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Any way you cut it, cutlery and kitchen tools are important components of both a kitchen and a retailer's inventory. This month, we examine the Cutlery and Kitchen Tool categories to give retailers an idea of what POS data reveals about them, as well as conversations with retailers across the country that revealed what's working for them.

Sales & Trends
No definitive source tracks kitchen tools. As most of you know, the category encompasses an enormous selection. Probably one of the toughest tasks is selecting the right mix after weighing brand against innovation.

Cutlery, however, is a different story. NPD Houseworld/POS tracking gives us a snapshot of what's happening in the market on a macro level. Sourcing a wide range of channels from specialty to national chains to warehouse clubs, NPD's data show unit sales declined three percent in the same periods tracked (July 04 – June 2005 versus July 2003-June 2004). But before you rethink your stock, dollar sales increased four percent for the same period to just over $200 million.
Within those numbers, we can't paint the picture further with a dollar-share breakdown. While sets led the way with 68.3 percent, specialty knives held a comfortable 9.7 percent of the pie, with cutting boards accounting for another 10.3 percent. Carbon stainless steel led the category with 62.8 percent of sales, stainless steel took 33.7 percent, and ceramic generated 1.2 percent of sales dollars.

"We are seeing that block sets are capturing 40 percent of dollar sales, up 22 percent. Santuko knives continue to be the hot story with triple-digit growth and specialty knives up 57 percent overall," explained NPD Houseworld President Peter Greene. "I think these knives' multifunctionality combined with their use on cooking shows has helped grow sales of this knife style in particular. Santuko knives are still a very small part of the business, so they probably have a large runway to go." Cutlery and kitchen tools are both experiencing the same thinning in the middle, as are many other retail categories. NPD's cutlery data suggests that lower-end product introductions and upper-end intros will continue to spur sales.

"It's true in many of the categories we track," Greene said. "For block knives, as long as the wedding business and new housing starts stay strong, people are going to need knives wherever they are. In addition, people with second homes are a great consumer for this category. If that market stays strong as well, retailers will gather strength from a consumer group furn–ishing another complete home."

Color-Filled World
The picture for kitchen tools is slightly tougher to paint. With no clear data, we can give you a soft outline gleaned from what manufacturers and retailers have disclosed. Greene said NPD is considering tracking the gadget category, taking a wide-brush approach to items such as peelers and spatulas without drilling down to items such as soft-skinned peelers and balloon whisks.

"The gadget business is a well-diversified business. It's a strong grocery business, but with all the licensed product out there now, it's doing better in the higher end," Greene said. "My only thought would be that retailers need to be sure they are maximizing their assortment. It's a tough job."

What's happening in the world of kitchen tools can be summed up in two words — color and innovation. Commodity items such as peelers and spatulas are increasingly sold as private-label items in many channels. Specialty kitchen tools are our focus — tools that set your inventory apart from that of the guy down the street.

Kitchen tools and gadgets entering the marketplace without brand strength behind them have to provide retailers with a level of innovation that makes them necessary.

Manufacturers told us that parallel with the issue of price is the demand for design and innovation. The strongest trend this year is color, along with professional stainless steel images and powder-coated epoxy colors to match the kitchen with a creamy finish. The rush on santoprene and silicone continues with a range of product in solid and translucent offerings.

One vendor commented, "Silicone is definitely on trend. Some will tank, and some will do well. Silicone brushes are a great example. Retailers have to continue to monitor how many they believe will really sell. They really have to pay attention to it. On the manufacturing side, you really have to look at colors one to two years ahead."

In the arena of commercial applications, retailers can expect to discover new translations of chef's favorite tools. Savvy manufacturers are studying the professional kitchen to discover tools that will translate well to the home chef. It's something that's been done in the small electrics category for decades.

Another vendor commented, "Manufacturers have to be realistic about their innovation. A small brand is never going to kill the giants that are cutting deals with retailers. If you come out with a meaningful innovation that's based on niche markets, then you are going to sell products. If I owned a kitchenware store, I would go with the purist mentality and just go for the killer products — sometimes, those will be the big brands and sometimes, they will be from smaller players."

In the Field
Mixed responses about cutlery were expressed by retailers. Brooklyn-based The Peppermill is experiencing a decline in higher-priced cutlery sales and growth in its secondary line.

Karen Braver, partner in The Peppermill, explained, "We carry two brands, Victorinox and Wüsthof. I have seen a decline in the high end and more people going for the low end; however, the Santuko knife is one of the higher-end items that sells very well."

Her customers tend to reach for open-stock purchases, heading back to the store for nicely designed blocks to store them in later. At what point do customers become price conscious? For Braver, $75.00 is the threshold for cutlery purchases.

"After that it's high end and not everyone is ready for that," she said.

When it comes to kitchen tools and gadgets, retailers were quickly able to fill in the void of qualitative data.

Terry Monroe, partner in Stillwater, Okla.-based Murphy's Department Store, explained that silicone is definitely driving sales in the category. And the success of silicone is attributable to its bright colors, which are driving sales of many other colorful products.

"Colors are even translating to larger-ticket items. KitchenAid continues to make new colors. We're starting to do better with the bigger items. The colors are selling well for us, stronger for us than the whites, since the consumer can find the white at the discount stores and places like Lowe's," he began. "Silicone products are just selling out. As that category gets more mature, I think there will be some reduction, but at the moment, we're picking up everything that comes along. Two-toned Hot Spots are selling well with the new colors and features. The fingertip silicone grabbers are selling well. Anything that's colored in silicone is selling well. A new cookie sheet from iSi is selling really well."

Outside of the silicone products, Monroe sees great growth in any product with a new colorful face. The addition of color to a category can translate to a completely new push of sales.

Monroe explained, "Zyliss products are the top end for us and they sell well for us. But salad spinners were a category that had dropped off in sales. Now, they have added different colors and we sold right through that category. We've had to reorder several times."

For Murphy's customers, the price threshold is dependent upon the product. During the holidays, Monroe believes they're willing to spend a bit more on a kitchen tool they might use only once a year — such as candy thermometers. Still, the dedicated home chef often overlooks price.

"The price depends a lot on what the consumer is looking for," Monroe said. "If they do gourmet cooking year-round, they will pay a lot."

Braver agreed, saying, "It depends on the product. A mandoline is going to be higher priced than a garlic press. For a handheld gadget, it's up to $20 — above $20, they will think twice. Below $20, they won't even think about it."

The way to move customers beyond price is to be sure products are selected with necessity and innovation in mind. Braver's customers have come to trust her purchasing decisions, making kitchen tool selection at her store a painless process.

"Our customers know that if we have a certain item from a certain brand, we have used it and we like it better than anything else," she explained.

To an ex-tent, Braver's inventory is brand specific.

"We carry a large assortment of OXO be-cause it's an extensive, high-quality line. Still, we will take certain gadgets from a different company because we like them better. For example, we believe a thousand percent in Zyliss' Garlic Press. We sell the Zyliss every day and people just take our recommendation because they like it."

She continued, "We may only have one thing from other companies because we fall in love with the gadget. Tablecraft, for example, has this great standing label set. It's the only product I carry of theirs — much to my reps' chagrin. But you have to have something unique to get in the store."

Monroe is allowing one of his successful vendors to take some of the pain out of kitchen tool selection for the fourth quarter.

"Harold Imports does a tab that we're doing this year. They select a lot of gadgets that they think will be good," he explained. "I am looking forward to the home-entertaining season this year. With the price of gas as high as it is, I think it will help the local merchants because people aren't going to drive as far to buy things. It's a pretty good-sized tank full of gas to get someplace here in Stillwater, Okla. I think it could easily be a great year."