Retail Observer

RETAILOBSERVER.COM NOVEMBER 2022 50 I t's difficult to accurately describe the state of the home appliance industry, because the market has been something of a roller-coaster ride over the past few years, filled with its fair share of peaks and valleys. What is certain is that change and adaptation are constant, and retailers of all shapes and sizes need to stay on their toes. What I can attempt to do, though, is sum up what we experienced in 2022 and look ahead to next year's trends. 2022 WRAP-UP It was a big ask of 2022 to outperform a record-breaking year in 2021 that saw over 55 million units shipped in the top-six core categories, for approximately 9-percent growth year-over-year. That said, 2022 tried its best. The first half of the year struggled to keep pace, while things quickly leveled off here in the back half. Unit shipments were down 2.1 percent in Q1 and 6.2 percent in Q2, which is exactly where we sit going into the fourth quarter. As inventory constraints remain a headwind in the industry, we began to see some recovery and stabilization of select categories with Top Load Laundry becoming the first products to be readily available to ship without going into backorder status. Select refrigeration have followed with improved supply in the channel, while Dish and Cooking remain the most challenged with availability. As backorders have begun to bleed down, so too has demand for appliances. We're now experiencing a softening in the business. The battle for the consumer dollar has gotten fiercer, and discretionary spending, which was once earmarked for the home, has opened up again to travel and experiences. We've also seen the replacement cycle slow down as fewer appliances are under duress due to a decrease in usage that was once five-to-six times their normal use. The other change in the business this year – and perhaps the most material – is the increased promotional cadence we're seeing. As demand slows and inventory builds, we've seen more promotional discounting across all categories with savings up to pre-pandemic levels (up to 30-40 percent). Memorial Day was the turning point, in my opinion, as sales did not meet expectations and so followed a more aggressive promotional stance for July 4th and Labor Day. Q4 is proving to keep the foot on the gas as we enter key selling periods starting with Columbus Day and into Black November. THE YEAR AHEAD As we close the chapter on 2022 and turn our efforts to resetting for the year ahead, I'm optimistic that the appliance industry will see conservative single-digit growth in both revenue and units. Business won't come easy, and meeting the consumer where they begin their shopper journey (online) will be pivotal in the competition for voice in the market. The more aggressive promotional cadence we saw in the back half of 2022 only stands to remain so for 2023 as suppliers' inventory continues to recover. The builder segment will outpace retail by approximately 400 to 600 basis points due to a pipeline of jobs waiting to be delivered and supported by new and existing remodel construction. We also won't have the headwinds of price increases and inflation that took place the last two years – much of which was given back due to aggressive promotional pricing anyway. That said, I remain positive and optimistic because we'll continue to see the replacement business take hold, homeowners will continue to invest in their kitchen and outdoor living space, and manufacturers are spending $100s of millions of dollars in capacity, innovation and technology. Doug Wrede Vice President Home Appliances, Nationwide Marketing Group Doug Wrede ApplianceTrends RO THE STATE OF THE HOME APPLIANCE BUSINESS

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