1. home and garden
2. appliances

Appliance Dealers
Industry Overview
The Association of Home Appliance Manufacturers
(AHAM) divides the major home appliance industry into
five product segments: washers and dryers; electric
and gas ranges and microwave ovens; freezers and
refrigerators; dishwashers, disposals and compactors;
and room air-conditioners and dehumidifiers. The
following chart illustrates dollar volume, and share of
market, by type of appliance:
Appliance Industry Sales: $23.3 Billion
Dollar Volume and % Share of Market
Washers and dryers
$6.2 billion - 26.6%
Room airconditioners,
dehumidifiers
$1.5 billion
6.8%
Refrigerators and freezers
$7.2 billion - 30.6%
Electric and gas ranges,
microwave ovens
$5.9 billion
25.0%
Dishwashers,
disposers,
compactors
$2.5 billion - 11.0%
Lowe’s and Home Depot. More than half the major
household appliances sold in the U.S. are purchased by
consumers at Sears or home improvement centers. The
chart that follows indicates that Sears alone sells 29% of
the retail dollar volume of major appliances:
Major Appliances: Channels of Distribution
Percentage of the Market, by Type of Outlet
Home improvement stores
30%
Other - 6%
Mass merchants
and clubs - 12%
Sears - 29%
Appliance dealers
23%
Source: HFN, “State of the Industry Report,” February 25, 2008.
As indicated in the chart that follows, Whirlpool is the
market share leader:
Major Appliance Manufacturers
Share of Market, Core Appliances*
Others - 9%
Whirlpool - 32%
Haier - 2%
Source: Association of Home Appliance Manufacturers,
“2007 Dollar Valuation Summary Report,” March 14, 2008.
Most appliance dealers also sell used appliances and
other product lines, often including consumer electronics
(TVs, stereos, VCRs, DVD players), floor care
appliances (vacuums, carpet cleaning equipment), small
appliances (food processors and mixers), and outdoor
appliances (grills). Delivery, installation, and removal of
old appliances are routinely offered by most, and many
dealers also offer repair and maintenance services.
Additional revenue generated by major appliance
dealers from these product and service offerings is
estimated at around $7 billion (Wall Street Journal,
November 26, 2004; Profile America, Inc. calculations).
While most appliance dealers are retailers, some are
wholesale operations that sell to hotels, restaurants,
new home builders, schools and other institutions. The
primary competitors for independent retail appliance
dealers are Sears, discount department stores, home
improvement centers, and mass merchandisers like
Maytag - 13%
Electrolux
(Frigidaire) - 17%
GE - 27%
Source: Appliance, “30th Annual Portrait of the U.S. Appliance Industry,”
September 2007.
* Core appliances include dishwashers, dryers, freezers, ranges,
refrigerators, and washers.
Whirlpool expanded its reach through its $2.6 billion
purchase of Maytag in April 2006. The merger created
a manufacturer that dominates the washer and dryer
market (the brands control about 75% of that segment)
and controls about 60% of the dishwasher market.
The company’s brands are sold primarily by mass
merchandisers, home improvement giants like Lowe’s
and The Home Depot; appliance superstores and
smaller independent appliance specialty stores also sell
the major brands, but to differentiate themselves from
the “big boxes,” they also tend to stock many high-end
appliance brands.
© 2008 Profile America, Inc. All rights reserved. www.profileamerica.biz
1
Issues and Trends
The $28.5 billion retail appliance industry tends
to perform relatively well from year to year, since
consumers need to replace appliances on an ongoing
basis. Even during recessions, consumers buy new
refrigerators or dishwashers if theirs quit working. They
may not spend as much as they would in a booming
economy; nonetheless, they spend when necessary.
However, the housing and mortgage crisis and
consumers’ lack of confidence in the economy took their
toll on the industry in 2007. Manufacturers’ shipments
fell 6.3% in 2007, largely as a result of the credit
crunch, falling new-home construction, and fewer home
remodeling projects being undertaken by homeowners.
Recovery is expected to begin in 2008.
AHAM’s 56th Annual Appliance Industry Forecast
estimates that unit shipments in its “AHAM 6” – a
product grouping of washers, dryers, refrigerators,
freezers, dishwashers and free-standing and built-in
ranges – fell in 2007 to 46.6 million units, as indicated
in the chart that follows. The industry’s peak sales
period occurred in 2005 to 2006, “when the white goods
industry* rode the crest of an over-exuberant housing
market” (TWICE, September 24, 2007):
Major Household Appliances (AHAM 6)*
In Millions of Units, 2000 to 2008
50
40
38.4 38.2
40.7
42.4
46.0
47.0
46.6
46.5
47.2
30
20
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 (f)
Sources: AHAM, “Trends and Forecasts, Industry Shipments of Major
Appliances”; TWICE, September 24, 2007.
In stark contrast to the boom years of 2005 and 2006,
when many people purchased appliances to make a
statement about the style and function of their homes,
today’s shift in purchasing patterns has been driven
by the need to replace dysfunctional appliances with
basic models at reasonable prices. Home improvement
giants The Home Depot and Lowe’s, as well as national
electronics and appliance superstores like Best Buy,
enjoy volume-buying discounts and can offer a full
range of appliances from major manufacturers at highly
competitive prices.
* “White goods” is the term used by the industry to describe major appliances,
most of which were white when first introduced to consumers. Similarly, the
term “brown goods” refers to consumer electronics, most of which were originally
encased in brown wood or composite materials.
The status of home improvement giants and superstores
as “destinations” for shoppers who are already in the
major-purchase or room-makeover mood, gives them a
competitive advantage over small independent retailers
(Dow Jones News Service, July 20, 2007).
The following table lists the low, high, and average life
expectancy for the major appliance categories. It also
estimates how many units were replaced in 2007 and
are likely to be replaced in 2008.
Life Expectancy / Replacement Cycle
Major Appliance
Years of Life
Expectancy
Low High Avg.
Units To Be
Replaced
2007
2008
Compactors
3
8
6
117,100
115,200
Dishwashers
3
18
10
4.65 mil
4.96 mil
Disposers
8
10
9
4.93 mil
5.36 mil
Dryers, electric
8
15
12
4.01 mil
4.11 mil
Dryers, gas
8
15
12
1.20 mil
1.19 mil
Freezers
8
16
11
Microwave ovens
7
10
9
10.89 mil 11.58 mil
1.69 mil 1.86 mil
Ranges, electric
12
19
16
3.45 mil
3.09 mil
Ranges, gas
14
22
18
2.41 mil
2.42 mil
Refrigerators, compact
8
12
10
1.11 mil
1.18 mil
Refrigerators, standard
10
18
14
8.10 mil
8.65 mil
Washers
7
14
11
7.27 mil
6.32 mil
Source: Appliance, “30th Annual Portrait of the U.S. Appliance Industry,”
September 2007.
Independent appliance retailers range from one-location
kitchen-design specialists selling high-end brands from
Viking, Subzero and Bosch, to large, multiple-location,
regional players that compete effectively against the big
boxes in major appliances and consumer electronics
categories. Listed below are the Top 10 independent
appliance chains (most of which have added consumer
electronics and other product lines to their inventory):
Top 10 Independent Appliance Retailers
Company / Headquarters
CE / Major
App Sales*
P. C. Richard / Farmingdale, N.Y.
$678 mil
49
H. H. Gregg / Indianapolis, Indiana
$618 mil
83
BrandsMart USA / Hollywood, Florida
$620 mil
8
ABC Warehouse / Pontiac, Michigan
$369 mil
43
Conn’s / Beaumont, Texas
$309 mil
62
Abt Electronics/Applncs / Glenview,, Ill. $300 mil
1
Rex Stores Corp. / Dayton, Ohio
$282 mil
No. of
Stores
164
Pacific Sales / Torrance, California
$240 mil
20
American TV/Appliance / Madison Wis
$251 mil
15
Nebraska Furniture Mart / Omaha Neb
$228 mil
3
Source: TWICE, “2007 Top 100 CE Retailers.”
© 2008 Profile America, Inc. All rights reserved. www.profileamerica.biz
2
Smaller independent dealers of major appliances are
following a few key strategies to compete against
their larger counterparts. Some are diversifying their
product lines to include electronics and home theater
systems – even floors, lighting, plumbing fixtures,
fireplaces, marble countertops, cabinets, and kitchenrelated merchandise. Others are going upscale and are
focusing only on high-end brands and on high-tech,
built-in models and are marketing to affluent target
markets. Still others are focusing on the “services” side
of the major appliance business, offering kitchen-design
services, installation, maintenance, and repair (Wall
Street Journal, March 27, 2007).
Many dealers are also joining buying groups to take
advantage of educational opportunities, including
classes on business management, strategic planning,
finance, marketing, and advertising. Members of buying
groups are also able to take advantage of volume
discounts on merchandise and receive price breaks
on office supplies, payroll services, and shipping.
Among the largest buying groups are Nationwide
Marketing Group, with 2,800 members; BrandSource
(formerly Associated Volume Buyers), with 4,000 retailer
members; MegaGroup/Best Brands Plus, with 1,200
members; and NATM Buying Group, with 12 members
(TWICE, May 7, 2007).
Factors mentioned in the advertising placed by
appliance dealers are intended to motivate consumers
to call, go to websites, or visit dealer showrooms.
“Confidence factors” and “convenience factors” appeal
to consumers’ desire for dependable products and
services. Examples of each follow:
Confidence Factors Mentioned in Ads
Professional Sales Staff
Guarantees (Details Given)
Locally-Owned/Operated
Years in Business
Design and Consultation
Estimates Before Repair
Complete Parts Inventory on
Truck / DIY Advice
Flat-Rate Prices / Package
Prices
Licensed Electrician on Staff
EPA Certified Technicians
Factory-Authorized Dealer
and Service Center
“Used and Worn Parts
Returned”
Source: 2007 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Convenience Factors Mentioned in Ads
Free Installation
Radio-Dispatched Trucks
Phone Price Quotes
Days/Hours Open
Convenient Locations
Areas Served (Repairs)
Online Repair Scheduling
Showroom Demonstrations
Prompt or Same-Day
Service
Night and Weekend Calls,
No Extra Fee
Website Address / Toll-Free
Number
“All Work Done in Your
Home”
Source: 2007 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Value of Products and
Services in the Industry
Average household spending on appliances reached
around $252, calculated by dividing $28.5 billion in
annual sales by 113 million households. Average
spending is helpful in determining market potential
and market share. For example, in an area of 50,000
households, around $12.6 million is spent on major
appliances and related service and repair. If an
appliance dealer generates $3.5 million annually, his or
her market share would be about 28% (a baseline for
comparison with future performance).
Critical Success Factors
CSFs for Independent Appliance Dealers
•
Educate sales staff about the performance
characteristics of all appliance makes and models
in the store, to position them as industry experts.
•
Have someone on the floor to greet customers
promptly; this is in sharp contrast to the “big
boxes,” whose associates are often difficult to find.
•
Partner with manufacturers to create “room
vignettes” in the showroom, and display them
prominently on the website, to demonstrate the
store’s design-savvy skills and to inspire people to
buy additional products and services (e.g., shelving
for utility rooms, cabinets for kitchens, and nice-tohave items like trash compactors and wine chillers).
•
Provide timely and expert installation (many
offer same-day delivery), show up on time for
maintenance and repair visits, and consider
servicing appliances bought at other stores.
•
Ensure that customers have a large selection of
makes, models, and price points from which to
choose. For models not in stock, have product
brochures in the showroom and display product
photographs and specifications online.
•
Host in-store events (cooking demonstrations on
new high-speed ovens, for example), and crosspromote the store with other home-improvement
independent retailers (bath design firms, flooring
dealers, cabinet makers, and the like).
Sources: Wall Street Journal, March 27, 2007, Aprl 12, 2007; HFN,
September 27, 2007.
Industry Resources
North American Retail Dealers Association, www.narda.com
Association of American Home Appliance Manufacturers, www.aham.org
Appliance, www.ApplianceMagazine.com
Retailing Today, www.dsnretailingtoday.com
TWICE, www.twice.com
HFN, www.hfnmag.com
© 2008 Profile America, Inc. All rights reserved. www.profileamerica.biz
3
Background
Values and Benefits
Media Marketing, Inc., creators of imMEDIAte®
software, has been in the forefront of sales
presentation systems since 1987. The
imMEDIAte suite, a state-of-the-art consultative
system, is used by hundreds of media reps
every day to create compelling presentations
and expert media proposals. Built on Microsoft
Office® technology, the imMEDIAte system
provides a complete solution to your media
sales needs.
Media Marketing is an authorized distributor
of Profile America’s IndustryIQ reports. Sales
and marketing teams embrace these industryknowledge reports because of their concise,
easy-to-read style and rich store of information.
Regular use of IndustryIQ reports creates a
relationship-building, consultative environment.
Since 1986, Profile America has provided
profiles of industries, markets and trends to
business-to-business marketers, facilitating
an understanding of the industries into which
they sell their products and services.
Sales reps want to be smart about advertisers’
industries, but face the realities of limited time
and resources. They need to track dozens of
different industries, and value these concise,
easy-to-use sales tools that they can leave
behind with their advertisers.
Likewise, managers want reps to be confident,
professional and informed. They want their
reps viewed as partners, not vendors -- and
they appreciate the IndustryIQ method
of collecting, analyzing and presenting
information.
Independent, third-party IndustryIQ reports
leave marketing and sales professionals
free to practice their core competencies:
developing successful advertising strategies
for their clients.
Delivery
Program Objectives
IndustryIQ reports are used by managers
as sales training, planning and business
development tools. Sales reps use IndustryIQ
reports to prepare for sales calls and as a
valuable leave-behind.
Armed with independent, third-party
assessment of industry dynamics, media reps
can “walk the walk and talk the talk” of their
advertisers’ industries, allowing reps to better
assist advertisers in creating compelling,
effective messages for their target audiences.
IndustryIQ reports incorporate a customerguided approach to gathering information
and creating industry-knowledge products.
We value your content recommendations as
we strive to create the most useful, fact-filled
industry reports available.
IndustryIQ reports are available in PDF
format from Media Marketing’s web site,
www.industryIQ.biz.
IndustryIQ is distributed by Media Marketing, Inc., in association with Profile America, Inc., for use by advertising sales representatives.
Although the information in this report has been obtained from sources that Profile America, Inc. believes to be reliable,
no guarantees are made as to the accuracy of the information presented, and any information presented may be incomplete or condensed.
© 2008 Profile America, Inc. All rights reserved. www.profileamerica.biz
4