Retail Observer

October 2018

The Retail Observer is an industry leading magazine for INDEPENDENT RETAILERS in Major Appliances, Consumer Electronics and Home Furnishings

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RETAILOBSERVER.COM OCTOBER 2018 50 Chad Evans Appliance Trends Chad Evans, GM of Merchandising BrandSource RO I n this rapidly changing global economy, furniture, appliance and other retail industries are evolving constantly. In recent months, both the furniture and appliance industries have seen quite a bit of change in response to the rise in tariffs. World leaders have been disputing on trade, with the resulting announcement of a possible 25% tariff, including $34 billion in tariffs on foreign technology goods and consumer products. Over time, the intention of these tariffs is to reduce the trade deficit between countries and decrease the likelihood of additional U.S. security issues. All of these changes are starting to be felt at the retail and consumer levels. As it relates specifically to the appliance industry, the biggest change that has arisen is in regard to product price increases. Many of these price increases went into effect early in the year, and U.S. retailers are warning consumers that the tariffs proposed by the Trump administration could raise retail prices even further in the near future. The initial product price increases that are being seen in the appliance industry were heavily targeted on the laundry category; however, all categories have been affected. Although the tariffs may seem daunting and scary, it is important to keep in mind that the overall appliance industry is still growing, and many independent appliance retailers are actually seeing an increase in margins. In 1980, you could purchase a washing machine for $499. In 2018, you can still purchase a similar washer, that has more technology and is far more energy-efficient, for the same $499. The appliance industry has seen a lot of innovation, functionality and new energy-saving options within the last 20-30 years, resulting in better products for the consumer. These same innovations, technologies and benefits also have led to a more competitive environment for both vendors and retailers. As an appliance dealer, if your customers inquire about the rise in pricing, it is important to let them know that with increases in technology and product benefits, they are getting more for their money. The good news is that most consumers who have not purchased an appliance in several years will not be aware of the cost of buying a washing machine. With rising costs, those of us in the appliance industry will be aware of the price changes. However, most consumers who walk into the store will not notice the price increase. They will do their research online and get an idea of the price of the product they want to buy. Most consumers will not complain so long as you offer them a competitive price in comparison to other retailers. George Bernard Shaw said, "Progress is impossible without changeā€¦". The appliance industry is moving faster every day, and the changes are coming more rapidly. These changes are definitely needed in order to make progress. Change is never easy, even if it is a planned change. The changes in the appliance industry will bring great opportunities, especially for the independent dealer network. The strength of the independent dealer has always been the service and support they give the customer. The independent dealer has always been more nimble, being able to adapt and adjust quickly. The hardest part for independent dealers is getting the word out to consumers and helping them find their business. A consumer will go online 85-90% of the time to research what they are looking to buy. If appliance dealers do not have a top-notch web presence, they will not have a shot at getting the customer into the store. If the dealer website is up-to-date, it is important to advertise that customers can search online. Digital advertising in all its forms can be seen as the great equalizer. The smallest store can look like a "big box" retailer with the help of a good website and a great digital marketing plan. Overall, the industry is growing, and appliance dealers are quickly learning to adapt. The prospect of tariffs may be scary, but if dealers focus their energy on positive marketing to their customer base, they will continue to be successful. POSITIVE MOMENTUM FOR RETAILERS DESPITE LOOMING TARIFFS

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