Dear Housewares Executive:

Our goal is to bring you up-to-date information that is relevant to the housewares industry and your profession, covering topics such as leadership, operations, technology, marketing, sales, distribution and finance.

Your comments, criticisms and contributions are always welcome.

Have a topic you’d like to see us cover? Email Perry Reynolds, VP of Marketing, IHA or call 847-692-0109.

IN THIS ISSUE:
- Dear Housewares Executive
- Chess Highlights
- Bah Humbug?
- Better Than a Court Date
- Alice Grows Up
- More Made in U.S.A.
- Are you ready to sell on HC365?

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Dear Housewares Executive

After the recent IHA Chief Housewares Executive SuperSession (CHESS) inRosemont, Ill., everyone went back home with a lot to think about and do. A record number of housewares company leaders heard experts from a diverse set of fields dig deeply into key trends and offer forecasts for what’s ahead.

The overall mood of the conference was decidedly upbeat and the energy was running high. The opportunity to network with peers expanded through “Table Topic” discussions at breakfast and lunch, where intense group dialog added to the overall energy of the conference.

Kick-off speaker Kip Tindell, Chairman and CEO, The Container Store, revealed some of the strategic building blocks that have allowed his company to “grow at 12% - 14% per year” at a time when other retailers are eeking out modest comp store sales. The philosophy of “Conscious Capitalism” is at the core of the company’s success which Tindell explained and encouraged others to adopt.

In addition to solid sales growth, Tindell credits these “golden rule” practices with keeping employee turn-over extremely low – only 3 people in positions above store manager have left his company in 33 years. He notes “Apple is trying to poach now.” Interesting points from Tindell about people:

• Good customers make great employees. He hires customers to work in the stores.
  
• One good person can do the work of three. He believes that no one is over
  qualified and that everyone has an impact on people around them.
  Look for some innovations coming from The Container Store including:
  
• Go Shop. An on-line order system with store pick-up to help time-pressed
  consumers.
  
• At Home. An in-home professional organizer service tapping the expertise of
  store employees.
  
• Gift Registry. New home starters can create a “dream space” here. Others
  include brides, babies and graduates. (On-line now).

As the kick-off speaker, Tindell crafted a wide platform upon which the rest of the CHESS “faculty” built their contributions. Several are summarized in this newsletter, but the full breadth of two days of content cannot be captured here.

The rest of the stellar 2011 faculty included: Commissioner Robert Stall, U.S. Patent and Trademark Office; Commissioner Nancy Nord, Consumer Product Safety Commission; Pamela Stafford, President, Brady Marketing; Berk Fernandez, Managing Director, UNA Worldwide; and Rick Farrell, President, Tangent Knowledge Systems.

With each year topping the prior one, the expectations for CHESS 2012 – right before the elections – are running high.

CHESS Highlights

Sandy Lincoln, Chief Market Strategist, BMO Asset Management U.S., forecasts slow growth for the global economy and thinks recession is out of the picture, but a low inflation scenario is likely. The strength of U.S. corporations will carry the day as he predicts three of four companies will beat their sales and growth forecasts.

Lincoln noted that this year’s macroeconomic forces are the same as last year, but they now get more attention than U.S. business reports, which contributes to the current market volatility. Sima Dahl, President and CEO, Parlay Communications, gave a spell-binding luncheon presentation on Social Media. She claimed, “This is the age of referrals,” and noted that product ratings can mitigate risk for consumers. Some of her top tips:

• Social Media is not a long-term strategy. It changes too fast. Focus on what can be done tomorrow
  and measure the results.
  
• The new marketing goal is engagement, not adoption.
  
• It is ten times easier to join a conversation on-line than it is to start one.
  
• The action verb in Social Media is listen.

Dahl has created Sway Factor, a system for building a network of people who care about you, for companies interested in developing or improving their virtual image. “In the Social Media universe, you are what you publish or what others publish about you,” says Dahl.

Peter Sims, author of “Little Bets: How Breakthrough Ideas Emerge from Small Discoveries,” encourages housewares companies to foster a “healthy insecurity” in order to break out of the left-brained habits which are ingrained by education and reinforced by business. He referenced studies that show diminishing activity in the frontal cortex – the area of the brain associated with judgment – when a person improvises. He frequently recommends improvisation courses for business people who want to improve their ability to be creative.

Sims encourages executives to be encouraging in order to foster a creative open environment. He recommended the “Principle of Plussing,” which promotes enhancement of ideas rather than debate or political competition.

Ken Harris, CEO, Kantar Retail Americas Consulting, observed that the consumer decision thoughtprocess recently moved from “Do I trade up?” to “Do I buy at all?” and that the U.S. consumer economy has now moved from the “Age of Deference to the Age of Reference.” Harris’ key forecasts include:

• Retailers will build smaller stores, with lower SKU counts.
  
• Gasoline prices will rise to $5 gallon, resulting in people making fewer shopping trips.
• On-line sales will grow by 30%.

Noting that “Housewares items are generally well-suited for on-line purchase,” Harris showed a brief
video of a virtual store in a South Korean subway station. Travelers use their smart phone to scan QR
codes for products which are delivered to their homes as they ride the commuter train.

Shortly after CHESS concluded, news broke about a similar virtual store, driven by QR codes in
Hungary. CHESS attendees who heard Harris, knew about this “retail” trend – some were implementing
QR code plans by the time the Hungary story broke.

Bah Humbug?

Are consumers gearing down ahead of the all important holiday season? The National Retail Federation thinks so. In a study conducted by BIGresearch, surveyed shoppers said they will spend 2.1% less than last year on gifts and seasonal merchandise. Nearly two-thirds (62.2%) said the U.S. economy will affect their holiday shopping plans. See the full survey data at: http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1225. Kantar Retail forecasts 2.8% overall retails sales growth during the 2011 holiday season, but that is only half of the 5.6% growth booked in 2010. Grocery and drug stores are expected to be above average gainers, thanks to price inflation. Since both of these forecasts use surveys, it is important to note that actual spending may not be the same as the intentions mentioned in the surveys. www.internetretailer.com/2011/09/22/subdued-holiday-forecast Walmart could be well positioned to capture more penny-pinching shoppers. In a recent study conducted by Bloomberg Industries, “Walmart had lower prices than Amazon.com on 18 items and Toys ‘R Us on 12 comparable toys.” On a comparison of 18 toys, Target was 9% higher and Kmart was 13% higher than Walmart.

Better Than a Court Date

IHA and its Board of Directors are asking housewares companies to sign a non-binding pledge supporting the housewares industry in taking a stand against the escalating costs associated with defending against legal claims of all types.

As of CHESS, more than 30 housewares companies had signed the pledge. The pledge is a plain-language policy statement on the preference to resolve legal matters using a process known as Alternate Dispute Resolution (ADR) rather than automatically going to court.

“Litigation costs impact all businesses and seem to be a function of just being ‘in business,’ ” says Phil Brandl, IHA president. “If both parties in a dispute can agree to resolve their issues through less expensive and more effective methods, everyone will benefit.” IHA is undertaking this initiative in alliance with the International Institute for Conflict Prevention and Resolution (CPR).

“ADR is a long-standing method for obtaining satisfaction in cases without the need for litigation by using mediation or arbitration,” according to Dale Matschullat, of Counsel to Schiff Hardin LLP, chairman of IHA’s Government Affairs Committee and counsel to IHA on the ADR initiative.

“Litigation is expensive, time consuming and very frustrating…plus, there will always be time to go to litigation,” adds Robert Trudeau, chairman, Trudeau Corporation. “However, prior to this, there is a smart and mature alternative that could save a lot of grief, and that is ADR.”

Another housewares executive, Bill McHenry, president & CEO of Widgeteer Inc., signed the pledge.

“As a member of the IHA, I was happy to participate in signing the ADR Pledge Form to help bring industry awareness to more sensible alternatives to suing someone in court,” McHenry said.

To download and sign the pledge, go to www.housewares.org/pdf/ADR_Pledge_Form.pdf. Return the completed form to Dean Kurtis at IHA at dkurtis@housewares.org or fax the document to 847-292-4211.

Alice Grows Up

Alice.com, one of the darling e-commerce start-ups, now boasts access to household products from more than 100 companies. Since opening its “doors” to the public in 2009, this on-line market and e-commerce platform has grown to include Facebook store fronts, reordering tools and automatic coupons for shoppers and a broad suite of analytic tools for manufacturers.

The connections with consumers through Alice.com appear to be gaining strength beyond simply the increasing number of items available from major consumables manufacturers. iPhone users can now shop with a free app. A few kitchen accessories are now in the mix, but the range is wide open for housewares companies with products that fit this increasingly popular niche. (www.Alice.com).

More Made in the U.S.A.

A new study predicts up to 30% of imports from China in seven industry groups will shift to being made in the US over the next five years. Mexico factories will also benefit to a lesser extent from a reduction in cost advantage that China factories have enjoyed over the last decade.

The research, conducted by the Boston Consulting Group (“Made in America, Again: Why Manufacturing Will Return to the U.S.”) says the following industries will experience this migration: transportation goods, computers and electronics, fabricated metal products, machinery, plastics and rubber, appliances and electrical equipment, and furniture. That pretty much covers the housewares manufacturing spectrum.

With other issues percolating abroad (labor unrest, electricity and water shortages, etc), added to the decay of the cost advantage, this might be a good time to investigate production options closer to home. See the full report at: www.bcg.com/documents/file84471.pdf

Are you ready to sell on HC365?

Many of you are already using Housewares Connect 365 to reach out to buyers in the housewares industry. HC365 is a FREE service for paid International Home + Housewares Show exhibitors and allows you to post a company description, product photos, product catalogs and even links to product videos.

Why would you want to do it?

HC365 recorded more than 372,000 searches for the 2011 Show and we are expecting to double that total in 2012. Make yourself seachable where buyers are looking for new product. You can even send them emails to their HC365 mailbox at no charge.

It’s fast and easy. And FREE. Go to http://www.housewares.org/show/exhibit/dir/ to get started. Contact your Show sales manager or email me at preynolds@housewares.org if you have any questions.