IHA News Release

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

Housewares Industry Buoyed by 2006 Growth as Cost Pressures Stabilize Into 2007

ROSEMONT, Ill. (January 2007)—Consumer confidence boosted by lower energy costs and coupled with an improved employment picture have brightened the outlook for holiday spending. Housewares industry executives express cautious optimism for 2007 based in part on continued innovation and a willingness to “trade up” for quality.

According to the 2006 State of the Industry Report just published by the International Housewares Association, the global housewares market showed an overall increase of 6.6 percent, driven in part by a stronger U.S. dollar. U.S. housewares spending hit $76.2 billion in 2005; Americans increased housewares spending by an annual average of 6.4 percent from 2000-05.

By category through 2005, U.S. consumers increased their average spending by 14.2 percent on tabletop housewares; 8.3 percent on furniture; 7.1 percent on personal care products and 5.4 percent on miscellaneous household equipment, especially decorative products and items for the outdoors.

“Given the historic pattern of consistent consumer spending on home goods, we expect our industry to do quite well even during a time of financial challenges that might be difficult to overcome in other categories,” says Phil Brandl, president of IHA.  “We expected that 2006 would wrap up on solid sales ground, and innovative companies are budgeting for 2007 sales increases.

“We do see continued industry consolidation, particularly at the supplier level, as the result of retail consolidation and other internal and external pressures,” he added. “Innovation and creativity are the words of the day if companies want to thrive. Consumers have shown that they are willing to trade up for innovation and features they want.”

U.S. households in 2005, according to the report, spent more on housewares than on dairy products, about the same as on fruits and vegetables and about a third as much as on gasoline and motor oil.

Despite some predictions concerning the negative impact of a slowing housing market, members of the International Housewares Association Board of Directors say it hasn’t softened sales of home-related items. One reason: larger homes mean more housewares. The average size of a new home went up 10 percent during the 1990s, with the increase attributable to the “monster home” phenomenon that emerged in the ‘90s and was even more prevalent from 2000-05.

“One would think we would see a softening because many of our company’s products are absolutely for new homes,” says IHA Board Chairman James L. Glenn, president and CEO of Whitney Design, Inc. “You buy an ironing board when you need one or when you move. That being said, you would think there would be a lowering of iron board sales but we haven’t seen that. It appears that you can have a decline in the (new) housing market and still pick up new consumer sales by creating new and innovative products.”

New housing starts are not very significant for the housewares industry, adds Jeff Siegel, they are less important than “new household formations” resulting from marriage and divorce that “require a new set of everything.” Siegel, CEO of Lifetime Brands, Inc., says those reformed households are “very important and those (numbers) haven’t changed.”

Fewer new housing starts are “not relevant in the short term,” says Peter B. Cameron, IHA Board chairman-elect and CEO of Waterford Wedgewood. “If (the situation) were to deepen, it would clearly affect housewares.”

Regardless of the product category, says Bruce Kaminstein, president of Casabella Holdings LLC, housewares companies can maintain growth, even while manufacturing cost pressures continue, with smart design and innovations that reflect what consumers say they want. To fulfill those wants, housewares suppliers are making more home visits that allow companies to watch their products being used and directly question homeowners on what features they prefer.

“We’ve introduced many new products and gained new customers,” Kaminstein says. “You need to be smart with your products and what you’re going to introduce. You have to be a good marketer today and you have to invest in your brand. Many companies have elevated themselves in terms of design.”

Kaminstein and other housewares executives continue to express concern over the increases in raw materials and energy costs they absorbed through much of 2006, yet leaven their comments with optimism that higher production costs have stabilized and distribution can be increased by pushing price points while offering consumers real reasons to “trade up.”

Siegel notes, for example, that when his company began in the mid-1980s, it sold a basic peeler at 99 cents retail. Today, the company sells more peelers at $9 retail than it did at 99 cents because consumers see a better product in terms of design, brand, ease-of-use and new features. 

“Retailers are looking for higher grade products,” agrees Glenn, “and they’re looking for enhanced value and a way to show customers that a product is different. We have one mass market retailer that made some upgrades last year and the changes had a significant impact on the products we supply to them.”

 “The industry faced cost pressures from increases in materials and energy costs in 2006, yet it was buoyed up by several trends that maintained consistent consumer spending on home goods,” Brandl says.  “As we approach 2007, materials and energy costs have stabilized and housewares companies continue to drive innovation and design of new products that consumers will buy for their utility and time saving features.”

IHA is the 69-year-old voice of the housewares industry, which accounted for (US$)$301 billion at retail worldwide in 2005. The non-profit, full-service association sponsors the world's premier housewares products exposition, the International Home & Housewares Show, and offers its 1,700 member companies a wide range of services, including industry and government advocacy, export assistance, State-of-the-Industry report, point-of-sale and consumer purchase data through Housewares MarketWatch, executive management peer groups, a unique Web-based community at www.housewares.org and group buying discounts on business solutions services.