The Association of Home Appliance Manufacturers’ Pres Bob Holding expects 1995 to be a strong year for white goods. Holding is forecasting 50 million units (manufacturers’ shipments) to be shipped in 1995. The industry is expected to ship 51 million units in 1994. However, as optimistic as Holding is about sales in 1995 he is concerned about another interest rate increase by the Fed slowing growth for the white-goods business.
Just how strong depends on the fourth quarter.
According to the Association of Home Appliance Manufacturers, president here, “there is a pent-up demand for replacement. It is clearly a record ’94 and it will carry over well into ’95.”
Manufacturer to retailer, the industry has enjoyed unexpectedly strong volume in the past year. Fierce competition and rising interest rates haven’t been enough to slow the boom.
“I still think we can do 50 million units [in manufacturers’ shipments! in ’95, he reports. “The question will be the fourth quarter.”
The industry is on pace to make 1994 its first 51-million year. Only twice have shipments exceeded 50 million: in 1987 (50.65 million) and 1988 (50.03 million).
In Holding’s mind, “The real question is how long this wave of surging economy is going to last, and don’t ask Mr. Greenspan: he’s got his hand on the choke.”
Alan Greenspan, chairman of the Federal Reserve, and his predecessors have increased interest rates to curb economic growth and keep inflation in check.
“Greenspan keeps threatening another round. That bothers me,” says Holding.
Interest rates could slow two areas of growth for the white-goods business, the rate of housing completions in fourth quarter of ’95, and “people’s ability to refinance mortgages and fix up their kitchens,” he notes. “So ’95 has lost a little of its momentum. I always said we borrowed a little from ’95 in ’94.”
In an interview with HFD, other points from the executive include the improvement in retail presentation, growing product innovation, the wealth of talent in the industry and the impact of the global economy.
For years the widespread complaints have been there’s nothing really new in an industry which upgrades products by evolution. Clearly the pace of change has picked up. According to Holding, product innovation don stimulates the market a bit more than we realize.
Just as a few examples, he notes that “Whirlpool is getting a lot of attention on energy efficiency,” GE is making an impact with its Profile series and there are several alterations in microwave ovens. “I think we do have products that interest people,” he concludes.
The issue is one of timing: are consumers in the stores? Are the dynamics at retail creating the excitement?
“It’s a real dogfight to get floor space,” observes Holding. But “retail presentation is so much better. Manufacturers are so much better” with advertising support. Suppliers are much more sensitive to the retail scene and partnerships are growing, he says.
“I think retailers are going to do a lot of things with electronics” – witness the growth of in-store displays and multimedia selling.