Retail Observer

RETAILOBSERVER.COM APRIL 2022 62 A popular topic of conversation among owners and managers of independent appliance service companies is what the future will bring – what might happen to the service side of the industry, and what trends we can identify to prepare for those possibilities? Successful service companies have generally had more work than people to do it, but in the last two years we've seen enormous pressure that has led, in many cases, to rapid growth and expansion. However, this short-term trend seems to be settling into a less-aggressive growth pattern. As the backlog of new appliance availability starts to clear, what can we expect? What other long- and short-term trends can we observe, and how should we react to them? In the last few decades we've seen new-appliance prices on a downward trend in relation to median income. The consumer price index (CPI) for major appliances has been consistently below the baseline set in 1997, with the exception of 2012 and 2013. What this means is that although incomes are rising, and the price of new appliances is rising, when adjusted to take into account all of the current data and real-world costs, new appliances are less expensive now than they were in 1997. This downward trend is having the effect of turning lower-end products into throw-away machines instead of repairable machines. There simply isn't a profitable way to service a machine that can be replaced for less than what it would cost for a professional service company to repair it. However, in the last two years this trend has begun to reverse as the CPI of major appliances is on an upward swing. There are many and varied reasons for this that are outside the scope of this article, but is this trend a permanent reversal? It seems unlikely. The trend may also be skewed by the flood of ultra-high-end products that sell for a hefty premium, causing an upward swing in the data that may not be representative of the industry as a whole. Is appliance service doomed to go the way of television repair? Sure, there are some big-box stores that will repair a high-end television, and there are service companies that will repair a television in warranty. But how many independent TV repair companies are left that do out-of- warranty service for a wide range of televisions? The answer is not many. So what can independent service companies do to position themselves for a future where many machines aren't repairable in practical terms? As expenses rise and employees demand well- deserved higher wages and benefits, the cost to repair appliances rises in tandem, pricing many lower-tier products straight into the landfill instead of the shop. Independent companies need to consider how to plan for this. Maybe it will mean partnering with manufacturers, maybe it will mean developing a niche or specializing in certain types of products or repairs that are of above-average profitability. Maybe it will mean some companies won't survive, or some markets will simply become unviable for profitable out-of-warranty repairs. Whatever the outcome, now is the time for service companies to take a look at the data and trends and start planning for how to deal with what might happen. Independent service companies have an advantage of being able to pivot more quickly than some of the larger, national or multinational corporations that provide service. We have a very up-close understanding of our markets: what works and what doesn't. We have a strong grasp of how new-product pricing affects service profitability, and indeed what it actually costs to run a professional independent service company. We cannot simply assume that things will continue as they have for the past half- century. With new national competition getting into the market, we need to consider, in depth, not only what we have to do to remain successful, but what we want to do as well. David Oliva owns and operates RD Appliance Service, Corp. on Long Island, NY along with his father. They've been in business for over 50 years with a main focus on high-end appliance service, although they do service all brands. David is a member of UASA, MSA and Accomplished Appliance Technicians of America and serves on the board of UASA. S E R V I C E D E P A R T M E N T RO THE FUTURE OF INDEPENDENT SERVICE

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