Are hardware stores dropping the ball on small appliances?
It’s no secret that appliances are becoming an increasingly important source of revenue for home improvement retailers. The ever-struggling Sears just launched Sears Appliances, a new small-format retail concept that doubles down on its status as an appliance market leader. Additionally, Home Depot’s recent blowout quarter was aided by appliance sales, which were up 15% to $6.5 billion in 2015. As TheStreet recently observed, appliances now count for 7.5% of Home De-pot’s sales, compared to 6.9% in 2013.
But resting in the shadow of America’s washers and dryers is an oft-overlooked (but slightly busier) category known as the small appliance market.
Encompassing things like coffee makers, toasters, blenders and food processors, the small appliance category is steadily attracting bigger-ticket items and embracing smart-home trends, but its broad appeal makes it almost equally valid to shoppers of all education levels and income brackets. According to a recent TraQline report from the fourth quarter of 2015, the people who are buying small appliances are spread out 36%, 32% and 32%, respectively, between the <$35K, $35-74K, and >$75K socioeconomic classes.
Despite the obvious notion that everyone needs small appliances (and will continue needing them for the foreseeable future), Walmart, Amazon and Target are taking home the biggest piece of the pie in terms of sheer consumer dollars: That’s 21.1%, 11.4% and 8.8%, respectively. Appliance heavyweight Sears only took home 5.8% of the sales.
Arguably, home improvement retailers are better-equipped to sell these items, as well as cater to a range of needs and price points.
According to Eric Voyer, VP marketing at TraQline’s The Stevenson Company, there’s been a slight increase in the number of lower-income (<$35K) respondents purchasing small appli ances, even as pricey gadgets flood the market.
“In many cases, we’re seeing more mainstream higher-end appliances, from consumers willing to pay several hundreds of dollars for a blender or a coffee maker, and there is no reason to see that trend come to an end any time soon,” he said. “In addition, IoT (internet of things) is an emerging trend across all products, from lighting to power tools. Small appliance manufacturers are following this trend as we see the continued production of WiFi-enabled coffee makers, Crock-Pots and other kitchen electrics.”
It doesn’t take rocket science to understand why Walmart is capturing such a large share of sales. Its average selling price is 30% less than the industry average of $101, and “competitive price” was by far the biggest reason consumers chose the retailers they did: 65% versus 24% who opted for “good selection of products.”
Much as they did with pet food, however, home improvement retailers may see the benefit of providing a one-stop shopping experience to customers who are already in the mind-set to purchase items for their homes. Price is powerful, but so is service. As with everything else in the world of home improvement retail: We’ll kill ‘em with kindness.
