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There are some interesting happenings in the retail world of small electrics. Purchasing patterns are skewing selections between high and low price-points with mid-level products experiencing sales losses. At the same time, the coffee arena continues to drive sales showing a continued dollar sales growth.
So while total small electrics sales have experienced only a 1.7% growth from January-June 2006 to the same period in 2007, The NPD Group/Consumer Tracking Service reveals products such as waffle irons/sandwich makers and coffee grinders showed better returns with significant increases in average selling price, up 9% and 14% from the first half of ’06 to ’07.

Consumer Demand
Peter Goldman, president, Home for NPD Group/Consumer Tracking Service, explained that features and benefits are driving the small electrics category. Consumers are looking first for features and design and then price. Brand comes into play on occasion, depending on the brand.

“Price does not have to be cheap — it has to be a good value for the money,” he said. “The fully automatic espresso category, in terms of dollar growth in 2007, drove the growth of the small electrics category more than any other small electrics group.”

Dollar volume dropped for the category in 2007, but NPD shows there’s still strength in the espresso market with 24% growth over the same period in 2006. (In 2006, the category saw a 38.5% growth over 2005). Dollar volume since 2005 for Espresso/Cappuccino Makers has grown from $25.7 million to $44.2 million.

A couple of categories showing significant changes include Waffle Iron/Sandwich Makers, Coffee Grinders, and Toaster Ovens. Goldman remarked that some of the growth can be attributed to new features and the wealth of options available on the market.

“In the area of toaster ovens, quite a bit of growth has been driven by the addition of convection capability,” Goldman explained. “It’s an addition of features like convection, digital, retro designs, that give consumers more choices and drives sales. The reality of the increase in sales is the marketing of the added features. For example, toaster ovens are not just for reheating a slice of pizza anymore, they are being used for food preparation.”

Goldman said the multi-functionality of today’s new small electrics is also a plus. Consumers have limited counter and storage space so designing equipment that serves several purposes makes sense. Toaster oven toast combos and food processors/blenders that share the same base (kitchen machines) are two good examples.

“They bring a new freshness to the market,” Goldman remarked. “Design and color are the two big features behind what manufacturers are trying to do to keep the small electrics category alive. There seems to be a market for it and the consumers seem to support it.”

Slow cookers as a category is one that has fallen flat, but still has some life to it if you look closely at sales. In 2005, there was a 39.3% increase in sales dollars versus only 6% this year. But when you look at the share of price point, the high-end slow cooker range seems to be gaining some ground, capturing 12% of sales versus 1% in the previous time period. Slow cookers under $50 have experienced precipitous drops since 2005 when they held 95% of the price point share down to only 73% in 2007. The $50 to $100 range moved from 8% to 16%; while the over $100 units went from barely registering to 12%.

“There is not a lot of growth overall in the category. Still, slow cookers seem to be regaining traction over the past two to three years. Food manufacturers are designing products for the slow cooker,” Goldman said. “It’s interesting that, in many categories, the $100 to $150 price segment is still a growing segment. Even in this uncertain economy, almost 10% of the category purchases are between $100 and $150 dollars.”

Good news for our retail sales channels.

Retail Stats
For the second consecutive year, The Gourmet Retailer magazine conducted an online poll of Cookware/Kitchenware, Specialty Food and Gift/Gourmet Stores, asking them such things as the average amount of square feet they allot to small electrics and their average margins on small electrics. In 2005, margins averaged from 30 to 40 percent, with Kitchenware stores reporting the lowest margin (31%) and Gift/Gourmet stores the highest (40%). This year, those margins leveled with all channels in the low- to mid-30% range. Coffeemakers were the top-selling category for small electrics for all retail channels responding for the second consecutive year.

Average Number of Small Electrics Lines Carried
Cookware/Kitchenware Stores — 10.99
Specialty Food Stores — 5.23
Gift/Gourmet Stores — 3.36

Average Amount of Square Feet Devoted to Small Electrics
Cookware/Kitchenware Stores — 238 square feet
Specialty Food Stores — 45.6 square feet
Gift/Gourmet Stores — 63 square feet

Average Margins on Small Electrics
Cookware/Kitchenware Stores — 33%
Specialty Food Stores — 34.5%
Gift/Gourmet Stores — 31.6%

Average 2007 Gross Sales for Small Electrics across all channels was $121,842.
Cookware/Kitchenware Stores — $154,479
Specialty Food Stores — $84,464
Gift/Gourmet Stores — $47,222

Future Power Sources
Sales projections look moderate for all retail channels. More than 56% of Cookware/Kitchenware retailers saw an increase in sales from 2006 to 2007, while 30% said they remained the same and 13% saw a decrease. Projections are also favorable with 55% expecting increases and 40% estimating sales will be the same for 2007.

More than 46% of Specialty Food retailers said their small electrics sales stayed the same from 2006 to 2007, while 30.8% said sales increased and 23.1% saw a decrease. Projections are less favorable with 50% predicting small electrics sales will remain flat for 2007 versus only 28.7% believing sales will increase.

Gift/Gourmet stores did not fare as well with more than 80% reporting either a decrease or flat sales for small electrics. Projections were not optimistic with 60% predicting sales would remain the same.

Top 3 Small Electrics Sellers
Cookware/Kitchenware Stores
1. Coffeemakers
2. Stand Mixers
3. Espresso/Cappuccino Machines & Food Processors (Tie)

Specialty Food Stores
1. Coffeemakers
2. Grinders/Slicers
3. Blenders

Gift/Gourmet Stores
1. Waffle Makers
2. Espresso/Cappuccino Makers
3. Coffeemakers

Most Important Factors in Customer Purchase Decision
Cookware/Kitchenware Stores
1. Quality
2. Brand Name
3. Features
4. Price

Specialty Food Stores
1. Quality
2. Price
3. Features

Gift/Gourmet Stores
1. Quality
2. Features
3. Price

Top 3 Ways You Merchandise & Promote Small Electrics
Cookware/Kitchenware Stores
1. In-Store Demos
2. Window Displays
3. Bridal Registry

Specialty Food Stores
1. In-Store Demos
2. Cross-Merchandise With Other Products
3. Print Advertising

Gift/Gourmet Stores
1. Cross-Merchandise With Other Products
2. In-Store Demos
3. Window Displays

If you would like to comment or send us your feedback on this feature, please send e-mail to mmoran@gourmetretailer.com.