Small Electrics: Consumer Lifestyles Dictate Trends

According to the International Housewares Association's Fall 2000 Market Watch, almost every U.S. household owns a microwave oven and a blender, while very few have espresso machines, electric teapots, vacuum package sealers, electric woks, or ice cream makers.

Fortunately, your customers are not the majority of U.S. households.

With the IHA's figures alone, it's easy to determine who your customers are not, but what you need to know is who they are and how do the elements influencing their lives affect the small electrics category. In order to analyze this category, we also need to look at consumer food preparation and lifestyles. First, we'll profile the small electrics consumer to help better understand his or her wants and needs. Then we'll speak with a few experts about their forecasts, look at changing lifestyles and nutrition, and finish up conversing with retailers from across the country.

So, let's get to it by first putting the consumer on the couch and beginning the analysis.

Building a Customer

The IHA's statistics gleaned from a national sample of 1,000 U.S. households compare household penetration and annual purchase incidence, representing purchases made at mass merchant, department, and home specialty stores.

Their report notes that for kitchen electrics, single-person households are an important segment as they are more likely to have recently purchased stand mixers, electric teapots, espresso machines, or juice extractors. Households with no children are more likely to have purchased food processors or ice cream or yogurt makers.

Research from Spectra Marketing further illustrates the characteristics of these one- and two-person households. Spectra created a small electrics consumer profile at our request, using an upscale electric blender model as the fixed element.

The resulting profile provides a glimpse of the likes and dislikes of an average small electrics consumer who has purchased an upscale blender in the past year. Spectra's study describes a well-educated consumer with a high income and an interest in travel, cooking, and the arts. Internet sites which drew a disproportionately high audience among the target consumer group included cnbc.com, etrade.com, foodtv.com, and washingtonpost.com. Additionally, these consumers were more likely to listen to classical, nostalgia (oldies), or all-sports radio stations, and read the travel section of the newspaper. Sports activities for this target group include mountain biking and golf.

Crystal Balls

So, what products will attract this customer to your store? If only we had a crystal ball. Still, there are some people who get paid to make predictions so we will defer to them.

According to the IHA, the electric coffee maker is the largest kitchen electric product category, and electric teapots and pressure cookers were the smallest in terms of annual purchase incidence in 2000. In addition, the replacement market is far more important to the espresso/cappuccino maker and electric coffee maker categories. In fact, 26 percent of the U.S. households who own an espresso or cappuccino maker purchased a new one in 2000. But A.J. Riedel of Riedel Marketing Group in Phoenix has sobering news for this category. She predicts that automatic coffee makers and espresso machines will not be hot this year. Instead, she's placing odds on microwave ovens, toaster ovens, and new speed-cook oven technologies.

"Vacuum sealers are another area which I think will continue to trend up and the reason goes to the consumer food prep trends," said Riedel, who also points to indoor grills as an indicator of what was.

She explained, "I think the indoor grill has reached its peak. My guess is it will start to decline. It amazed me it got as big as it did."

In fact, Riedel has outdoor grills on her hot list for 2001 — indoor grills are on the "not hot" list, along with bread machines and water filtration systems.

"When I watch products or try to project what products I think will do well, I have to consider whether it is going to help consumers get food on the table faster. That is the key. Products that don't do that are not going to hit a large group of consumers," Riedel said. "Bread makers for example were the industry's attempt to make homemade bread but it is so much easier to purchase artisanal breads than make them in the bread machine. Although it was touted as a convenience product, it really isn't that convenient."

According to research firm Unity Marketing, small electrical appliances generated more than $8.7 billion in sales in 2000. Unity, which includes personal care appliances in its figures, reports a 7.8 percent growth in 2000 over 1999. Retail figures noted since 1997 show a continued improvement in small electric sales. Still, over 70 percent of that market is credited to general merchandise retailers in 2000, leaving other retailers a much smaller share of the market.

These Unity figures hammer home the need for specialty kitchenware retailers to have a firm understanding of what's important to their small electrics customer.

The best bets are still convenience-oriented products with quality construction, moderate footprints, and easy storage capabilities. These qualities were agreed upon by both industry analysts and retailers alike.

According to IHA Lifestyle Consultant Lisa Casey Wiess, "Small electrics that make life easier for consumers, such as updated slow cookers that can be programmed to turn on and off, tap into the consumer's desire to combine convenience with home-cooked meals."

Another important area is technological advances. Technology will continue to expand the market as manufacturers combine new advances with traditional ideas.

Wiess continued, "What's trending in is anything Internet related or Internet connected. The general public may not be quite ready to make these purchases, but they are exciting for retailers who are searching for the next best thing. Hand in hand with Internet compatibility is the continued popularity of smart appliances. While some of the most recent smart appliances are still in prototype form, consumers are interested in simple smart appliances, such as toasters with built-in programmable features to preset the toast setting to the consumer's preference."

As far as color preference, Riedel said white is what sells.

"My general feeling about kitchen electrics and colors is that people are investing in something they are going to have for five or 10 years, so white is always going to be one of the most popular colors because it's safe. The fear is you might tire of a red or cobalt blue blender," she said. "Color is an interesting trend and it certainly drives interest at retail, but the majority of the product that's going to walk out the door is white."



The American Diet

mall electrics which have lost shelf space in the past are now experiencing a resurgence. Shifts in consumer eating habits are reflected in sales of items such as deep fryers, egg poachers, and vacuum sealers.

"A lot of the niche products are subject to the eating trends du jour. Rice cookers and steamers were really hot products for a while because of the low-cal craze. The pendulum is swinging back a bit from all-out healthy, low-fat cooking," Riedel said. "Deep fat fryers seem to have had a resurgence in the last year or two, which really can't be described in any form as healthy eating."

Another item making a resurgence is the electric egg poacher, which is finding support amidst reports that eggs are now okay to eat.

"People are now giving themselves permission to have eggs," Riedel said. "An egg poacher is really a convenience item."

Convenience appears to be key in this category. Small electrics must serve a useful function, make it easier to prepare food, and save consumers time. The time focus is best illustrated by a cooking technique termed "investment cooking" — cooking a variety of dishes at one time and freezing some for later use.

Riedel said this cooking practice is trending upwards, with 57 percent of U.S. households investment cooking an average of six times per month, up from only 2.3 times a month in 1998.

Investment cooking influences the sale of items such as vacuum sealers, microwave ovens, toaster ovens, and other speed/convection cooking styles. It is a practice which fits into the fast-paced American lifestyle — 44 percent of weekday meals are prepared in 30 minutes or less — and suits consumer demands. Retailers need to keep abreast of products which save consumers time and effort.

"With niche kitchen electrics, it's critical to think about whether the product will make it easier, more convenient, and faster for the consumer," Riedel said.

Successful small electrics are those with a small footprint and easy storage capabilities. Products also have to perform at a superior level and make a kitchen task easier to complete.

"A product like Presto's Pizza Pizzazz may be a good niche product because it saves the consumer time and it makes good pizza. Your pizza will be done before your oven is heated," Riedel said. "It's worth the storage space to have something that's going to make having pizza faster and easier."

Another cooking technique heating the category is "speed scratch cooking," a term coined in 1994 by The Food Channel and described as "any method or product intended to save the cook time or effort that would normally be required to prepare a meal in a traditional scratch method." These techniques include such things as prepared foods, shredded cheeses, and packaged mixes. The average time the typical U.S. household used this technique increased from 15.7 times per month in 1998 to 24.4 times per month in 2000.

"Consumers value eating at home but they don't want it to take much time. They are looking for ways to get food on the table much faster than it would take in a traditional method," Riedel said.

This is also what makes investment cooking popular. While consumers are looking to save time, they also want to provide their families with traditional foods.

Riedel said, "There is a feeling among American consumers that maybe we've moved too far away from home-cooked with home meal replacement."

Additionally, the cost savings presented in investment cooking may further fuel the trend, especially in the current economic downturn. Even with this economic challenge, there are products such as the vacuum sealer that are perfectly suited to market to your budget-conscious customers.

Riedel sees additional opportunities for the specialty kitchenware retailer in the coming years, mainly concerning education and service.

"I think the most important trend for specialty retailers is recognizing that the younger generation may not be learning how to cook. What we need to do is educate them. Discounters can't take the educational role that the specialty retailer can," she said.

As consumers continue to seek convenient dinner prep options, specialty retailers can take a lead role in introducing them to niche small electrics through in-store demonstrations and classes. Teaching the customer how these products will add convenience to their food preparation will build sales.

"You want to be known as a destination," Riedel said. "You want to say, 'If you are going to take up a new type of cooking, come to us and we can pick out everything you'll need to have a great cooking experience.'"

She continued, "The competitive edge that specialty stores have is that they can do demonstrations and they can do education. Customers want to shop with someone who can really help them and that's where specialty has the real advantage."



The Front Line

utside of research and forecasting lies the real test — the retail environment. While no one can guarantee what will sell, taking a look at current sales across the country might spark some ideas for your own store and customers.

Cindy Griffith, buyer for Dayton, Ohio-based Culinary Company, said egg poacher sales have gone wild this year.

"We can't keep them in the store. I finally doubled my order to keep them in stock," she said.

For Griffith's customers, traditional small electrics such as coffee pots, toasters, and toaster ovens are important categories, but they only sell if they have a good price point, brand recognition, and quality construction. With margins in this category precarious, product differentiation is essential.

"We try to be more unique in what we carry than the discount stores," Griffith said. "Quality and name brands are important to consumers, as well as unique items that they can't find in the big box stores."

Retailers we spoke with understand the importance of filling the niche in small electrics. Ron Eisenberg of the Great News Discount Cookware & Cooking School in San Diego, Calif., said he's seen products from bread machines to electric pasta makers come and go.

"Waffle makers and toasters are extremely important and the more features and benefits on these items, the more customers are attracted. People will pay the price," Eisenberg said.

Along with the standard products, Great News fills the niche demand with items such as juicers and rice cookers. Eisenberg believes rice cookers are popular at his store because of the popularity of Asian cuisine. The store also has a cooking school and includes the rice cooker in its demonstrations.

"Every product has a reason, an audience. With juicers, it's people who are health oriented. With an egg poacher, it's convenience," Eisenberg said. "There is also a big market for pizzelles. We didn't have them last year and we missed out at Christmas. We won't make that mistake again. They really are a highly seasonal item."

Merritt Island, Fla.-based Cook's Cove manager Becky Atkinson said her inventory is very limited, but consistent.

"While a department store might carry a pizzelle only at Christmas, I carry it year-round," she said.

The pizzelle iron is the best-selling small electric at Cook's Cove, followed by the electric fondue. Atkinson also carries electric crock pots, egg poachers, woks, coffee makers, and electric water kettles.

"I would love to get in more quesadilla makers," she said. "The reason I do these items is because nobody else sells them. I just do the things that I know the other stores don't carry."

Keeping an eye on the competition and their inventory, knowing your customers' lifestyles, and watching for new product developments are the first steps to better understanding the niche small electrics arena. Consider each cooking class program you offer and what small electrical appliance might fit into the class demonstration. If you don't offer cooking classes, simply review your inventory and consider which product will make trendy demonstrations.

As a specialty store, you need to be cognizant of your small electric goals. Learn from Atkinson's 13 years of experience and establish your store as a destination for hard-to-find niche products.

"The biggest problem with electrics is everyone wants everyone else's business. You could be inundated with SKUs and confuse the customer," Eisenberg said. "We're lucky to be in an enviable position because we can tell people what they should have and they believe us."

Building your customers' trust is a matter of understanding the market by keeping ahead of trends, stocking high-quality product, and training your staff to answer questions and demonstrate product. Plug in all these factors and watch your small electrics sales light up.

Key Points

Single-person households are an important market segment as they are more likely to have recently purchased stand mixers, electric teapots, espresso machines, or juice extractors.



• Small electrics margins are precarious — hovering at about 30 percent — making product differentiation essential.



• As consumers continue to seek convenient dinner prep options, specialty retailers can take a lead role in introducing them to niche small electrics through in-store demonstrations and classes.



• Showing your customers how small electrics will add convenience to their food preparation will build sales.



• Technology will continue to expand the market as manufacturers build new advances into traditional ideas.



• Convenience appears to be key in this category. Small electrics must serve a useful function, make it easier to prepare food, and save consumers time.