Floorcare category is definitely looking up!

By Phil Weafer June 01, 2014 Floor care

With increased competition in the form of new suppliers entering the category, and a consumer who seems to be looking up-, not downmarket, what lies in store for floorcare? Phil Weafer reports.

To view a PDF of the complete feature as it appeared in Wares magazine, click the download button at the bottom of this page.

To view the accompanying Floorcare Product Reference Guide, click here.

In last month’s “Green” feature we looked at the potential impact that the EU’s planned energy labelling could have on vacuum sales in New Zealand.

The general consensus from speaking to suppliers is that there will be no immediate effect. It is, however, something that will be monitored in case there is any potential impact as a result. 

As Avery Robinson’s Mark Robinson puts it when asked about the topic: “I think for us currently the EU energy labelling discussions are having no impact on sales of Dyson vacs in New Zealand so there’s probably nothing more to say than that really.”


Handstick a handy product

One subcategory that many feel is showing particular growth is the market for handstick vacuum cleaners. Sharon May, Product Manager, Floorcare for Miele Australia/New Zealand says that this product type will continue to grow. 

“There is a growing trend towards handstick appliances, a segment that is potentially widening the repertoire of consumers.” May continues to say that this category created a need for a second vacuum cleaner suitable for a mid-week clean or tidy up in many households.

Celebrating the first decade of Ergorapido, Electrolux Small AppliancesAlan Dalton also sees the handstick continuing to grow, both locally and internationally: “The only two categories growing within the floorcare category globally are robots and handstick. The true robots haven’t arrived in New Zealand yet, they’re coming. But handstick is where it is at this point in time. Some are calling them slim, cordless vacuum cleaners – instant clean is what they are.”

Speaking about the launch of the new Dyson DC54 range, Mark Robinson is also quick to underline growth in handstick vacuum cleaners: “For us handsticks are a major growth. Year to date we’ve seen our value share for this product in the market grow 13% up to over 30% so we’re seeing wonderful growth within that handstick category. 

“For us, we’re also expecting vacuums that require bags and filters to be replaced will decline I think as customers look for more sustainable products that reduce waste.”

Current GfK data agrees that the handstick is the fastest growing segment with a 33% increase in units and an even larger growth in value (+38%, MAT April 2014), thanks to the popularity of higher end products. As a result of this growth, many of the suppliers I spoke with have said that the average selling price (ASP) has also increased, which is positive for everyone. 


A more competitive market

So how has the market as a whole looked over the last year or so? With more competitors entering an already very competitive market, will it be a time to separate the wheat from the chaff? Maybe that’s a little extreme, but certainly the suppliers I spoke with generally seem excited about the prospects ahead for the competitive category. 

Ian Caudwell, Country Manager for New Zealand with Nilfisk, is one supplier that welcomes the prospect of new competitors to the market.

“It’s good competition and keeps us on our toes. Nilfisk is seeing some good growth and I think the market in general is feeling a lot more positive. It hasn’t been easy though – quite a few new brands have entered the vacuum market all demanding floor area in their special way which has meant established brands working harder for what they have.”

Over at Parex, Barnaby Thompson also points to new players entering the market as the main factor behind the increased competition.

“The market is fairly competitive. There is certainly more competition [and] there seems to be more brands that have gotten involved. Some big brands like Samsung and others are here now, so it’s pretty competitive. “

Electrolux’s Alan Dalton saw the company experience good growth in the last year and this has continued into this year. Dalton says it’s particularly pleasing because of the heightened levels of competition.

“Floorcare is one of the most competitive categories in the appliance sector – we’ve got over 60 competitors all looking for a piece of the market,” he underlines.

One such recent entrant is Kärcher. While it has always had a stronger presence internationally in floorcare, Kere McBratney says is the brand now looking to expand its range in New Zealand. 

“Business has been positive with good growth across our residential and commercial cleaning portfolios. Whilst Kärcher has had a domestic floorcare range globally for a long time it is an area that the New Zealand business has previously only had limited involvement in. That is set to change this year, so we expect to see some aggressive growth from a small base.”


Good retailing relationships = good results

Consumers are more savvy and knowledgeable than ever before, mainly thanks to the information available to them through the internet. What can be done to combat issues such as showrooming that arise from all that internet activity? 

When this topic was brought up with suppliers, there was a universal response that educating consumers at the point of sale (i.e in-store, to make sure the point is driven home) is imperative. 

TTI’s Nick Martin says that when it comes to floorcare products, ascertaining the consumer’s needs is still the main goal in helping retailers make sales that will fulfill their customers’ requirements and expectations.

“I think consumers on a whole still need that reassurance from the retailer, the person on the floor and that will come from a having a confidence in the person selling the items, that they are knowledgeable. It also means that retailers need to be asking the right kind of questions: what type of floor they have; do they have pets?”

Over at Avery Robinson, Mark Robinson feels that close relationships between retailers and suppliers is a key facet of generating sales and potential incremental sales: “That retail relationship is absolutely vital for suppliers. I think it’s critical to have mutual goals and strategies and to work closely with the retailers to ensure that those strategies are implemented correctly across your range of promotions and plans.”

Sharon May at Miele is another to place a lot of emphasis on the strength of the supplier-retailer relationship: “A strong relationship with retailers is the cornerstone of any business within a wholesale retail environment. When a brand or manufacturer transcends transactional selling and becomes a true partner to the retailer, category or business recommendations that create value and benefit to both parties will be highly respected.”

Alan Dalton says that Electrolux is working with retailers now to further develop accurate forecasts, adding that the process has also started locally. 

“We’re doing a bit of that now because we are doing container drops with our retailers, which you need to plan ahead. That gives us structure in our business, it gives reliability with our factories and they get use to us so we get product on time and the right product on time so it forces us to focus on relationships.”

Over at Nilfisk, Nick Caudwell believes understanding the consumer’s needs and requirements when it comes to floorcare, adding it’s the nitty gritty work done by the salesperson in-stopre which is key. 

“They are such a vital part of the information chain and they are the only ones that can educate and inform the end users on unique features, the matching of the right machine to the person’s needs and home size. Most importantly is discussing possible allergies with the customer as so many NZ children suffer from allergies. If the sales person can put the right vacuum into a home where there is someone suffering from allergies, it can literally change lives.”


Demonstrate to sell

When it comes to floorcare products, consumers need to see the products in action before they are convinced about making a purchase. Barnaby Thompson at Parex stresses the importance of physical demonstration to consumers. 

“For our products, we want people demonstrating our products. With our products, especially deep cleaning, if you demonstrate them, you’ll sell them.”

Thompson continues: “That’s the big challenge we face, because there’s nothing better than tangibly turning on the machine and show the customer what it can do. A lot of displaying products is showmanship, especially in floorcare. If you can get the product in a customer’s hands and get them excited that’s great.”

Thompson says that the company feels there is opportunity for retailers to view its products as a potential add-on as a deep cleaner or steam mop with a vacuum purchase.

Interestingly, many suppliers point to the aesthetic aspect of a vacuum purchase when asked about displaying in-store. 

In relation to the company’s Ergorapido, Electrolux’s Alan Dalton points to the design features of the machine as one appealing aspect to the consumer, saying “it’s designed to be left on display.”

As part of this aesthetic appeal, Electrolux is launching a limited edition model, that will be available for 90-days which will be beauty driven as each model is hand painted.

Miele’s Sharon May also feels that colour choices need to be up to date and on trend – even though consumers make their choices based on the product’s performance, aesthetics play a part in the appeal. 

The irony of having trend-based vacuum cleaners is not lost on TTI’s Nick Martin: “These are items that are kept in the cupboard, not shown off, yet we all spend so much time and effort on the aesthetics. But you need to do this because that’s what appeals to consumers.”  


The importance of POS

When getting products in the hands of consumers, Point Of Sale can be a key component for suppliers to demonstrate products to customers. Mark Robinson of Dyson distributor Avery Robinson speaks about a recent display the company had to promote its handstick range.

“I think implemented correctly, point of sale in-store can have a massive impact in achieving those sales and strategic goals. We’ve seen it recently with the new displays we did with our handstick range. The stores that we worked with implementing those displays have seen massive increases in sales and it’s been unbelievably successful so I think when the retailers and suppliers work together and share mutual goals and strategies it can be hugely successful.”

One of the bugbears for suppliers I spoke with is the inconsistency showed at times by retailers when it comes to POS. Suppliers have said that some retailers are not interested in using POS and when they do, often times the display will be gone in a matter of days. 

Speaking about the importance of the relationship between suppliers and retailers, Miele’s Sharon May says that good POS is one direct result of that relationship being healthy. When the relationship is strong, she says, “recommendations for POS presence, position within stores and in-store theatre are taken seriously and increase the chances of being implemented.”


You get what you pay for

For cleaning products, every supplier I spoke with sad that it is imperative that consumers realise what benefits they are getting at certain price points. By way of incentive towards upselling, here are some stats.

GfK’s Moving Annual Total (MAT) to April 2014 versus 2013 says that while the largest market volume for vacuum cleaners still sits within the sub-$200 price brand, the increasing popularity of $200+ models – in particular $400+ models – has generated an overall increase in average price. Compared to last year, sales units increased by 1%, whereas sales value grew by 5%. 

Upselling places greater emphasis on explaining to consumers exactly what they are getting for their dollar invested. Miele’s Sharon May says it is essential that customers understand the advantages that distinguish high quality vacuum cleaners. 

“Miele vacuum cleaners feature innovative technology and come equipped with comprehensive features and accessories that guarantee a high level of cleaning performance and convenience. Furthermore, quality vacuum cleaners ensure durability, longevity and represent outstanding value for money.”

Kärcher is another supplier that cannot emphasise enough the importance for consumers and end users to look at quality over price. Kere McBratney says: “New Zealand consumers seem to be making a return to putting quality back near the top of the list of considerations in the purchase decision tree. Whilst this doesn’t mean to say that price isn’t an important consideration, it has meant that consumers are becoming more willing to spend more where they perceive a clear benefit from the increased spend. 

“Ultimately consumers are looking to ensure that they continue to get value, whether it is in terms of product utility, improved product quality and life or value by way of support in the purchase decision making process.”

Alan Dalton takes the view that you cannot have one without the other – for top products, you pay top money: “Let’s be honest, you walk into a store; first you need to like the product; it’s got the features you want; it’s a brand you trust; then we might get the price so it’s really number four. It’s not price driven. 

“There are a lot of people here that want to buy European product and if it’s quality, and Electrolux delivers quality, people are willing to pay the money. You can’t get quality and low price in the same equation, it’s one or the other.”

TTI’s Nick Martin also feels that it’s important consumers realise they “pay for what they get”. Martin also says consumers need to accept responsibility when it comes to general upkeep of floorcare products.

“At the end of the day, people can baulk at a price but products are expensive because they can do this and deliver on that. Once a person realises that if they spend a little bit more, they get more features it’s acceptable.”

Setting the correct price can also be vital according to Parex’s Barnaby Thompson, who questions whether over-inflating price points on floorcare products actually works.

“Each product has got a fair price and if you try get that right first time rather than dance around it, it’s better for everyone because that’s going to improve your sell-out which again is the key to any business. If it’s not moving off the floor it’s a headache for everybody. Pricing is key – as a supplier, we can only guide retailers ultimately it’s either their business strategy or approach and ultimately it’s their decision.”


Going forward – seeking value growth

So how do the suppliers in the channel feel going forward? There is a certainly a sense of excitement and anticipation going forward from those I spoke with. For one, Mark Robinson of Avery Robinson is looking forward to the coming year with anticipation.

“We’re obviously excited for the year ahead. We’ve gone through some big changes as a company but we’re unbelievably enthusiastic and excited for the year ahead.”

TTI’s Nick Martin says that we are entering a key time for floorcare, with consumers dealing with fewer distractions at this time of year. 

“As one retailer said to me you have the ‘Christmas/New Year hangover’, you have the schools returning so the money is going towards all these types of things in the beginning of the year which distract from people purchasing to a greater extent. But also, things like the election and the budget factor in too.”

With the 10 year anniversary of the company’s Ergorapido firmly in mind, Alan Dalton says Electrolux is looking forward to the year ahead and is crystal clear about where he would like the brand and the market as a whole to go.  

 “We are trying to lift average selling price. According to GfK, 70% of the volume is under $200. Now we know we have to be there, but we don’t want to be there. When you’ve got the New Zealand Government talking up the economy saying it’s buoyant that’s when you get people looking to pay a bit more.”

So it’s an exciting and challenging time to be in the floorcare category. With new competitors entering the market and new products and technologies, international trends constantly being updated; players need to ship up or fear of being blown away.  


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