IHA News Release

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Contact: Deborah A.Teschke
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Housewares Industry Battles It Out For Consumers’ Discretionary Income

Home Entertainment Products Benefit

ROSEMONT, ILL (July 23, 2008) – Even during the most challenging of times, the resilient housewares industry can point to some positive trends driven by the very conditions that are prompting consumers to tighten their belts, according to the Summer edition of Housewares MarketWatch,  a publication of the  International Housewares Association.
While consumers are expected to curb their spending into 2009, products used for home entertainment could benefit as they accentuate a "cocooning" trend to save discretionary income yet still have some fun.

The beneficiaries of this trend include ice cream makers, fondue sets and popcorn makers, all of which have seen increased sales over the past year, says Peter Goldman, president of the Home Section at The NPD Group, a global market information company.

Sales of ice cream makers rose by nearly 8 percent in the 12 months ending March 2008, for example, when compared to the same time period one year earlier, as indicated by NPD point-of-sale (POS) information.

"This and similar growth patterns in related categories are largely attributed to the home entertaining trends as consumers look to nest at home as a means of cutting their usual entertainment expenses," Goldman says. "However, with consumers showing a greater tendency to spend more time at home, we may begin to see [overall housewares] sales slowly start to creep back up."  The same POS survey found that 53 percent of consumers plan to dine out less than usual, a finding that supports home entertainment as a less costly alternative.

Another positive trend during tough economic times: the influence of celebrity chefs and popular cooking shows on consumers’ desire to recreate favorite recipes highlighted by the TV personalities they follow. Paula Deen and Tyler Florence, for example, were among those ranked among the top 10 celebrities for purchase influence, according to an NPD report on "celebrity," a finding that demonstrates how influential celebrity chefs can be.

The stay-at-home trend also helps drive home improvement spending, Goldman says, as consumers are reluctant to alter their hard-earned lifestyles even while saving money remains their main motivation. The result is often spending a portion of the money consumers have saved and turning it into an affordable investment within their homes.
Fifteen percent of people who do home improvement projects actually plan to spend more money than usual for "selected" home improvement products during this challenging year, according to NPD’s survey on the economy, largely because do-it-yourself projects are an attractive way to spruce up the home cost effectively.

Dollar sales in some categories such as interior lighting and interior and exterior paint rose by 4 percent to 5 percent in the three months ending March 2008 versus the three months ending December 2007. Those types of projects are filling some of the gaps created by a downturn in larger scale projects such as kitchen makeovers, Goldman says

Retailers also are helping to buoy up the housewares industry by offering incentives such as discounts for the purchase of eco-friendly products and even more savings for consumers who spend their economic stimulus checks at retail. The "green" movement, which has gained significant momentum in the housewares industry over the last two years, gives manufacturers and retailers an opportunity to capitalize on the lackluster economic climate by meeting a consumer demand for products that leave less of a carbon footprint and lower their spending on energy.

"Though a certain level of skepticism still exists when it comes to eco-friendly products," Goldman says, "we may now begin to see this resistance to purchase lessen as consumers increasingly look for ways to save on their utility bills."

Goldman notes that at the midpoint of 2008 economic surprises are few, as more than half of U.S. consumers feel that the country is currently in "bad economic times" or even recession, according to a recent survey by The NPD Group. Soaring costs for fuel, food and other staples, combined with a still flagging housing market, a big dent in consumer confidence and job woes all feed into an unstable economy that has consumers spooked.
Given that climate, the housewares industry is in a battle for economic stimulus dollars, Goldman says. The remainder of 2008, then, will see a resilient industry "slogging it out" as suppliers and retailers continue to seek ways to win some of that valuable discretionary income.

Economists, somewhat cautiously, point to a bottoming out of the housing market by the beginning of 2009 and an improvement in credit by the last two quarters of 2008, "each of which may provide a much needed boost to the bottom lines of many manufacturers and retailers," Goldman says. "As we hope for a brighter picture, we know there are several factors that offer the potential of growing our businesses even in the face of tough economic times."

The Summer 2008 issue of Housewares MarketWatch, along with back issues, can be viewed and downloaded at www.housewares.org/iha/pubs/mw/.

The International Housewares Association is the 70-year-old voice of the housewares industry, which accounted for (US)$306 billion at retail worldwide in 2007. The not-for-profit, full-service association sponsors the world's premier exposition of products for the home, 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 reports, point-of-sale and consumer panel 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.