IHA News Release

FOR IMMEDIATE RELEASE:
Contact: Deborah A.Teschke
Manager, Media Relations & Communications
847-692-0110

2006 IHA State-of-the-Industry Report Examines Global Housewares Market

ROSEMONT, IL (December 21, 2006) –  The 2006 State-of-the-Industry Report, recently published by the International Housewares Association, offers an inside look at the $301 billion global housewares industry, including major economic trends and forces influencing consumer spending.

This newly expanded report is comprised of data from the IHA annual membership survey, as well as analysis of U.S. and global market data by Raftery Resource Network (R2N). The report also includes “Expert Perspectives,” insights from leading research firms analyzing and forecasting various industry trends, including ACNielsen Homescan & Spectra, the Association of Home Appliance Manufacturers (AHAM), Design Research Reports, Inc. Euromonitor International, The Gourmet Retailer, Mintel International Group Ltd, Retail Forward and Riedel Marketing Group.

Among the key findings in the report:

• Global housewares market data show an overall increase of 6.6. percent, driven in part by a stronger U.S. dollar.

• Domestic housewares spending increased by an average of 6.4 percent per year between the years 2000 and 2005.

• Fifty-six percent of IHA member companies manufacture products in the U.S. Most also import products.

• Discount stores and supercenters experienced a slight decline in market share to $18.4 billion in 2005.

• Kitchen tools & accessories along with tabletop showed the highest category gains versus 2004.

The Global Market

Of the $301 billion global housewares market in 2005, 85.6 percent of sales were in North America, Western Europe and Asia. Asia had a market share of 32.1 percent on $96.4 billion in housewares expenditures. In North America, with a sales market share of 28.5 percent, the U.S. was responsible for $76.2 billion and Canada, $9.7 billion. Western Europe had a market share of 25 percent based on $75.1 billion in consumer spending.

An Asian consumer market forecast by Euromonitor International in its Expert Perspectives essay says that segment continues to be buoyed by governments across the region investing in infrastructure and a population increase that is expected to exceed 4 billion people by 2015. As a larger middle-class develops and more people own homes, housewares manufacturers and retailers are expected to benefit.

Growth is expected to be much greater in emerging markets such as China, India and Thailand, than in mature markets such as Japan. Euromonitor International forecasts that increased disposable income coupled with a steady rise in the number of Chinese households should create a spending boom on new homes and improvements over the next 10 years. The number of urban households earning more than US$5,000 a year will grow by 24 percent annually, creating millions of new consumers.

Category and Market Share

The average U.S. household spent $578 on housewares in 2005, according to U.S. government data. This represents a 0.5 percent increase from 2004, when the average household spent $575. Put into perspective, U.S. housewares spending was higher in 2005 than that for dairy products ($362), about the same as fruits and vegetables ($600) and about a third as much as gasoline and motor oil ($1,813).

According to the State-of-the-Industry Report, as retail stores become increasingly efficient store saturation continues to rise. Annual inventory turnover and sales per capita have risen steadily over the past 14 years in the U.S., while the amount of retail building square footage per person has increased by a third since the 1970s. This means that the store “population” in the U.S. market is in a delicately balanced position. Missteps by any retailer, according to the report, “can quickly lead to demise as heavy-spending U.S. consumers find it increasingly easier to switch retailers.”

In an Expert Perspective essay, ACNielsen reports that “channel blurring,” in which consumers shop several product categories across retail channels, has picked up steam since it began in the 1990s. Dollar sales for most categories are driven by households that buy in two or more retail channels. This holds true, according to the ACNielsen report, for housewares and small appliances, where 33 percent of households that buy these products in two or more channels drive 51 percent of category sales.

This changing retail landscape takes the form of a bell curve in terms of sales. Retailers such as those solely online, supercenters and small format value retailers are in the rapid acceleration phase and ascending up the curve.

Specialty stores and DIY hardware and home centers, increased their share in housewares retailing in 2005.  Specialty stores accounted for 13 percent of all direct to retail housewares sales, up from 10.3 percent in 2004, also an increase over 2003. They are the top channel for kitchen electrics and home office and office supplies. Hardware stores and home centers see the majority of their housewares sales in space organizers, home décor and household electrics.

Other trends impacting the housewares industry according to the State-of-the-Industry Report include:

• The Greening of America – According to a forecast report by Erik Thorsen of Mintel International Group, Inc, 35 million Americans are “true greens,” or people who regularly purchase green products regardless of price. Another 200 million Americans are “light greens,” or people who occasionally purchase green products based on perceived value, need and benefit.

• The Do-It-Yourself Market – The DIY market was expected to reach $485.4 billion in 2006. Growth rates of 5 percent and less are expected for the next five years.

• Outdoor spaces – The patio is becoming a full-blown outdoor living space, with many consumers expressing the desire to upgrade their homes by adding porches, decks and patios. Sixty percent of the 1.8 million new homes built in 2004 had a patio, deck or porch.

The 2006 State-of-the-Industry Report costs $200 for IHA members and $500 for the general public. To order a copy of the report online, please visit www.housewares.org/iha/resources/soi.asp  or contact Janet Anderson, Membership Services Sales & Marketing, at gcostello@housewares.org or 847-692-0114.