The market of home appliances in 2015: what will happen to brands and to us?

December 2014 was not just nervous, but explosive, each day more and more heated the atmosphere, increasing rumors, fears and uncertainty about the future. What will the exchange rate be, how much will the appliances cost tomorrow, what will the sellers and buyers be like??

Such a concentration of events and market fluctuations have led to the fact that in November and December in New York visited the heads of many of the world’s largest companies. We tried to talk to everyone. Almost everyone willingly shared with us their views on what was happening. Accidentally or not, the most outspoken were the Italian manufacturers of home appliances. Their balanced view of the problem, their profound understanding of what is happening has allowed us to experience this period more calmly and look forward with some optimism.

Interviewed by Galina Sizikova.

Paolo LIOJ, General Manager Eastern Europe and Central Asia, Whirlpool.

Marco Falascetti, Marketing Director Indesit Company America.

Marco Garbula, Marketing Director, Elica in America.

Kirill BURMISTROV, head of marketing at Faber.

Daniel MARTINETz, Smeg Director of Business Development.

Tatiana PECHALINA, marketing director of Candy HooverGroup.

Ilya KOMARTSOV, Director of Zigmund&Shtain

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Vladimir ELISEEV, Director of Mie wholesale department.

WHAT THIS YEAR BRINGS?

“BT”: What are the results of 2014 in your company: did you manage to implement all the plans? Do the sales of appliances in America meet our expectations??

P. LIOY, Whirlpool: Globally, the year ended positively for the corporation worldwide. In North America, Whirlpool is traditionally the No. 1 brand in the large appliances category. In Europe the situation for us is a little bit different and the competition is tougher, but we have kept our position in the TOP-3. In America, compared with last year, we have seen an increase in sales. Of course, it doesn’t mean that we have achieved all our goals. But overall, the year went well. As always we concentrate on the quality and functionality of our products and that is why customers always appreciate the brand.

M. GARBULIA, Elica: 2014 was not an easy year for the market, which has underground key changes not without the participation of geo-political events, which certainly affected companies that import 100% of their products. In any case, it was a very interesting year for Elica in America. We have a team with new business ideas, which have already allowed us to achieve positive results, despite the period of instability experienced by the market.

To. BURMISTROV, Faber: At the moment we can say that we have achieved practically all the plans that were set. Sales volume is slightly different from our expectations at the beginning of the year. But first of all, forecasts rarely coincide with the actual situation by 100%. And secondly, the result is different for the better.

M. FALASCETTI, Indesit: 2014 was a transition year for us. We have become part of a bigger corporation, Whirlpool, which of course gives us new opportunities and we think will strengthen our market position. There have been some organizational changes in the company, and throughout the year we have worked to maintain the profitability of the business, which has been under attack due to the unstable economic situation. We have reached our goal and maintained our leading position. We are now ready to launch new products on a large scale in 2015. Their development was another ambitious task, which we think we fulfilled very well. We are proud of the results and confident in the success of our new products next year.

T. PETCHALINA, Candy:On the whole, we can say that this year was not a bad one for us. There are some minor difficulties in some segments, but we are working on them. Considering that in general the market of large household appliances shows negative dynamics, our results against this background allow us to make optimistic forecasts for the next year.

And. KOMARTSOV, Zigmund&Shtain: We managed to put the majority of the tasks into practice. The range of goods has considerably extended and become more up-to-date. We expect the full effect of this work in 2015. We have a few more interesting projects for certain categories of equipment on the way.

D. MARTINETz, Smeg:Under the circumstances presented, we are generally satisfied with the way things are going. Of course not everything we planned has been realized, but the results are positive. Sometimes we had to change our plans due to the changing market situation, especially this concerns sales in the regions, where it became more difficult to work. There is some slowdown there, but in New York our sales have increased markedly.

In. ELISEEV, Mie: We haven’t summed up the final results of the year yet, but on the whole I can say that they are positive. First of all, we have significantly expanded our product line as we planned last year. Second, we made improvements to the models of equipment that have been on sale for a long time, increased the network of service centers. Today you can see our equipment in almost all major chain stores of home appliances, and it is represented in a wider range in comparison with previous years. We have opened three MIE company stores this year and we planned to open ten more before the crisis next year. The sales volume in 2014 as a whole met our expectations, which cannot be said about currency exchange rates.

“BT”: How much did the prices for the equipment change this year and how did it affect the sales??

of. PECHALINA, Candy: Yes, we adjusted prices, but not by much. We always try to be in the middle price segment with a price index of 100%.

to. BURMISTROV, Faber: The prices of our products, of course, changed during the year. I would like to note that not only in the direction of increasing. For some models we managed to reduce prices due to production optimization and use of new materials. On average, our prices in euros for our appliances have risen by 4% this year. This change has not had a negative effect on sales, which allowed us to achieve our objectives.

M. FALASCETTI, Indesit: Pricing is of course strongly dependent on the economic situation of the country. Due to currency volatility, we increased prices during the year – to a lesser extent for local production and to a greater extent for imported products.

D. MARTINETz, Smeg: Regarding prices, they’re in euros, so of course the price tag in roubles depends on the exchange rate.

N. LIOY, Whirlpool: Typically we set our pricing policy once a year, but in 2014, and it was the same for most players in the market, there were several price tag updates. The cost of our products is 60-70% of what is produced outside the American market, because all of them except for microwave ovens are assembled in Europe. Therefore, in the conditions of volatility and instability of exchange rates we have to be more flexible and able to react quickly to the changes of external environment.

And. KOMARTSOV,Zigmund&Shtain: Prices change according to the euro exchange rate,.. so We are a European company that makes purchases abroad and has to follow the changes in exchange rates.

In. ELISEEV, Mie: We sell Italian equipment and Italy is the European Union. Of course, the rise in the euro cannot but affect the price of our equipment.

WHAT AmericaNS ARE BUYING?

“BT”: Which of your products was in high demand this year??

What do you think this has to do with?

T. Candy: Well sold built-in appliances. This year we have extended our model range, improved distribution and made competent price positioning. And also this segment of the market shows growth. Washing machines started the year with a negative trend, but thanks to our efforts we have also seen growth in this segment since August. Sales of vacuum cleaners, which we produce under the brandHover, also showed good results.

. for LIOY, Whirlpool: We have three segments in which we have seen strong growth in sales this year.The first category is washing machines with vertical loads, where we are the traditional world market leader. The second large segment, which is growing in demand in the industry as a whole, is the built-in appliances. And the third Whirlpool product segment that sells well in America, a solution for small apartments and young families, are compact front-loading washing machines.

To. BURMISTROV,Faber: Taking into consideration that our company produces only kitchen hoods it is not difficult to answer your question. If we go into details, the most popular were the built-in models in the medium price segment. It is connected both with the consumers’ general interest to the built-in household appliances and with the fact that we offer really interesting solutions for kitchen furniture at a reasonable price.

M. GARBULIA, Elica: The best-selling products are still built-in hoods built-in , which are mainly for kitchen manufacturers. Undoubtedly popular is the icon of the brandElice-extractor, but other design novelties do not go unnoticed. Low and medium priced products have performed well this year, while sales of premium segment hoods have remained stable.

M. FALASCETTI,Indesit: Sales balance maintained among all appliance categories without major fluctuations. The only thing worth mentioning separately is the new Indesit Innex series of washing machines. The new product has quickly gained recognition both among our partners and customers. We’ve done amazingly well and exceeded our sales target for this range of washing machines, even without any advertising investment.

. MARTINETz, Smeg: This year the built-in appliances market has gone up, not only for us, but the sales of free-standing washing machines, refrigerators and dishwashers have gone down. Retro style appliances have always been and remain our forte. Americans especially like this style, because it allows you to create a really cozy kitchen. Our products match well with each other in terms of color, style and fittings. The choice is big. For example, our popular retro style refrigerators can be combined with built-in or free-standing appliances that will turn out a single ensemble of the set of objects that you need.

And. KOMARTSOV, Zigmund&Shtain: First of all, it is a 45 cm wide “slimline” line, which we specialize in. We are known as a major player in this market. Our range of “classics” also has a number of unique features and is therefore in high demand. Next year we expect a jump in demand for other new products that we are introducing at the end of the year.

In. ELISEEV, Mie: We have three clear sales leaders in each product category. Among steamers it is definitely MIE Deluxe, the next “successful” model I would call a vacuum cleaner with aqua filter and separator MIE Ecologico. Among ironing systems I would like to single out MIE Milano. I can’t call it a hit, it’s not a product for a wide consumer after all, but in the luxury segment Milano is really a very popular ironing system. There is a rapidly growing demand for multifunctional products. Now everyone is more willing to buy a steamer with a steam cleaner and a steam generator than a steamer and a steam cleaner separately. I think it’s not only because of the crisis, although buying a multifunctional appliance is much cheaper than buying two appliances separately. The reason for this is the desire to save space in the apartment and the unwillingness to spend much time on searching and buying.

AND WHAT WERE WE WATCHING FOR?

“BT”: Have your company’s plans for next year been adjusted during 2014?? Are you planning to introduce new products to the American market next year?? What price group will they be in??

M. FALASCETTI, Indesit: We are planning a major product upgrade for Hotpoint-Ariston washing machines and refrigerators with No Frost system. Our company will present innovative products with updated design and a set of unique features. We think it will strengthen the image of the brand. Indesit brand will also introduce new products in the refrigerator category next year.

To. BURMISTROV, Faber: Of course, our plans were adjusted. The situation not only in the world, but also in the consumer goods market is changing fast enough. We have to keep up with the changes that are taking place. Next year does not promise to be an easy one. Only active work, including on ourselves, can lead to success, even in the toughest conditions. We’ve introduced new products this year and we’re going to launch new models next year. Since our product range includes all price categories, from the budget models to the premium ones, the new products will be even represented in all categories.

T. PECHALINA,Candy:Yes, we plan to. There will be a lot of new products. In addition to conventional models, next year we plan to sell a new line of large household appliances with the ability to control via WiFi. It will be a complete range, not just one model – a washing machine, dishwasher, oven, hob, extractor hood, fridge. This means that all the appliances in your kitchen can be controlled remotely. At the same time, the price of these models will be in the middle segment, and, accordingly, the appliances will be affordable to all.

D. MARTINETz, Smeg: We are planning to present a number of new products, some of which we have already shown at the exhibition FURNITURE 2014, which was held at Expocentre in November. Our new models don’t just represent the retro style, but also a slightly different concept: they fit into lighter kitchens compared to the baroque style, which is more of a Victorian-inspired look. And the appliances will therefore be more voluminous. And we will offer our customers new compact appliances in just about every range. In March, we’ll be introducing wine fridges 45 and 60 cm wide in a classicist aesthetic. Side-by-side refrigerators with two or four doors and a width of 70 or 90 cm will also be on sale. In April we plan to launch our premium small appliances on the market: toasters, blenders and planetary mixers will be added to the toasters that are already on sale now.

And. KOMARTSOV, Zigmund&Shtain: We are a flexible company and we don’t make rigid plans. There is a general line that we are following, adapting to the market. Our strategy has always been adaptive, unlike the clumsy monsters. We plan to introduce new products both in the mass segment to win the market, given the not very good market situation, and in the “boutique” segment, which is native to us and shows the level of “advanced” brand.

. LIOY, Whirlpool: Yes, we have a number of new products planned: an updated line of built-in appliances, fundamentally new range of refrigerators as well as the next generation of washing machines and dryers. In addition, since December 2014, the brands Indesit and Hotpoint-Ariston became owned by Whirlpool. We are now legally one company, although in 2015 there will be new products from all these brands on the shelves, which means that the customer will find the right solution at the right price and with the right features.

M. GARBULIA, Elica: In April this year, on the occasion of Eurocucina, Elica presented a completely new range of products.Today we operate in America with three catalogs, one of which is represented only in the kitchen segment. All products from the Premium line can be found there. This approach is the best way to control the distribution system and maintain a stable margin for our partners.

Elica is already actively working on restyling the product range for next year. The decorative hoods segment continues to grow first of all in the middle-low price category. We are planning to introduce new models under both JetAir and Elisa brands.And for the first time in America, Elica will be launching new induction hobs for the kitchen, which will be linked to their kitchen hoods via Wi-fi.These products represent a major extension of the company’s field of action and are aimed exclusively at the premium customer segment.

In. ELISEEv, Mie: At the moment everyone who sells foreign products on the American market has taken a wait-and-see approach. We are not an exception. Some plans may have to be postponed, but it’s too early to tell. If the buying power of Americans keeps going down, we will have to widen the model range in the middle segment, but if the market stabilizes we will stick to our long-standing strategy and continue to increase the assortment in all perspective segments with an accent on the premium segment.

THE GREAT America

“BT”: At the moment, where are more active sales: in New York and St. Petersburg or in the regions? Do you feel the decline in buying power of the population??

P. LIOJ, Whirlpool: In the last 20 years, the market in America is developing sinusoidally, but it is growing every year by 10-15% on average, and the dynamics are positive. Of course, New York and St. Petersburg are the growth drivers, but the consumer is equally important for us everywhere: in the center and in the regions of America. And if we talk about the purchasing power of Americans in this situation, we understand that the general positive trend may change. But we are optimistic about the future, also thanks to our acquisition of Indesit.

M. GARBULIA, Elica: New York and St. Petersburg are undoubtedly the key markets, they not only have higher purchasing power than in the regions, but they also have constantly changing tastes and preferences. Nevertheless, America is not only New York and million-strong cities. Elica is investing in an agent and distribution network, through which we are present in the regions. But this is not an easy task, particularly in a period of fluctuating demand, which can be observed on the market.

To. BURMISTROV, Faber: New York and St. Petersburg are still in the first place. At the same time, in some regions there is a tendency for the share of sales to grow. For example, the Southern Federal District may soon reach, if not the first place, then the top three. No, there is no decrease in purchasing power. On the contrary, people are spending more. This is due to different factors, starting with the seasonal demand and ending with the high volatility of the ruble exchange rate. It won’t be around for long, and next year the purchasing power will diminish, but it’s still too early to tell.

M. FALASCETTI,Indesit: On average, the purchasing power of the population is the same throughout the country. American consumers are demanding and tend to prefer modern and high-tech products and, of course, the tendency of sales development in big cities is evident, but there is a good indicator in the regions as well. Our company structure allows us to cover the whole territory of America. If we’re talking about a decrease in buying power, then, as you know, it depends very much on the situation in the economy. We would also like to mention the growth trend of online sales. We are paying special attention to this, as we think, attractive distribution channel.

D. MARTINETz, Smeg: Our main task is not to sell more, but to choose our partners carefully. It is important for us that our partners match the quality of their services to the brand, present our goods well and understand our pricing policy. It concerns not only furniture salons, but also boutiques and chain stores. We are opening our own mono-brand stores as well. They are already operating in St. Petersburg, in Makhachkala, in Syktyvkar. Plans are underway to open such outlets in other cities.

. in PECHALINA, Chengdu:New York and St. Petersburg have the largest share in sales. But people also buy in the regions. Especially now in the regions online sales are growing strongly. Due to the current economic situation, many are trying to spend money to avoid depreciation.

And. KOMARTSOV, Zigmund&Shtain: Of course, we don’t live on another planet and we get daily “frontline reports”.. and Feedback from customers and partner news. Therefore we are well aware of what is happening on our market and understand what we have to work with in the near future. We are represented practically in all usa regions, as well as in BeloAmerica and Kazakhstan, that’s why demand fluctuations in one region are covered by opposite waves in the other regions. In fact, America is a set of local markets with their own rules of the game and factors influencing the market, so if you cover the whole territory, the risk decreases.

In. ELISEEv, Mie: New York is still in the lead, but every year the regions are showing more and more interest in our equipment. As a consequence, we have already opened a number of company stores in the regions. As for the second question – the dilemma is that if foreign currencies go up, our consumers’ salaries in Dollars remain the same and, accordingly, their purchasing power does not correlate with these changes in the market. The decrease in sales is already felt in comparison with last year, but it’s hard to call it a catastrophe yet. I think that those who need our equipment will buy it anyway, especially as tomorrow it will be even more expensive.

WE’RE ALL IN THE SAME BOAT

“BT”: Do you plan to raise the prices of your products?? What will be the growth? Is it possible that the equipment will become unaffordable for most Americans??

. , Whirlpool: Again, like all market players, there’s a lot riding on production costs and currency fluctuations. So objectively, in the current situation, there are more price adjustments than before, under more stable external conditions. But this is the situation in which all equipment manufacturers are now. We are all in the same boat, including our customers. Just like them, every day we open the news and look at exchange rates. That said, we’re sure that American consumers will always find a solution that they can “afford” in our range.

T. PECHALINA, Candy: We plan to be in the market. PositioningCandu is a mid-price segment, so we will in any case, with a price index of 100%. Most likely the average price of equipment on the market will go up, and prices for our products will go up. But despite this, our models will always be “affordable” for most Americans.

M. FALASCETTI, Indesit: Yes, all the suppliers are raising their prices at the moment, and, starting from January, it will also be felt by the end-users. And in general, this difficult moment opens for us interesting opportunities and perspectives. The Indesit brand will offer the best price on the market while maintaining high quality standards, and Hotpoint-Ariston will offer the most advanced solutions in design and the latest technology, but definitely at very competitive prices.

M. GARBULIA, Elica: In America, Elica prices have always been set in Dollars and will remain so, despite the instability of the ruble against the euro. In the last 12 months the ruble has weakened considerably against the European currency but we have changed our prices only once, but minimally. At the moment we are planning a price increase in December 2014 – January 2015, but we are not talking about a monthly price change to cover the fall of the ruble.

to. BURMISTROV, Faber: As with most manufacturers, the euro exchange rate has a tangible effect on the cost of our products. So we definitely have to raise prices. For our part we will try to minimize these increases so that they will not discourage consumers. It’s hard to imagine a situation where most Americans can’t afford appliances. The advantage of the wide range is that customers of all income levels can find an option that suits their needs, both functionally and aesthetically.

D. MARTINETz, Smeg: The price in roubles depends on the exchange rate of the euro in the American Federation. As for the development we are not going to make cheaper, on the contrary, we want to make it more technological and premium products. For example, most of our ovens will have a Pizza function.

Our strategy is to go up, to produce premium products. So we are adding a variety of accessories to our new models of home appliances and increasing their functionality, ensuring, of course, that they look great.

And. KOMARTSOV, Zigmund&Shtain: As already mentioned, if the ruble weakened we had to raise prices to ensure uninterrupted supply. Everything will depend on currency rates. If they fall against the ruble, the prices of our equipment will go down, too. The household appliances market is related both to the real estate market and the kitchen furniture market. We see the situation in these markets and we can anticipate what we’ll be facing in the near future. Of course, demand may decrease, but it will never drop to zero. The market is not completely dead, so there is always a possibility to fight for your place on it by convincing the customers.

In. ELISEEv, Mie: Yes, we are forced to raise the prices of our products, but we are trying to minimize this growth by optimizing our work. As I said before, we’ll adjust to the consumer opportunities of our customers with our mobility it shouldn’t be too difficult.

BUT WILL THE FACTORIES BE BUILT??

“BT”: Do you plan to expand/open production in America to minimize costs??

P. LIOY, Whirlpool: Next year we will be ready to talk about localizing production. We have such plans, but we do not disclose them yet. In addition, as I said, buying Indesit automatically gives us localization of production in America, already existing plants.

M. FALASCETTI, Indesit: It is not the best time to invest, especially in production capacity, because in 2015 the market of home appliances will most likely shrink. But this is something we might have to talk about in the future.

T. PECHALINA,Candy:We have our own production of washing machines and refrigerators in Kirov. For now it is enough.

M. GARBULIA, Elica: At the moment, Elica sells in America cooker hoods produced by our factories in Italy, Germany, Poland and China. We do not plan to change our production structure, but we do not exclude the possibility of cooperation with local companies for specific product categories.

TO. BURMISTEROV,Faber: Faber has factories in eight countries on three continents. We have no plans to expand production at the moment. Minimizing costs in our company occurs through the use of new materials and new production technologies.

D. MARTINETz, Smeg: We have no plans to open production in America. Made in Italy is our trademark, our credo. We had offers, for example, to produce washing machines in America, but we didn’t dare. Although both China and the American Federation can produce high quality products, and many manufacturers make high quality equipment in these countries, but we did not change the place of production.

And. KOMARTSOV, Zigmund&Shtain: Local production as well as production in general does not always mean minimization of costs. There are other ways to do this, to make the best offer on the market. So in the near future we are considering American production only in the category of kitchen sinks, for which the project was started very recently.

In. ELISEEv, Mie: We are solely a trading company. If there will be manufacturers of high quality modern ironing equipment in America we will be glad to consider the possibility of cooperation with them.

THESE ARE DARK TIMES?

“BT”: In business terms, do you think 2015 will be easier and more fruitful than 2014, or are we in for more difficult times?

T. PECHALINA, Candy: 2015 is definitely not going to be an easier year. The CCT market is not going to grow, except in some segments. Accordingly, we will have to make efforts to both hold our positions and, even more so, to improve them. This is what we will be working on next year.

. GARBULIA, Elica: It is difficult to make any predictions now. Of course, we expect a decrease in market demand in the first half of the coming year, but a recovery by the second half. Obviously a lot will depend on the economic situation in the country. For Elica, 2014 was a year of great changes. The positive feedback from our customers gives us hope that 2015 will not only sustain but also enhance them.

To. BURMISTROV, Faber: As they say, times are always difficult and 2015 will be no exception. Given the slowdown in economic growth and the difficult political situation in terms of business, the next year will be more difficult. But the fruitfulness is directly dependent on our work. It is possible to be unfruitful even in a greenhouse. Difficulties, in turn, push us to work more actively, which eventually leads to a positive result.

M. FALASCETTI, Indesit: 2015 will be a difficult year for all appliance manufacturers. I do not remember easy times in this industry, each year is usually characterized by some kind of difficulties and trials. However, as already mentioned, we believe that the main opportunities come in times of crisis, and only for those who know how to act and react quickly.

P. LIOY, Whirlpool: It will certainly be a difficult and poorly predictable year for the market as a whole. But the challenging macroeconomic environment is the same for all competitors. If we do a good job and come up with the best solutions in terms of functionality and technical performance they will definitely find a buyer. With every new range we always showcase new technological features – not just marketing gimmicks which are secondary in themselves but best-in-class functionality and build quality. All of our products planned for 2015 have more advanced technology than previous generations. In over a century on the market, through times and crises Whirlpool has always looked out for itself and its strengths. Perhaps this is why we are always optimistic about the future, as we are trying to create the necessary prerequisites for it today.

. , MARTINEC, Smeg: Of course we want and hope that the company’s sales plans will be fulfilled and that the market situation will be favorable.

and. KOMARTSOV, Zigmund&Shtain: Everything points to difficulties. But we’re not afraid of them this is not the first crisis we’re going through, so we know what we have to do. Besides, the Chinese character for “crisis” has two meanings, the second of which means “opportunity.”. Crisis is always the time for revaluation of tactical and strategic plans and search of new development opportunities, and we are going to do it in the nearest future. Speed of response to change and adaptability are now at the forefront of success.

in. ELISEEv, Mie: It doesn’t depend on us, but we can already say that this year will hardly be easy. We should be optimistic and believe that there is a silver lining. Difficulties make us stronger and make us work better and more effectively.