In tough times, consumers look homeward

Americans want to feel better about their homes—and against a drumbeat of bad economic news, that feeling is stronger now than ever.

This is the theme being presented at the 2009 International Home & Housewares Show, which will be held March 22 to 24 at McCormick Place in Chicago. More than 2,000 exhibitors and 20,000 buyers are expected to attend the show, where some of the industry trends being high lighted include dining at home, storage and organization, and cost-saving appliances.

Show organizers are calling it a “back to basics” philosophy, or—as some experts refer to it—the “cocooning” effect. This term, which came into prominence after the 9/11 attacks in 2001, describes how consumers are seeking refuge in their homes. “A lot of it is being driven by the economic downturn: when the economy becomes uncertain, people surround themselves with family and friends—things that make them feel good,” said Lisa Weiss, a lifestyle consultant to the Housewares Show. “Americans are shifting their attitudes toward home, which means focusing on traditional values, more entertaining at home and dining at home.”

A September 2008 Consumer Spending Survey by Booz & Co. found that 43 percent of respondents said they had been eating at home more often in the previous six months, while an additional 20 percent were planning to start eating home more because of the economy. Echoing those findings was a study by Riedel Marketing Group: Of the 100 members of Riedel’s Home-Trend Influentials Panel (or HIPsters), almost half report preparing dinner at home more often now than two years ago.

According to Paul Leinwand, VP Booz & Co., some of the most important trends in housewares are about green, health and wellness and value. Products that combine some or all of these factors stand to gain the most in this market. For example, multifunctional kitchen electronics like rice cookers with built-in steaming trays are both health-driven and value-added. Or take water filtration systems: by eliminating the need to buy bottled water, these not only cover their cost in a relatively short period of time, but they help the environment by saving on plastic.

“As long as the consumer can see a payoff—not four or five years down the road but within a reasonable amount of time—those products should do well,” Leinwand said.

Peter Goldman, president of the home business unit of NPD Group, a leading market research firm, agrees that practical, multipurpose items are more likely to do well in this environment, and manufacturers that focus their efforts in that direction are more likely to capture consumer loyalty in the end.

“Consumers are seeking convenience, and they’re seeking value in the investments they make,” Goldman said. “Take a single-serve coffee machine that has tea pods and hot chocolate pods. People are saying, ‘The kids canuse it, too.’ So the fact that it’s multipurpose makes it more appealing.”

In terms of dinnerware and beverageware, a study released March 3 by NPD Group showed that amidst double-digit dollar declines in many table-top categories last year, the segments that fared best were those that were viewed as more economical and practical.

Overall, the survey showed declines across the board, with the bakeware and cookware category falling off nearly 4% in dollars. Where the industry is seeing some movement is in multiple sets that offer extra pieces, and in open stock items. “One is not exclusive of the other,” Goldman said. “Consumers are migrating toward items that are more value-oriented.”

Jeffrey Siegel, president and CEO of Lifetime Brands, said his company sells to Wal-Mart and Tiffany & Co.—and everyone in-between—and he’s seeing the same trend across categories: Opening to moderate level price points are doing better than upper price points. For example, service for four at the mass merchant level is selling best in the $40 to $100 range, but not above, and at the department store, single service dinnerware in the $50 to $75 range is selling better than sets in the $120 to $200 range.

Eric Erwin, executive VP marketing/product development at Wilton Industries, said that sets will still sell, as long as they represent good value. “If there is a retail perception problem with kits or sets, as Momsees it, it is putting things into a box that she doesn’t need or want,” he said. “If the set has what she needs, and it is a great value—being the more you buy the more you save—then she will respond to it. The consumer is really smart, and in tough times she is even smarter.”

For Fiesta’s brand of dinnerware, however, it’s single-product sales that are helping drive the company’s business, according to VP Rich Brinkman. For example, today’s consumer is more likely to buy a component such as a vegetable bowl as opposed to a whole set. Brinkman said it’s helping that his brand is also manufactured in the United States—which fits in with the return to values—and is lead free, as lead has become a concern with Chinese imports in the last 18 months.

Another area that seems to buck the trend, according to NPD research, is small kitchen electronics. The category has seens oftening in the last year—particularly the last six months—but there’s still unit growth in the $150-plus category. Since people only need to make these purchases every three to five or five to seven years, depending on the item, they’re willing to stretch the budget a bit more to attain a certain life style, Goldman said, adding, “There are still people out there who are gainfully employed and have the where-withal to make that investment. The kitchen is the centerpiece for entertaining, and people want to have that fashionable brand.”

As far as the “green” trend goes, Weiss said it was big at last year’s Housewares Show, but the industry may see a slowdown in the growth of environmentally friendly products this year. The simple reason is they tend to costmore. “If there’s one product that’s green and another that’s not, if the cost is equal, consumers would tend to buy the green product,” she said. “But they might not want to spend the extra money, unless that’s a priority for them.”

The slowdown does not apply, however, to energy-saving appliances, which have considerable appeal for consumers looking for an immediate return on their purchase. “If you’re saving energy, you’re saving money, which will benefit household expenses,” Weiss said.

Riedel agreed that consumers are drawn to Energy Star-rated appliances because they can save on their utility bills. As for other green products? She believes people who are already in the habit of buying them will be hard-pressed to give them up. But the consumer who hasn’t yet taken the plunge may not choose to do it this year.

“We’re going to get more manufacturers of green products saying, ‘Let’s not charge more for them anymore and make the consumer chose between green and value,’” Riedel said. “If that happens, I think green products will explode and grow.”