Supermarkets posted strong sales in cookware/bakeware during the recession; now the challenge is to keep the cook-at-home momentum going
Value, convenience and product uniqueness are familiar criteria for supermarket buyers scanning the exhibit floor for new products during the final days this week of the 2010 International Housewares Show in Chicago.
This year, however, such buying criteria for housewares takes on added meaning given expectations that consumers' shopping habits may have permanently changed due to the severity of the recession that began in 2007 and its lingering effects.
“While the long-term outlook is not clear, it appears consumers have experienced a philosophical shift in purchasing patterns that may not change for years to come,” said Bill Thompson, category manager, nonfood, Food Lion, Salisbury, S.C.
That shift, in part, has to do with home economics to save money at a time when discretionary spending is either on hold or it is closely being evaluated when a purchase is made. Thompson noted that the economy continues to impact consumer shopping patterns across the store, including kitchen tools.
This has resulted in an interesting opportunity for supermarkets when it comes to some housewares categories.
Mintel, a market research company, reported that with the economic downturn, 58% of respondents to a recent consumer research study said they eat at home more often. The eating-at-home trend has been widely confirmed by others, including grocery retailers.
“With the current economic conditions in Michigan, our customers are heading back to the kitchen,” said Sue Myrick, general merchandise/health and beauty care purchasing and sales, Spartan Stores, Grand Rapids, Mich. “Good news for us? You bet. We have seen a double-digit sales increase driven by full line sales as our customers retool their kitchens.”
Kathy Cella, director of housewares for the NPD Group, Port Washington, N.Y., said the grocery channel saw a significant sales lift in kitchen housewares for the six-month period ending Jan. 1, 2010. NPD tracks kitchen housewares in the bakeware, cookware and cutlery categories. During that period, kitchen housewares sales within the grocery channel doubled, she said. Exact figures were not available.
Mintel research also noted that in 2008, grocery/drug stores notably showed improved sales in the cookware market.
“Grocery stores are optimally placed for one-stop, food-related shopping and, as customers have been cooking at home more, they have turned to grocery stores for last-minute cooking and baking needs,” the report stated.
Overall, the housewares industry demonstrated resiliency in the depths of the downturn. The average U.S. household spent $609 on housewares in 2008, which represents a 0.7% increase from the previous year, when the recession was said to take hold, according to the International Housewares Association's “State of the Industry Report.”
“The housewares industry historically has been able to sustain itself well during tough times and then rebound quickly as the economy renews,” IHA President Phil Brandl said. “In part, this is because consumers look to housewares when they are spending more time at home and are being more cautious with their discretionary income overall.”
“The only fundamental change [in the industry] in this recession is that upper-end consumers have either shifted their purchasing to lower-priced products, or are waiting for upper-priced products to be drastically reduced. … Consumers who have jobs are spending as much on housewares as they did before this recession,” said Jeffrey Siegel, president and chief executive officer of Lifetime Brands, in an IHA press statement.
Despite this resiliency, the recession did slow sales momentum in the overall cookware category across most channels. Mintel reports that the cookware market has shown inflation-adjusted growth of 9.9% from 2004 to 2009. However, in 2007-2008 the recession cut into sales, slowing growth, and a drop in sales was expected for the 2009 selling season.
Bakeware remained a bright spot. Driven by a renewed interest in baking, especially among economically minded mothers and other female consumers, bakeware posted strong growth of 27% from 2004-2009, Mintel reported. This was aided by the return to cooking at home.
Just who is cooking at home more? Mintel says women aged 45 and up with households incomes of over $100,000 are cooking at home at rates well above average. Also men, aged 18-35, have stepped to the stove in disproportionate numbers and are looking for simpler cooking methods in assembly and heating up. Basic sets, microwave dishes and cross-marketing with frozen foods or with basic cooking guides appeal to this demographic, noted Mintel.
“Food preparation has become in many cases a family event,” said Myrick of Spartan Stores. “Couples working together in the preparation of meals utilize kitchen tools used by celebrity chefs on the Food Network, lending to the sale of upscale brand name gadgets.”
Spartan offers a complete line of kitchen-related items. It maintains a basic 16-foot kitchen gadget planogram comprised of over 250 peg items with more than 30 shelf items. Additionally, the chain merchandises 8 feet of foil and bakeware with a new lineup in cookware, creating a “Kitchen” destination within the store, explained Myrick.
“We offer our customers products that will add style and fun to the preparation of meals, as the trend of eating at home becomes more of the norm,” she said.
Eric Erwin, executive vice president of marketing and product development, Wilton Enterprises, Woodridge, Ill., said Wilton, which is known for its cake-decorating products, bakeware and tea kettles, has benefited from the emotional response to family and cooking at home during the economic downturn.
“When we asked ourselves how the economy has changed the consumer, we noticed in tough times moms everywhere are wrapping their arms around their families and celebrating life's celebrations. Consumers may be cutting back on their family vacations, but they are certainly not going to cut back on their 6-year-old daughters' Princess Birthday Party. Mom is doing more for her family and doing it in ways that have meaning,” he said.
Mintel's consumer research shows a diversity of retail channels for cookware/bakeware products, with most consumers turning to multiple channels to meet their cooking product needs. Wal-Mart Stores stood out as the single most widely used retailer with its one-stop appeal, strong reputation for low prices and national marketing clout, Mintel reported.
While the grocery channel appears to have benefited in housewares sales from more shoppers cooking at home, it is the mass merchandisers that have emerged as the fastest-growing channel for cookware/bakeware sales. Mintel noted that this channel is popular with younger consumer groups and with Hispanics, placing mass merchandisers in a good position to do well with a stronger economy.
NPD's Cella said mass merchandisers represent about a third of kitchen housewares sales while supermarkets represent only about 3% of sales. It's the difference between the planned purchase and the impulse buy, she pointed out, with supermarkets more ideally positioned for the impulse sale.
“It is safe to say people will continue to purchase kitchen housewares at supermarkets. It's an impulse purchase as long as retailers market the product right.” She recommended more merchandising of housewares throughout the store rather than from the in-aisle housewares section. “Make sure you've got placement and not just down that baking aisle but in other locations. Endcaps grab attention.”
Spartan Stores takes advantage of cross-merchandising opportunities. It will take gadgets such as mango cutters, pineapple corers, zesters and graters, and display them with fresh items that are already prepared, said Myrick.
But Erwin of Wilton said the best way for supermarkets to compete with mass merchandisers is to pursue a total store concept and integrate general merchandise. “Use merchandising plans to solve real consumers' problems instead of treating general merchandise as only a convenience category,” he said. He cited a national retailer that cross-merchandised Wilton's assortment of brownie-making tools and bakeware with a top national brand of brownie mix.
“It was a complete solution for the consumer and worked very well. Grocery should have a great advantage against mass merchants — they just have to believe in the stories that they are telling,” he said.
One way the recession has changed the way consumers shop is in how they now view value. “Value is more than price,” Erwin added. If the consumer is going to pay for it, then it better be worth it, he said.
“In bakeware, we have seen a definite movement to high-quality, mid-range product within assortments, and a drop-off in premium-priced ‘best’ goods within assortments. Our recommendation to the retailer is cover your entry level product with good quality and great pricing, and then make sure you have the mid-range covered with quality and selection,” he noted.
Looking ahead, Erwin said consumers are responding to high-quality non-stick coatings and interesting new shapes that do something special in bakeware. He views aluminum making a return as a substrate that delivers outstanding results for those pursuing professional-quality baked goods.
“You can't mislead the shopper by charging too much for something that doesn't deliver a great experience. When it is innovative and new, plus solves real consumer problems — like, ‘How do I keep the crumbs from coming off my cake when I frost it?’ — the consumer responds well and will spend money.” As an example, he said Wilton makes aluminum bakeware resulting in the best cake skin.
Aluminum is the largest cookware segment with 90% of the segment boasting non-stick surfaces, according to Mintel's research. There has been safety concerns with PFOA (perfluorooctanoic acid, a synthetic) in non-stick coatings and as a result green non-stick cookware is on the market claiming the absence of PFOA. Such innovation and consumer education in non-stick surfaces is expected to remain a major element in driving sales and differentiating products in aluminum cookware, according to Mintel's report.
Cella said NPD's research has found that value packs of cookware — two or three items such as frying, stir-fry and sauce pans packaged together — have sold well in the recession and the average price point for a set is in line with open stock price points. These may be bought to replace older and worn cookware. She also said that large sets of 12- and 16-piece cookware have sold well. “The consumer perception is that they are getting more for their money. … It is not necessarily quality cookware. It is something that will get them through, but it is about value,” she sold SN.
Private label has been another way for supermarkets to demonstrate value to shoppers looking to purchase cookware. “Private label has been our predominate offering and that trend will continue,” said Thompson of Food Lion. “This allows us to offer a great everyday value to our customers at a quality that is on-par with anything they could purchase at a mass merchandiser.”
Food Lion's cookware and kitchen tool sections are typically smaller than mass merchandisers due to the overall formatting difference, Thompson said. “This allows us to ensure our product offerings are maximizing the consumer's needs in a minimal amount of space.”
Cella noted, however, that brand names are important in kitchen housewares categories. While private label may be generally the top seller in these categories, Cella said brand-name housewares are a purchase motivator.
The bottom line for Cella is to give shoppers something different. “It's all about replacement or something different,” she said.
The housewares category, which is naturally driven by innovation, comprises extremes in supplier sources from small high-end specialty suppliers to those selling lower-priced imports. It, therefore, is easy for retailers to find something different to offer their consumers.
McGinnis Sisters Special Food Stores, a three-store retailer in Pittsburgh, is doing just that by testing a new product, Roast Wrap from KichenNet, which is being introduced at the Housewares Show. The item, which retails for $3.89 for a package of two wraps, takes the labor out of tying or trussing a roast. Simply stated, the consumer can easily slide a flexible net around any type of roast with ease. The wrap secures the roast and keeps the stuffing in place and the result is an evenly cooked piece of meat.
Carl Pursh, meat and seafood commodity team leader at McGinnis, said they are selling the product from a meat counter display at two stores and from a kitchen tool peg board at the third store.
Over the last eight weeks, McGinnis has sold about half of the original order of 72 units. Pursh said they have gotten repeat purchases for the item.
McGinnis is well known for its fresh meats, produce and bakery department. McGinnis butchers are well versed in engaging shoppers about the techniques of cooking meats. “We do a lot of bundling of meals, education and give out a lot of recipes. We create a conversation with customers,” Pursh said.
The stores also sample foods. Pursh said the Roast Wrap product could benefit from sampling but the supplier has provided an instructional DVD that is played on in-store television during prime-time shopper hours.