annual survey 2004 the Dutch market for large and small electrical household appliances

Transcription

1 annual survey 2004

2 the Dutch market for large and small electrical household appliances annual survey 2004

3

4 4 VLEHAN 2004 VLEHAN ASSOCIATION OF SUPPLIERS OF HOUSEHOLD APPLIANCES IN THE NETHERLANDS number of members 25 Managing Director M.P.J.A. Muijser secretariat C. Zegers - van Loon visiting address Boerhaavelaan HX Zoetermeer The Netherlands postal address PO Box AD Zoetermeer The Netherlands tel. no. +31 (0) fax +32 (0) vlehan@fme.nl website

5 5 Contents page 4 VLEHAN 2004 page 6 Foreword page 8 Introduction page 9 Research method page 10 Market report/summary page 14 Figure 1 page 15 Figure 2 page 16 Figure 3 page 17 Figure 4 page 18 Figure 5 page 19 Figure 6 page 20 Figure 7 page 21 Figure 8 page 22 Figure 9 page 23 Figure 10 page 24 Figure 11 page 25 Figure 12 page 26 Figure 13 page 27 Figure 14 page 28 Figure 15 page 29 Figure 16 page 30 Figure 17 page 31 Members of the Board page 32 VLEHAN members

6 6 Foreword The 23 members of the VLEHAN Association (1 June 2005: 25) jointly offer Dutch households a wide range of large and small domestic appliances. Our Western society has become accustomed to the availability of products which make our everyday life both easier and more agreeable, and life without a washing machine, refrigerator, vacuum cleaner, dish washer, coffee maker, etc., is now virtually inconceivable. The companies marketing these appliances are engaged in open and sometimes fierce competition with each other in their endeavours to gain the customer s favour. And the consumers win, since this free market mechanism is one of the reasons why these appliances continually improve in quality, can do increasingly more, use lower amounts of energy and water, and have increasingly appealing designs and moreover, are available at stable or even falling prices. The average household now owns 17 large and small domestic appliances. On average, these appliances have a useful life of at least 10 years, and often considerably longer. Consequently, every year the 6 million Dutch households buy some 12 million new appliances. These appliances have a tremendous impact on our everyday lives, and consequently nowadays the authorities monitor the market very closely. Issues such as low energy consumption, safety, the absence of hazardous compounds, and the recycling of waste appliances now all have the full attention of the authorities, both in the EU and the individual member states. The Dutch Consumers Association also provides a great deal of information about these products, and requests attention for the societal and environmental dimensions of the production processes. One of the important duties of a trade association of the nature of VLEHAN is to address these surrounding issues in an appropriate manner, thereby enabling the members to concentrate on their core business the manufacture and marketing of household appliances. The following pages of this Annual Survey explain the developments in sales of the various segments in VLEHAN would like to make use of this opportunity to draw attention to two current themes that influenced the developments in our market during 2004: firstly, the increases in the prices of raw materials and, secondly, consumers increasing awareness that the earlier replacement of household appliances can save energy and consequently money.

7 7 INCREASES IN THE PRICES OF RAW MATERIALS The price of copper has increased by 41% since the beginning of 2004, according to an article in the Het Financieele Dagblad Newspaper of 1 March As everyone knows, copper is used in the electric motors and wiring to be found in all appliances. However, the increasing price of steel will have much greater consequences for the manufacturers of large appliances, such as washing machines, cookers, and tumble dryers. In July 2004 the price of steel was 50% higher than at the beginning of the year and the trend is persisting, primarily due to the continually increasing demand in China. Exorbitant price increases of this nature are only relatively recent, and have only become really apparent since the beginning of Unfortunately, it is self-evident that these increases will inevitably have consequences for the price of household appliances such as dish washers and tumble dryers. IT PAYS TO REPLACE APPLIANCES BEFORE THEY ARE WORN OUT Household appliances have for many years been of an excellent quality, and consequently they have very long useful lives. Nevertheless, it actually pays to replace appliances before they are worn out. Household appliances, in analogy with cars, are continually upgraded as a result of innovations and other improvements or, in other words, a 10-year-old refrigerator does not possess the functionality or high level of specifications of a later model. When viewed from this perspective, a new appliance will repay itself in full during its normal useful life and, in fact actually save money. The savings achieved by washing machines are of the order of per annum. Moreover the replacement of all old appliances by new low-energy models would actually enable Europe to achieve no less than 25% of what is referred to as the Kyoto target (the reduction of CO 2 emissions) in one fell swoop. VLEHAN is collaborating in a European project designed to clarify these results and increase awareness of the potential benefits. When viewed from this perspective, early replacement really is a win-win situation which is why the issue is of such great interest to consumers and European and Dutch policy-makers. M.P.J.A. Muijser Managing Director, VLEHAN May 2005

8 8 Introduction This Report reviews the developments in the market for large and small electrical household appliances or, in other words, Dutch consumers total expenditure on this category of equipment (both freestanding, and built-in) during Consequently the professional market falls outside the scope of this Report. The market for electrical household appliances as defined above can be classified into the following product groups (groups not listed below are not incorporated in the total sales figures): LARGE ELECTRICAL HOUSEHOLD EQUIPMENT Dish washers Washing machines Refrigerators Freezers Tumble dryers Hobs Ovens Cookers Cooker hoods Microwave ovens SMALL ELECTRICAL HOUSEHOLD EQUIPMENT Coffee makers Espresso machines Kettles Deep fryers Toasters Contact grills Electric kitchen equipment Fun-cooking products (such as gourmet cooking sets, fondue sets, and rice cookers) Fruit juicers/citrus presses Gentlemen s shavers (incl. beard trimmers) Ladies shavers (incl. depilators) Oral-care products (incl. brush attachments) Hair-care products Other (such as blood-pressure meters, digital thermometers, and bathroom scales) Irons (steam, and dry) Vacuum cleaners Electric heaters Air humidifiers Air purifiers Air conditioners

9 Research method GFK Benelux Marketing Services B.V. a reputed international market-research agency that began operations on the Dutch market in 1978 closely monitors developments in the Dutch retail sector. Pursuant to these operations, GFK tracks consumer purchases of the aforementioned houshold appliances from the retail trade to compile figures of the requisite sales (in numbers of each product) and the turnover (in euros). The results from these permanent measurements enable GFK to track developments in the various product categories over the course of time, and to issue up-to-date and reliable analyses of trends. OTHER SOURCES OF DATA GFK has also obtained supplementary data on market developments from VLEHAN s Effectory statistics and the Central Bureau of Statistics (CBS). 9 THE CONTENTS OF THIS REPORT The tables in this report have been drawn up on the basis of trend analyses derived from the GFK reports, contributions VLEHAN members, and data obtained from various other sources. The data in this report relate to Dutch consumers total expenditure on household appliances. Following a reweighing of the results for 2003 a number of minor corrections have been made to the figures cited in the Annual Survey for All amounts cited in this report are in euros, inclusive of VAT. The sales of each product (the number of each product) cited in the figures are in thousands, and the turnovers are in million euros.

10 10 Market report/summary GENERAL ECONOMIC SUMMARY FOR 2004 During 2004 the economy exhibited a slight recovery from the contraction that took place in 2003, and achieved a growth of 1.4%. However, this growth was largely due to the surge in exports (+ 8.3%); government and household expenditure remained virtually unchanged from the level in The growth in unemployment was the largest in twenty years, a development which resulted in consumer uncertainty about the future and reserve in expenditure on goods and services. CONSUMER CONFIDENCE Consumer confidence increased again during the first eight months of the year, albeit marginal. However, this trend was interrupted in September/October, when a slight decrease became apparent. The general economic climate deteriorated, largely due to concerns about pensions and increasing unemployment. The rate of employment for the whole of 2004 exceeded 6%; for the sake of comparison, in 2001 the year in which consumer confidence exhibited a downturn the rate was only 3.4%. This explains the reserve consumers exhibited in their expenditure in However, in 2004 the Dutch population had saved a total of 14.5 billion. EXPENDITURE ON GOODS AND SERVICES Household expenditure on goods and services was just 0.5% higher than in 2003, although fortunately it did grow; in 2003 expenditure had decreased by 0.9%. However, when this growth is placed in an appropriate perspective this development is unfortunately less promising than might at first appear, since the increase was primarily due to the obligatory and unavoidable expenditure on rent, municipal taxes, insurance premiums (following an amendment of the Compulsory Health Insurance Act), etc. Consumer expenditure on durable goods was lower in 2004 than in However, a further explanation is required. An examination of the sales of durable goods such as washing machines reveals two developments: although the turnover (the total sales expressed as euros) decreased as a result of the pressure on prices, the volume (the total sales of appliances) actually increased. Consequently there was certainly no consumer strike during For this reason, when interpreting the market developments and the macro-economic analyses it is important to recognize that consumers are still prepared to spend on durable goods. Nevertheless, since these have become cheaper the turnover has decreased in some segments, such as washing machines. Consequently it would be incorrect to simply conclude that the decrease in expenditure is indicative of consumer economies resulting in reduced purchases of durable goods as compared to the previous year. 99% of all households have a washing machine, and this is not changing. RETAIL TURNOVER In 2004 the total turnover achieved by the retail trade was 2.1% lower than in 2003, the second consecutive year in which the retail turnover decreased. The most important reason for this decrease was the 1.5% fall in store prices in both the food and non-food sectors. In 2004 the turnover of food and beverages stores was 1.7% lower than in the previous year.

11 11 The price war between the supermarkets led to a 1.9% decrease in prices in the food sector. In 2004 the turnover of the non-food sector decreased by 2.9%; the non-food sector s turnover had already decreased in It should be noted that the demarcation between food and non-food retailers is becoming increasingly blurred, as is revealed by the many non-food products such as computers, telephones, microwave and DVDs offered for sale at supermarkets and chemists. This makes it increasingly difficult to interpret figures from the retail trade in terms of market developments in a specific sector. INFLATION For the whole of 2004 the rate of inflation amounted to just 1.2% and, if oil prices had increased less rapidly, we might well have been approaching deflation. It is now virtually inconceivable that the rate of inflation could still have been 4.2% in The decrease that has become evident since then is largely due to a shift in consumer conduct. Concerns about the general economic situation have resulted in consumers becoming more aware of prices than was previously the case a development clearly illustrated by the 2004 price war in Dutch supermarkets, as a result of which products were even offered for sale below the retail price. THE HOUSING MARKET, AND MOVING HOUSE The market for new kitchens of particular importance to the built-in segment of the large household appliance market is greatly dependent on developments in the housing market. Although the number of completed new homes fell short of the forecasts, the number was nevertheless more than 15% above the number of new homes completed in ,000 new homes are scheduled for completion in 2005, a number that will lay excellent foundations for the further growth of this market. An additional further development is the trend in which luxury kitchens equipped with conveniences such as a dish washer, built-in refrigerator, etc., etc. are no longer reserved solely for owner-occupiers and newly-completed luxury rented accommodation. The housing corporations are also increasingly installating luxury kitchens during the modernization of their existing housing stock. Many of today s consumers are more than willing to pay for these extras. In addition, the very low mortgage rates fortunately also continue to have a beneficial effect on the market. On the basis of the total growth in sales (volume) it is possible to arrive at the overall conclusion that the built-in segment of the market is to some extent confronted by a consumer strike. A YEAR FOCUSED ON PRICES In 2004 the sector was strongly focused on prices, a situation which was due to a variety of reasons. One important reason was the abolition of the energy premium, already reported in our 2003 Survey, which had a detrimental effect on the average retail price. In addition, the general market conditions in the electrical and kitchen stores also made their influence felt; the various retailers are engaged in a fierce competitive battle to gain the consumer s favour a battle in which, in analogy with the supermarket, retailers are not hesitant to deploy the price weapon. The emergence of retailers outside the traditional retail channels, in particular in the market for small household appliances, is also imposing pressure on the average retail price. Moreover, nowadays consumers are better informed before they step into the store; in addition, they are prepared to negotiate and insist on a discount. In conclusion, the Internet is playing an increasingly important role; nowadays the worldwide web is not only used to examine product (types) and prices, but is also increasingly being used to make direct online purchases.

12 12 It is striking to note that and notwithstanding the weak economy sales of various groups grew in In total, the sales of large household appliances actually increased by 4% to almost 3.5 million articles. Moreover in the most important sales category, washing machines, growth was 5% - and for dish washers actually almost 8%! The conclusion is clear: consumers are economizing, but they are not doing so by postponing purchases of large household appliances. Innovation will be of decisive importance to further growth. One example of the importance of innovation in the small household-appliance market is the emergence of the coffee-pad system; however, the developments in the electrical toothbrush, shaver, refrigerator and vacuum-cleaner groups are certainly also worthy of note. The most talked-of introduction to the draining board in 2004 was the draught-beer system for home use which, once again, is an example of the continued scope the market offers for appropriate innovations, even in a struggling economy. On the emergence of broadband Internet and numerous wireless applications the smart home talked about so much in the past is close to becoming reality. Within the near future a continually-increasing number of household appliances will be integrated in a home network that already extends to PCs, telephones, and audiovisual equipment. These new developments offer firm foundations for further innovations and a continued growth in the market. WASHING MACHINES, TUMBLE DRYERS, AND DISH WASHERS Price decreases were evident throughout the whole of 2004, although it did appear that the prices were stabilizing towards the end of the year. These price decreases in turn resulted in a clear shift in the price categories. In 2004 the most important price category in the entire washing category was euro, whereas in 2003 the prices had still been between 400 and 500 euro. Unfortunately, in spite of the 5% increase in sales of washing machines the turnover failed to increase. Once again, in 2004 the 1400-RPM segment increased its share of the market (from 31% to 35% in 2004). Three years ago, on average consumers paid more than 700 euro for a 1400-RPM washing machine; since then, prices have fallen to the 600 euro mark. This development is in part due to a 30% decrease in the market share of the more expensive 1600-RPM washing machines following the abolition of the energy premium. In 2004 tumble dryers, in contrast to previous years, exhibited a 5% increase in sales. However, once again turnover decreased in this instance, by 4%. Condenser dryers achieved a further increase in their share of the market (from 64% to 66%). It is striking to note that the market share of condenser dryers with a capacity of 6 kg doubled, both in terms of sales and turnover. In 2004 approximately 8% more dish washers were sold than in 2003; sales by retailers outside the traditional retail channels will have made a major contribution to this growth. Turnover decreased by 3%. The growth in sales was primarily due to the increased sales of the lower-priced freestanding slimline models (< 50 cm wide). REFRIGERATORS AND FREEZERS Refrigerators and freezers were also confronted with a price war during Refrigerators exhibited both a decrease in sales (-1%) and turnover (-6%). Refrigerator/freezers achieved a slight increase in their share of the market (from 33% to 34%), and in so doing became the best-selling types in The price of these models fell by about 5%. A new development currently making its emergence is the no frost system, which was fitted to about 9% of the refrigerator/freezers sold in 2004 (2003: 6%). The side by side American refrigerators still account for a small share of the market (2% by sales); however, in 2004 turnover grew by 7%. Whilst freezers had been confronted with disappointing results in 2003, in 2004 sales increased by no less than 11%; turnover grew by 4%. Once again, the abolition of the energy played a not-unimportant role in the shift towards the lower less energy-efficient price segment.

13 13 COOKERS AND COOKER HOODS Sales of the cooker groups, in analogy with the washing machines, also reveal the emergence of retailers outside the traditional retail channels. This resulted in a 4% increase in sales of microwave ovens and a 3% increase in sales of cooker hoods. However, none of the groups exhibited an increase in turnover. The most popular model of cooker hood was the chimney hood; these achieved a slight increase in their market share, in particular in sales via electrical-goods stores. As was the case in 2003, about 50% of all cooker hoods sold via kitchen stores were chimney hoods. Sales of hobs achieved a slight growth (0.5%). Gas hobs, with an almost 64% market share of the market, retained their popularity; however, electric hobs did gain market share, in particular during the last quarter of The increased sales of built-in ovens recorded in 2003 did not continue in SMALL DOMESTIC APPLIANCES Although sales of a number of product sub-groups within the Small Domestic Appliances (SDA) group exhibited an increase in 2004, turnover achieved by the overall group fell by more than 3%. The turnover would have decreased even further were it not for the introduction of on average more expensive products in the oral-care equipment, coffee maker and hairstyling/hairstraightener segments. New products, such as the home draught-beer systems and breadmakers, performed very well. When the turnover home draught-beer systems is included in the total SDA as is the case with our definition turnover in the SDA market fell by only 0.3%. In 2004 straighteners became very popular in the Netherlands; whilst only 10,000 straighteners were sold in 2003, in 2004 the sales increased fivefold. It is a moot point whether this hype will continue into According to the latest reports from the UK and USA, curls are back in fashion; it is not without reason that the first new hair-curling appliances were launched on the market in January-February In 2003 the traditional retail channels were already confronting considerable competition from other retail channels, such as DIY stores, supermarkets, and chemists. This trend has continued in 2004, when some 15% of all kitchen appliances were sold via these new channels. As mentioned earlier, this imposes pressure on the average retail price. However, the figures for 2004 also reveal that consumers are willing to pay extra for products with added value. The latest ironing systems offer an excellent example of their willingness: these new appliances are, on average, 100 euro more expensive than traditional irons, and as a result of their influence both sales and turnover in the iron segment of the market have remained stable. In conclusion, the important vacuum-cleaner segment of the market exhibited a 4% decrease in turnover. This decrease could have been more pronounced were it not for the extremely popular vacuum cleaners without dust bags (+11%). Whilst dust-bag-free vacuum cleaners generated 6% of the turnover in the Home Comfort segment in 2003, in 2004 the market share increased to almost 8%.

14 14 figure 1 dish washers washing machines tumble dryers refrigerators freezers cookers / ovens built-in + freestanding hobs microwave ovens cooker hoods Total market for large household appliances, January - December 2004 sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 4% growth -4%

15 15 figure 2 < 1,000 RPM 1,001-1,200 RPM 1,201-1,400 RPM 1,401-1,600 RPM > 1,600 RPM Washing machines by RPM sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 5.1% growth -2.9%

16 16 figure 3 top-loader front-loader Washing machines by type sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 5.1% growth -2.9%

17 17 figure 4 AAA+ energy class AAB+ energy class AAA energy class AAB energy class AAC energy class other energy class Washing machines by energy class sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 5,1% growth -2,9%

18 18 figure 5 vented, electronically-controlled vented, timer condenser, electronically-controlled condenser, timer Tumble dryers condenser vs. vented dryers sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 4.9% growth -4%

19 19 figure 6 built-in/built-under freestanding Dish washers freestanding & built-in/built-under sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 7.5% growth -3.3%

20 20 figure 7 box model table model cabinet model refrigerator/freezer, freezer above refrigerator/freezer, freezer below side by side American Refrigerators by segment sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth -1.2% growth -6.2%

21 21 figure 8 built-in freestanding Refrigerators built-in and freestanding sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth -1.2% growth -6.2%

22 22 figure 9 A++ A+ A B C D Freezers by energy class sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 10.8% growth 4.1%

23 23 figure 10 box model cabinet model Freezers by type sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 10.8% growth 4.1%

24 24 figure 11 electric gas Built-in hobs by source of heat sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 0.5% growth -8.9%

25 25 figure 12 freestanding built-in Cookers & ovens built-in and freestanding sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 3.7% growth -3.1%

26 26 figure 13 built-in chimney hood / island hood flat integral freestanding / built-under Cooker hoods by segment sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 2.7% growth -1.7%

27 27 figure 14 MWO combi MWO + grill MWO solo Microwave ovens by segment sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 3.5% growth -5.2%

28 28 figure 15-1,200 W + 1,201-1,300 W + 1,301-1,400 W + 1,401-1,500 W + 1,501-1,600 W + 1,601-1,700 W + 1,701-1,800 W 1,801-1,900 W 1,901-2,000 W 2,001 W > Vacuum cleaners by power, in Watts sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 2% growth -3.9%

29 29 figure 16 steam irons ironing systems travel / dry irons Irons by segment sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 0% growth -0.7%

30 30 figure 17 drip filter incl. systems with coffee pads espresso Coffee makers by segment sales turnover 2003 January December 2003 January December 2004 January December 2004 January December growth 20.8% growth 2.7%

31 31 Members of the Board

32 32 VLEHAN members

33 33

34 34

35 35 Published by VLEHAN Association of suppliers of household appliances in the Netherlands June 2005 visiting address Boerhaavelaan 40, Zoetermeer, the Netherlands postal address PO Box 190, 2700 AD Zoetermeer, the Netherlands tel. no. +31 (0) fax +31 (0) website designed by de vormheren BNO, Noordwijk, the Netherlands printed by Zijlstra Drukwerk market analysis GFK

36 with the collaboration of GFK