Household Appliances Volume 2: Electric & Gas Stoves & Ranges - US - May 2005

SUMMARY

The $5.6 billion cooking appliance market includes stoves and ranges (gas and electric), and microwave ovens. This report covers the period from 1999 through February 2005. During this period, numerous step-up features have gained popularity by consumers increasing interest in convenience, time efficiency, and style. Features that save consumers time include the easy cleaning allowed by smooth-top ovens and the faster baking offered by convection ovens and speed ovens. Other popular improvements include dual-fuel ranges, which offer gas cooktops with electric ovens, and separate cooktops in combination with wall ovens. Other consumer concerns driving sales are the desires for a more integrated and professional looking kitchen, and appliances that offer shorter cooking times and easier clean up.

While the majority of the markets purchases are "distress" purchases, made when their old machine breaks, Mintel finds that 38% of buyers upgrade from a functioning machine. The majority of upgrades from a functioning machine are the result of either home moves or home remodeling. Moving homes is vital to the cooking appliance market. Mintel finds that 36% of people who moved to a new home in the last 12 months purchased a new microwave, 38% purchased a new electric stove or range, 17% purchased a new gas stove or range, and 9% purchased a new convection oven. The housing boom of 2002 through 2004 contributed greatly to the market.

As a result of the housing boom and new product offerings, the market grew 9% in constant prices. If higher levels of growth are to be achieved, more current owners must be convinced to upgrade from a working appliance, even if they are not moving homes. This report explores the hypothesis that with the decline in cooking by consumers corresponding with a heightened interest in the home, styling provides the potential for increased growth in the market.

This report focuses on the domestic U.S. market for gas ranges, electric ranges, convection ovens and microwaves. Gas ranges and electric ranges include freestanding, built-in, and surface cooking units. Microwaves include both countertop and over-the-range models. Excluded from this report are contract sales, second-hand appliances, and rental appliances.

This report does not include a review of the retail environment. Instead, Mintel is devoting an entire report to the subject of Household Appliance Retailing, publishing in July 2005.

TABLE OF CONTENTS

Introduction and Abbreviations

Introduction

Other Relevant Reports

Definition

Abbreviations & Terms

Abbreviations

Terms

Executive Summary

Growth of $1.1 billion between 1999 and 2004

Low interest rates propel sales

Distress purchasing primary, accounting for half of volume sales

First-time buyers account for roughly one in ten sales

Functional vs. aspirational buyers

Features and styling impact average price

Market divided among gas, electric, and microwave ovens

Five brands dominate

Branding campaigns may prove ineffective in light of customer concerns

Features the primary factor in product choice

Convenience foods and eating out to dampen sales

Convenience and style essential

Convection ovens hold room for growth

Limited growth ahead

Market Drivers

Moving home

• Figure 1: Existing and new home sales and new housing starts (single-unit, privately owned homes), 1999-2004

Home ownership

Home ownership is rising

• Figure 2: Percentage of U.S. households owning homes, 1999-2004

Population size and characteristics

Presence of children in the household

• Figure 3: Presence of children in households, by age of householder, 2003

Moving home, buying first home, and buying new home by age and marital status

• Figure 4: Home moves, purchase of new home and first home ownership, by age and marital status, January-September 2004

The U.S. population by age

• Figure 5: U.S. population, by age, 2000-10

Replacement cycles

Appliance life-expectancy

• Figure 6: Life-expectancy of cooking appliances, and units to be replaced, 2004 and 2005

Trends in kitchen remodeling/improving

• Figure 7: Spending for residential improvements, at current and constant prices, 1999-2004
• Figure 8: Chart: Spending for residential improvements, at current and constant prices, 1999-2004*

Culture of dining out

Less home cooking

No time for cooking

Women in the workplace

Impact of the great room

Features and styling

Time deprivation

The look of the appliance is important to consumers

Low mortgage (and short-term interest) rates stimulate the market

• Figure 9: Mortgage interest rates and change in volume sales for cooking appliances, 1999-2004

Buying appliances on credit

• Figure 10: Reasons for buying on credit, December 2004

Income

Income, home ownership, and remodeling

Income and conditions of the sale

• Figure 11: Number of households per income group, 2000 and 2003
• Figure 12: Graph: Share of households per income group in 2003 and change from 2000

Market Size & Trends

Overview

• Figure 13: Total U.S. manufacturer sales of cooking appliances, at current and constant prices, 1999-2004
• Figure 14: Chart: U.S. manufacturer sales of cooking appliances, at current and constant prices, 1999-2004*
• Figure 15: Total U.S. unit shipments of cooking appliances, 1999-2004

Sales trends: diminished importance of the mid-range appliance

Why style can sell ovens

A dearth of compelling aesthetic options

Manufacturers succeed by breaking the form

Step-up features prohibitively expensive

Time-saving measures: convection ovens and speed ovens

Market Segmentation

Overview

• Figure 16: Manufacturer sales of cooking appliances, segmented by product type, 2002 and 2004
• Figure 17: Total U.S. unit shipments of cooking appliances, by segment, 2002 and 2004

Electric stoves and ranges

• Figure 18: Manufacturer sales of electric stoves and ranges, at current and constant prices, 1999-2004
• Figure 19: Chart: Manufacturer sales of electric stoves and ranges, at current and constant prices, 1999-2004*
• Figure 20: Total U.S. unit shipments of electric stoves and ranges, 1999-2004
• Figure 21: Unit shipments of electric ranges, by type, 1999-2004

Gas stoves and ranges

• Figure 22: Manufacturer sales of gas ranges and stoves, at current and constant prices, 1999-2004
• Figure 23: Chart: Manufacturer sales of gas ranges and stoves, at current and constant prices, 1999-2004*
• Figure 24: Total U.S. unit shipments of gas stoves and ranges, 1999-2004
• Figure 25: Unit shipments of gas stoves and ranges, by type, 1999-2004

Microwave Ovens

• Figure 26: Manufacturer sales of microwave ovens, at current and constant prices, 1999-2004
• Figure 27: Chart: Manufacturer sales of microwave ovens, at current and constant prices, 1999-2004*
• Figure 28: Total U.S. unit shipments of microwave ovens, 1999-2004

Supply Structure

Overview

Consumer recollection of brand purchased

• Figure 29: Purchase of cooking appliances in the last 24 months, by brand, by product type, December 2004

Company profiles

GE Consumer & Industrial

Product offerings

Maytag Corporation

Product offerings

Sears Holdings Corp (Kenmore)

Product offerings

Electrolux Home Products (Frigidaire)

Product offerings

Whirlpool

Product offerings

Sharp Corporation

Product offerings

Matsushita Electric Corporation (Panasonic)

Product offerings

Samsung

Product offerings

LG Electronics

Product offerings

Advertising & Promotion

Overview

Brand perception

• Figure 30: Respondents attitudes towards brand, December 2004

Company Activity

GE

Maytag

Sears Holdings Corp (Kenmore)

Electrolux AB

Whirlpool

The Consumer

Introduction

Explanation of the base used by Simmons NCS for data about kitchen appliance ownership and recent purchase

Market participation by home ownership and recent remodelling

Product penetration

• Figure 31: Ownership of cooking appliances, by home ownership and recent remodeling, January-September 2004

Recent purchasing

• Figure 32: Recent purchase of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by home ownership and recent remodeling, January-September 2004

Home ownership and recent remodeling

• Figure 33: Home ownership and recent remodeling, by demographic group, January-September 2004

Market participation by recent household changes

• Figure 34: Ownership of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by recent household changes, January-September 2004
• Figure 35: Recent purchase of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by recent household changes, January-September 2004

Recent purchase by recent household changes

• Figure 36: Recent purchase of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by recent household changes, January-September 2004

Ownership and recent purchase by marital status and income

• Figure 37: Ownership of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by marital status, household income, and sex of single respondents, January-September 2004
• Figure 38: Purchase of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens in the last 12 months, by marital status, household income, and sex of single respondents, January-September 2004

Ownership and recent purchase by age and race/ethnicity

• Figure 39: Ownership of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by race/ethnicity and age, January-September 2004
• Figure 40: Purchase of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens in the last 12 months, by race/ethnicity and age, January-September 2004

Ownership and recent purchase by region and county density

• Figure 41: Ownership of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens, by region and county size, January-September 2004
• Figure 42: Purchase of microwaves, electric stoves or ranges, gas stoves or ranges, and convection ovens in the last 12 months, by region and county size, January-September 2004

Reasons for purchase

• Figure 43: Main reason for purchasing a new appliance, December 2004
• Figure 44: Main reason for purchasing a new appliance, by demographic group, December 2004
• Figure 45: Main reason for purchasing a new appliance, by demographic group, December 2004

Who is willing to upgrade from a working appliance and why?

• Figure 46: Reasons to replace an appliance, by demographic group, December 2004

Factors in product selection

• Figure 47: Primary factors in selecting purchase, December 2004
• Figure 48: Primary factors in selecting purchase, by demographic group, December 2004

Who will pay more for design-led products?

• Figure 49: Willingness to pay 10% extra for a customized finish or color, by demographic group, December 2004

Average sales price paid

• Figure 50: Average price paid for appliances purchased in the last 12 months, by demographic group, November 2004

Summary of findings for select demographic groups

Married couples

18-44-year-olds vs. over-45s

18-44-year-olds

Over-45s

Conclusions

Future & Forecast

Future trends

Continued increases in the number of households and home ownership

• Figure 51: New housing starts (single-unit, privately owned homes) and number of U.S. households, 2000-2004

Demographic changes may be adverse for the industry

Increasing presence of women in the workplace may affect sales and product design

High-end products for smaller households may prove popular

Convection microwaves to gain popularity?

Features and styling to sell more high-end product

Future penetration growth of convection ovens

Market forecast

Cooking appliances

• Figure 52: Forecast of total U.S. manufacturer sales of cooking appliances, at current and constant prices, 2004-2009
• Figure 53: Graph: Forecast of total U.S. manufacturer sales of cooking appliances, at current and constant prices, 2004-2009*

Electric stoves and ranges

• Figure 54: Forecast of U.S. manufacturer sales of electric stoves and ranges, at current and constant prices, 2004-2009

Gas stoves and ranges

• Figure 55: Forecast of U.S. manufacturer sales of gas stoves and ranges, at current and constant prices, 2004-2009
• Figure 56: Forecast of U.S. manufacturer sales of microwave ovens, at current and constant prices, 2004-2009

Forecast Factors

Appendix: Trade Associations

Appendix: Research Methodology

Consumer Research

Sampling & Weighting

Technometrica TechnoExpresssm

ICR Surveys EXCEL

Simmons National Consumer Surveys

Greenfield Online

Presentation & Definition

Further Analysis

Trade Research

Informal trade research

Formal trade research

Desk & Internet Research

Sources

Definitions

Forecasts

Appendix: What is Mintel?

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