Summer 2004 A CASE STUDY: The Impact of Innovation in ... · A CASE STUDY: The Impact of Innovation in Floor Care Products ... convenience. The products that ... COOKWARE 68.3% of

factor. Both traditional floor care players aswell as upstarts are supporting this categorywith marketing campaigns designed toincrease visibility and consumer awareness oftheir products and the category as a whole.

Given that the majority of manufacturersengaged in the alternative floor care market arealso well entrenched in the traditional floorcare market, the added marketing supportbeing thrown behind these newer items feedsoff of an already established brand presence.

Simply being familiar with a brand name andhaving a positive opinion of the brand can insome cases be the ultimate driver of whether ornot a consumer will make the purchase.

To appeal to a broad set of consumers,alternative floor care manufacturers have posi-tioned their products across diversified chan-nels of distribution including general mer-chandisers, specialty stores, mass merchants,electronic/appliance stores and departmentstores. The price points at which productsare sold varies depending on features andcapabilities as well as channels of distribution.

Though there are some manufacturers whohave opted to concentrate their distributionefforts in only a select few channels, themajority are penetrating multiple channels.NPD Houseworld POS information indicatesthat general merchandisers commanded thelion’s share of the alternative floor care mar-ket during the first three months of 2004with 32 percent of total units sold.

STEAM CLEANERS, ROBOTICSEXPAND CATEGORY

As mentioned earlier, steam cleaners are oneof several types of alternative floor care prod-ucts in today’s marketplace. There are a widevariety of steam cleaners on the market today.

Summer 2004

®

A CASE STUDY: The Impact of Innovation in Floor Care Products

continued on page 6

In the crush of competition some compa-nies whither and a few prosper. What has

made the difference in many highly com-petitive home products categories?Innovation.

The result of innovation in one key homeproducts segment, floor care, has been thecreation of a new alternative floor-care prod-ucts category. Both smaller and large-scaleplayers are actively employing innovation tocreate a product that offers new cleaningcapabilities. Here is a brief case study of theimpact of this innovation on floor care.

Products in this emerging category includesteam cleaners, robotic vacuums, cordlesssweepers and wet/dry mop-vacs. While it isstill too early to determine how well theseproducts will fare over the long-term, currenttrends indicate that the alternative floor caremarket has begun to take hold with con-sumers.

According to NPD Houseworld’s POSdata, unit sales of alternative floor care prod-ucts rose by 21.5 percent during the firstthree months of 2004 as compared to thesame time period in 2003. There areundoubtedly several factors contributing tothe surging sales this category is experiencing.

On the one hand, there is the “newness”factor, with consumers attracted to the prod-ucts simply because they are different andnon-traditional, a break from the norm so tosay. Aside from just being “new,” most ofthese products have been designed to meetthe demands of today’s consumers and offerversatility, ease of use and, most importantly,convenience. The products that will be suc-cessful in this arena must make consumerslives easier or they will become nothing morethan the occasional holiday gift.

On the other hand, there is the marketing

ABOUT HOUSEWARES MARKETWATCH

Housewares MarketWatch reports both point-of-sale (POS) and consumerdata from NPD Houseworld databases.The quarterly data covers various productcategories within the divisions of SmallAppliances and Non-electric Housewares.

The information contained on the following pages is offered as a snapshotof a category’s performance, both fromthe retailer (POS) and consumer perspectives. The POS data covers theretail channels of mass, department store,general merchandise, kitchen specialty,electronics/appliance (vacuums only) anddrug store (personal care only). Eachissue of Housewares MarketWatch willfeature several categories from the SmallAppliances and Housewares divisions.

Complete data on a category can bepurchased by visitingwww.npdhouseworld.com. See theData and Methodology section on page 8for an explanation of how the data iscompiled.

By Peter GreeneThe NPD Group, Inc.

■ Compact FoodProcessors repre-sent 18.7% of unitsales for Q1’04.

*Source: POS Data

FOODPROCESSORS

■ Q1’04, 9% of all Espresso/Cappuccino makers had an automatic shut-off feature, up from 6.6% in Q1’03.

*Source: POS Data

ESPRESSO/CAPPUCCINO

MAKERS

■ 8.6% of Toaster Ovens had a digital touchpad in Q1’04.

*Source: POS Data

TOASTER OVENS

2Source: The NPD Group/NPD Houseworld

MARKET SIZEQUARTER ONE • 2004

UNIT VOLUME IN THOUSANDS

SSmmaallll AApppplliiaanncceess:: KITCHEN ELECTRICSTO

TAL

MARKET

COOKI

NGEL

ECTR

ICS FOOD

PREP

/BEVER

AGE

26,966 12,463 14,503

*Source: consumer data

DRIP COFFEEMAKERS • INCOME LEVELPercentage purchased by income level versus census

DEMOGRAPHIC ANALYSISUnit Volume Share

6 months ending — March 2004


Under$15,000

7.2

%

DRIP COFFEEMAKERS

CENSUS (PERCENT OF POPULATION)

TOASTER • REGIONPercentage purchased by region versus census


TOASTER


$15,000 –29,999

$30,000 –44,999

$45,000 –59,999

$60,000 –74,999

$75,000 –99,999

$100,000– 149,999

$150,000 +

10.9

%

17.2

%

16.7

%

16.3

%

16.5

%

16.9

%

13.8

%

11.1

%

11.5

%

14.4

%

13.1

%

12.5

%

11.0

%

6.5

%

4.4

%

NewEngland

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain

5.2

%

5.0

%

14.0

%

14.1

%

17.9

%

16.0

%

8.0

%

6.8

%

17.1

% 18.7

%

6.1

%

6.0

%

9.5

% 11.2

%

5.9

% 6.6

%

16.4

%

15.7

%

Pacific

■ 78.3% of all Lighted Mirrors sold inQ1’04 had between 3x and 5xmagnification.

■ 53.3% of units sold in Q1’04 werecordless.

*Source: POS Data

LIGHTEDMIRRORS

3 Source: The NPD Group/NPD Houseworld

SSmmaallll AApppplliiaanncceess:: PERSONAL CARE



TOTA

LMARKE

T

HAIR C

ARE/

GROOMING

ORAL CARE &

OTH

ER

PERSO

NAL CARE

56,927 27,304 29,623


■ 26.3% of all Women’sElectric Shavers soldin Q1’04 were battery powered.

■ Corded Men’s ElectricShavers represented21.1% of sales inQ1’04.

*Source: POS Data

ELECTRICSHAVERS

HAIRDRYERS • REGIONPercentage purchased by region versus census




HAIRDRYERS


MASSAGING APPLIANCES • BUYER GENDERPercentage purchased by buyer gender versus census


Male

34.2

%

MASSAGING APPLIANCES


NewEngland

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain Pacific

4.8

%

5.0

%

13.8

%

14.1

%

16.6

%

16.0

%

6.5

%

6.8

%

19.8

%

18.7

%

7.0

%

6.0

%

12.0

%

11.2

%

6.0

%

6.6

%

13.6

% 15.7

%

Female

48.9

%

51.1

%

65.8

%

HEATERS


■ Stand and Personal/Clip fanstogether represented about half of the units sold in Q1’04

■ 17.5% of Fans sold in Q1’04 had a width of 20” or more

*Source: POS Data

FANS




SSmmaallll AApppplliiaanncceess:: HOME ENVIRONMENT

TOTA

L HOME

ENVIR

ONMENT

MARKET

15,908

( EXCLUDING VACS)


HEATERS • HOUSEHOLD SIZEPercentage purchased based on household size versus census




Single member

HEATERS


HEATERS • INCOME LEVELPercentage purchased based on income level versus census


Two members Three members Four members Five or moremembers

11.9

%

10.2

%

33.3

%

26.1

%

20.1

%

19.4

%

17.0

%

22.7

%

17.7

%

21.5

%

Under$15,000

$15,000 –29,999

$30,000 –44,999

$45,000 –59,999

$60,000 –74,999

$75,000 –99,999

$100,000– 149,999

$150,000 +

7.4

%

10.9

%

20.5

%

16.7

%

15.0

% 16.5

% 18.7

%

13.8

%

10.6

%

11.5

%

11.7

% 13.1

%

11.8

%

11.0

%

4.2

% 6.5

%

STEAM CARPET EXTRACTOR VACUUM


■ 56.8% of CanisterVacuums sold useHEPA filtration

*Source: POS Data

CANISTERVACUUMS


SSmmaallll AApppplliiaanncceess:: FLOOR CARE



TOTA

L FLO

OR

CARE M

ARKET

8,225


STEAM CARPET EXTRACTOR VACUUM • REGIONPercentage purchased in region versus census




STEAM CARPET EXTRACTOR VACUUM


STEAM CARPET EXTRACTOR VACUUM • AGE OF BUYERPercentage purchased by age of buyer versus census


13 - 17years

NewEngland

MiddleAtlantic

East NorthCentral

West NorthCentral

SouthAtlantic

East SouthCentral

West SouthCentral

Mountain Pacific

3.5

% 5.0

%

13.2

% 14.1

% 15.3

%

16.0

%

6.2

%

6.8

%

18.6

%

18.7

%

8.7

%

6.0

%

12.8

%

11.2

%

7.5

%

6.6

%

14.2

% 15.7

%

18 – 24years

25 – 34years

35 – 44years

45 – 54years

55 – 64years

65 years +Under 13years

5.1

%

9.7

%

0.0

%

18.5

%

1.2

%

7.3

%

22.9

%

13.7

%

23.6

%

15.7

%

25.3

%

14.0

%

13.9

%

9.2

%

8.0

%

12.0

%

■ Glass Bakeware accounts for17.7% of units sold in Q1’04.

*Source: POS Data

BAKEWARE

■ Anodized Aluminum made up 17% of the unit sales in Q1’04.

*Source: POS Data

COOKWARE

■ 68.3% of Flatwaresold in Q1’04 had a bright/mirror finish.

*Source: POS Data

FLATWARE




HHoouusseewwaarreess:: NON-ELECTRIC

While some are designed specifically for clean-ing bare floor surfaces, many models areequipped to perform a variety of cleaningapplications that go well beyond simple barefloor cleaning.

For example, there are numerous steamcleaning products available that have thecapability to deep-clean appliances,countertops, blinds, toilets, gardenfurniture, automobiles, windows,upholstery, mirrors and more, inaddition to cleaning bare floors.Consumers also have the option ofchoosing from portable and non-portable varieties. These versatileproducts have become especially popularwith today’s consumers because of the con-venience they offer.

Aside from functional capabilities, whetheror not a cleansing solution is used with theproduct is another distinguishing characteris-tic that sets apart different steam cleaningmodels. For some products, the work is per-formed with the use of only water and energyand therefore considered environmentallyfriendly whereas for others, an additionalcleaning solution is also required.

With these models, manufacturers havefound a means of generating ongoing revenueby producing and marketing not just thecleaner but the required cleaning solution aswell. Some have even partnered with moreestablished packaged goods companies toleverage their brand names in cleaning anddrive additional revenue on an ongoing basisvs. a one-time purchase.

Robotic vacuums are also gaining in popu-larity with consumers in the market for alter-native floor care products. The primaryappeal of these products is the promise of theultimate convenience – cleaning “all by them-selves” thanks to the “futuristic” technologyincorporated in the design.

One “hot” product style out in the markettoday operates with the simple touch of abutton. The user simply places it in the mid-

A CASE STUDY: The Impact of Innovation in Floor Care Products

dle of a room, turns it on, selects the roomsize and walks away. Sensors enable the prod-uct to avoid falling down stairs and cleanaround furniture without getting stuck whilespinning side brushes clean next to walls anddifficult to reach areas.

It is to early to know whether or not alter-native floor care products will help toimprove the landscape of the floor care mar-ket in the long run. However, consideringthe innovation that the category brings to themarket, it is obvious that manufacturers arelooking well beyond the ordinary to helpinvigorate the floor care industry.

continued from page 1

DINNERWARE

BEVERAGEWARE

COOKWARE

BAKEWARE

CUTLERY

FLATWARE

*Source: The NPD Group/NPDHouseworld POS Information

GENERAL MERCHANDISE (32.0%)

HOME SPECIALTY STORES (30.7%)

MASS MERCHANDISE (30.3%)

DEPARTMENT STORES (5.4%)

ELECTRONIC/APPLIANCE STORES (1.6%)

UNIT SHARE BY CHANNEL OF DISTRIBUTION

Alternative Floor CareJanuary - March 2004

15,2

64

*Source: POS Data

11,6

97

2,40

2

2,94

0 5,56

4

6,67

5


By Peter GreeneNPD Houseworld

THE RISE OF AFFORDABLE LUXURY

*Source: The NPD Group/NPDHouseworld Consumer Information

The rise of mass merchants and other non-traditional channels of distribution as leadingsources for housewares and small electricsproducts has put heavy pressure on the needfor product differentiation for the suppliersthat serve these retail channels.

Consumers are driving this trend. Theywant and respond to products from recog-nized, quality makers. They are in search of abargain price but are quite interested inupgrading the quality of their home and satis-fying their aspirations for a better way of lifethat this “affordable luxury” seems to offer.And they are already accustomed to shoppingin these channels.

Product differentiation allows retailers togain a competitive edge with these con-sumers–especially in the case of mass mer-chants and other retail channels not tradition-ally associated with marketing high-end mer-chandise. By including high-end brands intheir portfolios, retailers position themselvesto better compete within and outside theirspecific channel of distribution. At the sametime, this strategy works to enhance a retail-

er’s image as a source of quality products. Toemphasize these points, consider some of themajor mass merchants who have partneredwith high-end manufacturers to market exclu-sive brand extensions.

For manufacturers the ability to leverage ahigh-end brand across multiple channels andat different price points provides a competi-tive edge in the industry. This strategy seemsto be working to promote brand awarenessamong diverse consumer groups, therebyincreasing the chances for manufacturersto capture ever-larger shares of themarket and improve their bottomlines, although suppliers take greatpains to protect their originalmarkets by creating product innew and adjacent categories.

Look for this trend to continue asboomers become an ever-stronger forcein home products and as younger generationssettle into household formation. Both craveluxury. The home products industry is posi-tioning itself to deliver that luxury. MASS (53%)

DEPARTMENT STORES (10%)

GENERAL MERCHANDISE (9%)

OTHER B&M (8%)

OTHER NON B&M (6%)

KITCHEN/HOME SPECIALTY (5%)

WAREHOUSE CLUBS (4%)

E-COMMERCE (4%)

DRUG STORES (1%)

UNIT SHARE BY CHANNEL OF DISTRIBUTION

Kitchen AppliancesMarch 2003 - February 2004

TTrreennddWWaattcchh

What do consumersthink of the

PodCoffeemaker?An exclusive report from NPD,“Coffee Pods: a Consumers’Perspective” will tell you if thiswill be the revolution that relegates the drip coffee makerto the shelf next to the percolator or if this trend is destined to be just another fad.

For more information, contactJohn Block at (516) 625-4610or [email protected]


MMARKARKETWATCHTCHMARKARKETWATCHTCHH

H O U S E W A R E S

®

ABOUT THE NPD GROUP, INC.

The NPD Group, Inc. (NPD) is a glob-al market information company thatmeasures product movement and con-sumer behavior across a broad rangeof industries -- apparel, automotiveproducts, consumer electronics, cosmet-ics and fragrances, food, foodservice,footwear, housewares, information tech-nology, interactive entertainment, toysand music. NPD's clients, many in theFortune 500, use this insight to uncovermarket opportunities, strengthen chan-nel relationships and benchmark indus-try performance. Since 1967, NPD hasintroduced numerous industry firsts,most recently combining and calibratinginformation from consumer panels andpoint-of-sale tracking via its flagshipservices, the NPD Worlds. The firm hasoffices and affiliations in 60 countries.For more information on The NPDGroup, visit www.npd.com.

Deborah A. Teschke, Senior EditorPeter Greene, Contributing EditorTom Goodman, DesignPublished by IHA

For more information, contact Debbie Teschke at 847-692-0110; [email protected]

I N T E R N A T I O N A L H O U S E W A R E S A S S O C I A T I O N

6400 SHAFER COURT, STE. 650ROSEMONT, IL 60018 USATEL: 847-292-4200 FAX: 847-292-4211www.housewares.org

060704A/18,000

MMARKARKETWATCHTCHMARKARKETWATCHTCHH

H O U S E W A R E S

DATA ANDMETHODOLOGY

NPD has a standard data model that is usedfor all categories, although it is modified tosuit the needs or characteristics of each. Thestandard model incorporates both consumerand point-of-sale (POS) databases. These twodata sources are highly complementary andare used to support one another–each makingthe other stronger.

Point-of-Sale (POS) databases are assem-bled from retailers' records of actual sales byproduct as collected at the cash register.These databases are highly reliable and pro-vide census counts of sales by product andprice for participating retailers. Not all retail-ers participate, however, so informed esti-mates are made for product sales in non-par-ticipating retailers in a process called "projec-tion" or "POS projection." The completedsales data are valuable to clients trying tounderstand which products or items are sell-ing well and which are not, at which pricesand in which channels. The finished POS datadescribe the product, retail channel and price.They do not, however, address the buyer ofthe product.

Consumer databases are developed usingproduct purchase surveys completed by alarge-scale rotating sample of consumers.These data also produce estimates of sales byproduct and retail channel, as does a POSdatabase. More importantly, however, theconsumer surveys capture information abouteach purchase not available in the POS data-bases, buyer demographics, the product'sintended use and a variety of other character-istics. These facts help clients understand whyproducts are selling well or poorly and helpthem better understand consumers' motiva-tions. One additional advantage to the con-sumer surveys is that there are no "missingretailers" from the database since the informa-tion is gathered from panelists directly and noretailer cooperation is required.

CONSUMER METHODOLOGYMost consumer data in the U.S. are gath-

ered from periodic samples of individuals whoare asked about their recent purchases.Respondents report certain details about thetype and nature of their purchases in a survey

administered via the Web. The respondingsample is demographically weighted and pro-jected through a series of steps to representthe Total Adult (18+) and Total Teen (13-17)U.S. population.

Each week, over 145,000 individuals areselected from the NPD online consumerpanel to participate in one of three weeklystudies. The NPD online consumer panel iscomposed of pre-recruited individuals whohave agreed to participate in NPD online sur-veys and have completed a comprehensivedemographic questionnaire. The use of anestablished online panel assures good cooper-ation levels and predictable demographic bal-ance among cooperators.

Most survey work is completed via theInternet. Internet users are known to havecertain demographic and behavioral biases notfound in the total population, though theseare rapidly diminishing over time. A processof sample selection and respondent weightingis used to control demographics, however,reducing some of the biases in the sample.Extensive research has shown that by effec-tively weighting the sample, the Internetyields superior data quality (coverage) than dooffline methodologies.

POS METHODOLOGYNPD collects point-of-sale retailer data

from selected retailers. These data are theactual sales for the chain on an SKU-by-SKUbasis. The data are combined with data fromother retailers to produce reports on certaincategories by channel, where a sufficientnumber of retailers are cooperating and wheresufficient market demand exists for the data-base.

Data are not available from all retailers,however. The available data are projected tocover the missing (non-cooperating) retailerswithin each channel in most of NPD's cate-gories. In certain circumstances, brand shareweights are applied as well to compensate formissing retailers with a different brand mix,to more accurately reflect the marketplace.Those adjustments are generally guided byinputs from either consumer panel data oractual in-store audits.

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Summer 2004 A CASE STUDY: The Impact of Innovation in ... · A CASE STUDY: The Impact of Innovation in Floor Care Products ... convenience. The products that ... COOKWARE 68.3% of