HOME APPLIANCES UPDATE: Projections Positive Despite Continuing Challenges
In the home appliances game, as we venture into 2021, there’s good news and not-as-good news, according to Doug Wrede, Vice President of Home Appliances for Nationwide Marketing Group.
The good news: It looks like this year will, in the end, turn out to be an overall prosperous one for the home appliance business in retail and rent-to-own alike. The not-as-good news? Some of the challenges that retail and rental dealers faced during 2020 will persist well into the new year.
Those challenges – courtesy of the coronavirus crisis – shadowed the American arrival of the pandemic last spring almost exactly. According to the Association of Home Appliance Manufacturers (AHAM) weekly shipment results, Q1 of 2020 was normal – with shipments up 2.4% for the Top Six categories: refrigerators, freezers, freestanding cooking, built-in cooking, clothes care, and dishwashers. COVID-19 hit in mid-March, and the Q2 numbers showed it – bigtime.
“In Week 15, the core appliance business was down 19%, with dishwashers down 20%, and clothes care down 28%,” recalls Wrede. “The moment I saw those numbers and realized how badly the industry was faring – that was the moment I spit my coffee out.
“We hope to never see those numbers return, and there was some recovery in Q3,” he continues. “But much of the damage had been done by how shelter-in-place impacted everything: factory closures for all brands for weeks at a time; parts and service disruption; customers staying at home; spotty employment attendance; social distancing in manufacturing bringing yields down as low as 30%; price increases to cover freight, incentive pay, social distancing, and personal protective equipment; rolling order-blackout periods – it was a lot.”
Wrede applauds rent-to-own dealers for meeting the call for e-commerce transactions as it grew exponentially last year – overall up to 400% growth in traffic for businesses with online shopping capabilities.
“We also saw a vast adoption of chat,” notes Keven Dalke, Director of Nationwide RentDirect. “Hundreds of rental dealers flocking to enable chat on their websites so they could still engage with consumers and do so more safely – including shop-by-appointment, which became a pretty popular tactic that we deployed, and many RTO dealers leaned into. It’s indicative of the importance of the internet, being seen online, and having a website that’s up-to-date to reach customers today.”
By Q4, the pendulum was swinging wildly the other way – in week 36, appliance shipments were up 40% – which helped 2020 finish, despite its myriad difficulties, with an overall positive shipment rate of 6.4%.
“There’s still great need in the market,” says Wrede. “We’re not getting all the inventory we want, but it’s good to see some recovery in the appliance base.”
The recovery continues, as 2021 has begun well for home appliances – with unit shipments up 14.4%, revenue up 17.6%, and all top categories showing growth. Wrede says consumer demand remains strong, and with an assist from the reliable replacement cycle, the appliances business looks like it will continue growing for the next two years and beyond.
“The upside of the shelter-in-place lifestyle brought on by the pandemic is that customers are using their home appliances three to six times more than they typically do, so they’re needing new or better machines more often,” Wrede explains.
For 2021, Wrede forecasts continued recovery for the first half of the year, with the second half of the year seeing some stabilization for the home appliances market. Likewise, as demand remains high during the first six months of 2021, promotions and discounts will stay low.
“I also believe there will be a balance-of-share shift,” predicts Wrede. “Who you do business with might change going into the future. But industry projections show the appliances business up 3-4% this year overall, and that’s good news.”