer when they're thinking lemons, so they don't have to seek that out. But what we do grabs their attention and gets them to think, ‘Oh, this is interesting.’”
For many supermarket retailers, the first step is getting the housewares out of the lonely housewares aisle at the back of the store, said Riedel.
“I find it funny that so many supermarkets have the desert of the housewares aisle,” she explained. “There's one person in the housewares aisle, and every other aisle has five to 10 people in it.”
Another way to liven up the housewares assortment is to edit the selection. It's not the supermarket's place to stock 10 different brands of cookware, Riedel and others said. This just creates confusion. Rather, buyers should really do their homework and select the one or two brands that have the highest quality at the best price.
By eliminating the clutter, retailers also make their housewares section more nimble — able to respond to trends as they happen.
“We think it's prudent to buy lightly right now so that our Dish area will not be deep in any one category,” said Gay. “This allows us to move with the trends and to adjust our product offering to suit customer demand.”
72%
who regularly cook at home do so because it is the lowest cost option available.
Source: Mintel consumer report