In many ways, the housewares business is in a better place than just one year ago, and housewares executives say they’re ready to capitalize not only on positive momentum in the U.S. economy but also on the many investments and adjustments they made at their companies in 2017.
“There’s obviously tremendous change going on in our marketplace,” said Brett Bradshaw, president of Bradshaw International Inc. and chairman of the International Housewares Association’s (IHA) board of directors. “It’s more important than ever to be hungry, efficient and fast in order to drive growth through share gains, and diversification is key in growing share, whether it be brands, categories or retail trade channels.”
Global housewares spending rose to $355.4 billion, an increase of 2.4 percent, in 2016—the most recent available statistics—according to IHA’s 2017 State of the Industry Report. In the U.S. alone, housewares expenditures increased 6 percent to $87.1 billion.
Green light for the economy
While the majority of 2017 was described as “a mixed bag,” “stable” or “a year of change and adjustment” by some housewares executives, holiday sales figures indicate a brighter future. According to Mastercard SpendingPulse, 2017 holiday sales increased 4.9 percent, setting a record for dollars spent. This also represents the largest year-over-year increase since 2011.
In addition, industry leaders are looking forward to how the recent tax cuts for both corporations and individual taxpayers will affect bottom lines in 2018.
“I view the tax cut as a very strong positive for all businesses and taxpayers,” said Chip Steidle, CEO of John Ritzenthaler Co. “It is long overdue.”
“Increased corporate investments will translate into growth for the economy, higher paying jobs, continued consumer confidence and continued consumer spending,” said Bradshaw. “Retail will also benefit from modest cost-push inflation.”
“So much of what drives the economy is psychological,” added Neal Asbury, CEO of The Legacy Cos. “To so many people, these tax cuts feel like something good is going to happen. So not only is there what these cuts will do literally, but psychologically, it’s going to feel like Americans are on the move.”
Investing in the future
The tax cuts also mean the housewares industry will be able to continue the internal adjustments and investments in omnichannel and digital strategies that characterized much of 2017, says IHA. Many of those investments are due to the continued growth of e-commerce, the evolution of the retail landscape and higher consumer expectations for information, product availability and response times.
“Technology is playing an increasingly important role for both physical and digital retailers,” said Thom Nichols, president of Pretika Corp. “Brands, companies and retailers that are embracing new ways of doing business and reengineering how they connect with customers will remain a force.”
To illustrate that point, Steve Greenspon, CEO of Honey-Can-Do International LLC said his company is investing in new software and hardware to support its operations, such as tracking software, warehouse equipment and software for data analytics.
In addition, Yvette Laugier, GM of Peugeot, said her company is investing heavily in social media.
“(Social media) is our biggest focus since last year,” she said. “It’s our most cost-effective way to reach consumers, and our marketing department is spending more and more time connecting with consumers this way.”
“I believe this is the time to invest in new technology, new ways of doing business with retailers and new relationships with consumers,” said Will Symonds, president of DKB Household USA Corp. “But, the later vendors and retailers leave those investments, the further they will fall behind. And as the cost of doing business increases, some may find it impossible to catch up at all.”
Rising costs of business
Certainly, all this new technology costs money, especially as housewares vendors work to support both digital operations and physical store inventories. Another cost is the continued increase in raw material pricing—an expense many vendors so far have been absorbing.
“The rising cost of raw materials is a huge concern for us—an area we’re constantly monitoring,” said Michael Stoll, president of UT Brands.
There seems to be a growing sentiment that retailers will need to start adjusting as well. But there’s also some responsibility on the consumer side, according to Bill Endres, president of Select Brands.
“While we are seeing an increase in basic materials, it is important for our customers to understand that with a better economy, costs are most likely going to increase,” he said. “We must continue to look for efficiencies to hold costs in check if possible, but we also must recognize we can only push this so far without affecting product quality.”
Among the other rising costs housewares executives are watching are wages and benefits in a tight labor market and, for those directly involved with the manufacturing process, more production-related technology and the need for even more highly skilled labor.
What to watch in 2018
Looking ahead to the rest of this year, many housewares executives predict continued merger and acquisition activity on the vendor side and dramatic changes in the world of retail.
While many expect more retail store closings in the coming year, they are quick to emphasize that doesn’t mean the demise of brick-and-mortar as a whole.
“Retail is not dead,” said Stoll. “There’s a tremendous amount of product still sold in retail. But there will be winners and losers (as retailers adopt to the changing consumer landscape).”
“We’re very respectful that brick-and-mortar stores are trying to figure things out in a rapidly changing marketplace,” said Asbury. “Five years from now, we won’t recognize them. And that means housewares manufacturers have to change too. We’ll be right there with them figuring it all out.”
Products from these executives’ companies and more than 2,100 other exhibitors will be on display at the 2018 International Home + Housewares Show March 10-13 at Chicago’s McCormick Place Complex. To register for a Show badge or for more information click here.
The International Housewares Association is an 80-year-old voice for the housewares industry, which accounted for $355.4 billion at retail worldwide in 2016 ($87.1 billion at retail in the U.S.). The nonprofit, full-service association offers its 1,700 member companies a 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 Web-based community at www.housewares.org and group buying discounts on business solutions services.