Tag Archives: MDA

Smart Move

smart home banner

The connected home is now reality, not a fantasy. The global market for smart-home appliances is expected to be worth $38.35 billion by 2020, and will only grow as demand and consumer interest in smart appliances increases. Shoppers will be looking for smarter appliances, but these can be balanced with regular models depending on a consumer’s desire to have some or all of their devices connected.

Some categories are clearly just jumping on the bandwagon, such as a connected SDA, which is in most cases an expensive and underused version of a regular appliance.Yet when considering the connected home from a long-term financial and time-efficiency perspective, some are valid purchases, once you’ve weighed up the cost against its potential long-term worth. Many of these domestic appliance products are, however, costly and there’s a good chance that if you could afford a kitchen and utility room full of connected devices, you’re perhaps not going to be the one cleaning or cooking and directly using the connected devices.

For retailers, the margins on smart appliances are evident, however this must be weighed up against unit sales, which may mean a lower margin than your bread-and-butter range could achieve if it were occupying the same space in your store. While the investment in ranging smart appliances may not be attractive at the moment, remember that sales in John Lewis stores in the smart-home category increased by 81 per cent year on year from 2014 to 2015. This is a growing trend that will likely spread to independent retailers, as smart appliances become increasingly more mainstream.

Having a select range of smart appliances gives your store an aspirational product and proposition for shoppers to consider when looking for a new washing machine or fridge. It’s worth considering that many shoppers looking to purchase a new appliance are doing so as a ‘distress purchase’. These consumers will be looking for a reliable device, not necessarily one with smart features.

However, a demonstration from a knowledgeable staff member connected via a tablet or smartphone, to explain the benefits of the smart system, may persuade many shoppers to purchase for the long-term benefits. These include compatibility with future smart appliances they may add to their home.

My advice is to pepper your range with connected devices, but don’t forget the mass-market appeal of traditional appliances and offer choice at all price points and functionality.

Read more at http://ertonline.co.uk/opinion/smart-move/

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A Major Opportunity

beko machine banner

Unlike the CE category, which for many independent retailers has seen a decline in market share of 10 per cent for the first time since measurements began, the market share in major domestic appliances is positively buoyant.

The MDA market has increased by seven per cent over the past year, boosting the independent retailer’s share to around 20 per cent. This is thought to be helped by the growing built-in market, with increasing amounts of new-builds. And let’s not forget home improvement projects, which are also fuelling sales in this category.

This growing demand is beginning to make an impact on independent retailers, with MDAs now making up around 62 per cent of sales in 2015, up from 57 per cent in 2014.

Yet, there are areas in major appliances where indies are struggling compared with the market as a whole. One of these areas is American-style fridge-freezers, where they have a share of only 12 per cent compared with their share of cooling as a whole (19 per cent). This is perhaps because of space limitations when displaying larger models, but it is not to be dismissed as a source of increased revenue and important margin. However, these appliances are not necessarily to everyone’s tastes and, with our ever-decreasing new-build house sizes, are a limited market.

Irrespective of the purchase reason, distress or upgrade, key to selling premium brands and models is the ability to sell both the benefits presented by unique features. But not every purchase need be premium. Consumers may be purchasing a range to furnish a new kitchen and mix and match from the same brand across appliances to increase average sale value. Demonstrate to your customers how you have enabled them to stick to their budget or, better still, achieved perceived savings by purchasing more products than intended with the inclusion of some premium models.

The difference between a retailer selling premium goods and one selling mid-range products is the staff – how they communicate with shoppers – and also how consumers view the retailer itself. Understand customers’ perceived needs irrespective of whether it’s a distress or a considered purchase and find the right product for them. Careful questioning should enable them to identify premium product features that will appeal, and help the customer decide what is right for them. More often than not, customers will go for a premium model if sold correctly.

Consider your sales environment and its suitability to display and promote premium models. Does your showroom allow these products displayed in a manner that does them justice and creates desire to buy? With analysts predicting the total UK market for major domestic appliances to be worth £4.4 billion for 2015/16 and estimated to grow by 1.5 per cent year-on-year through to 2020-21, there is still scope for growth and opportunity.

As a business that focuses exclusively on CE and tech brands, Gekko is able to review consumer spending habits. Those in their 30s and 40s are purchasing the bulk of MDA products, decreasing significantly among those in their 50s. The lowest demographic is those in their 20s, who account for six per cent of the market.

With the MDA market squeezed, especially in crowded categories, it’s interesting to note that the average MDA spend is £328, increasing to over £400 in cooling products. This is driven higher by closing the gap on the premium market, where a Good, Better, Best strategy is applied across a brand. In such instances, we recorded that 64 per cent of purchases were from females at the top end “Best”, 55 per cent in “Better” and 57 per cent in “Good”. Interestingly males were sitting on the fence, with a highest score of 45 per cent buying mid-range “Better” and were not necessarily the influencers when selling premium MDA products.

Mid-range appliances can be the norm, but upselling to premium products should be the aim. With the right store staff, trained to sell in the right way, and the correct environment that reflects a premium proposition, high-end products are within easy reach for many of your sales.

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SDAs: Are they really worth it?

tefal fry sda

Small appliances attract footfall in-store, encourage impulse purchases and can help make your store look more attractive to customers, says Daniel Todaro, managing director of field marketing agency Gekko

The short answer to that question is yes, and they will always be worth ranging for two good reasons.

Firstly, they attract customers into your store, which is valuable to increase traffic and change perceptions. You don’t want to be perceived as only ranging high-ticket, one-off purchases.

The second is that we are becoming a little more adept in the kitchen, partly driven by celebrity chefs, Great British Bake-Off and MasterChef.

The growing SDA market creates an opportunity for many consumers to replace their old, outdated items and do so guilt-free as the initial outlay is considerably less than some other gadgets and the long-term gain and use are easily justified.

According to researcher GfK, the UK SDA market grew nine per cent in 2014 to surpass £779 million. The research also highlights the growing demand for liquidisers, which grew by 144 per cent with an average price tag rising from £36 to £42, and also a 95 per cent increase in the juicer market.

Our interest in healthy eating is demonstrated by the 48 per cent increase in 2013 of low-fat/no-oil deep fryers. However, do be wary of fads, as low-fat/no-oil SDAs dropped in value by £2m in 2014, losing popularity by becoming mainstream products. I suspect the same will happen to juicers as the market becomes saturated.

The SDA category, which also includes hot beverage makers, kettles, toasters, food preparation, sandwich toasters, health grills and deep fryers, is a staple category that offers consumers convenience and choice at various price points. The UK is one of the most diverse markets for SDAs in the world, with more than 700 new SDA products introduced into the market in 2014 alone, offering retailers an opportunity to refresh seasonal ranges with limited risk.

Although electrical retailers will always thrive on the MDA staples, diversifying your product range to include SDA will make your store more attractive to a broader spectrum of shoppers. Many small appliances are stylish, well designed, and will make your store look better.

With the in-store customer journey becoming increasingly more important in retail, correctly merchandising your store, coupled with training your staff to communicate the benefits of your products, will transform interested shoppers into customers, and will ultimately improve sales.

Gekko suggests that sales staff quickly identify the individual customer’s motivation to buy, whether it is driven by value, style with colour coordinated bundled solutions, or practical features aimed at making life easier.

Remember value is in the eye of the spender, the role of sales staff is to demonstrate that value in each and every conversation.

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