Major Appliances Research

Part
01
of five
Part
01

Major Appliances - Price and Promotion Influences

After an exhaustive search through credible sources, we were unable to identify six insights that detail the impact of price and promotion when deciding to purchase major appliances.

USEFUL FINDINGS ON MAJOR APPLIANCES PURCHASE

  • According to a Euromonitor International survey report, the most essential features for shoppers when selecting an automatic washing machine include water and energy efficiency, followed by features that improved convenience (e.g., time-saving features).
  • According to data from the Association of Home Appliance Manufacturers, shipments of washing machines decreased by around 3% in the year 2018, with an increase in prices of laundry appliances.
  • About 49% of consumers chose low price as one of the most crucial aspects while purchasing household appliances.
  • More than three-fourths (85%) of major appliances are purchased from brick-and-mortar stores. Meanwhile, online purchases of major appliances have risen from 11% to around 15% in 2018.

Research Strategy:

Our research began by looking for information in consumer reports on the appliances market in the United States. We explored sites such as Euromonitor, ConsumerReports, etc. We wanted to see if any article mentioned the role price or promotion plays in the purchasing decisions of consumers buying the products in the United States, which we could use to analyze any impact. However, this strategy did not yield results as there was no such information available. At most, we found information on what consumers look for while buying large appliances, etc. We believed this strategy would work as sites like these publish information on consumer trends, purchasing behavior, etc. and would have mentioned the requested data in their reports.

Next, we searched for survey reports and articles published by appliance industry associations in the United States. We visited sites such as the Association of Home Appliance Manufacturers, the Consumer Electronics and Appliances Manufacturers Association, among others to find survey reports or articles mentioning how price and promotions are vital to consumer purchase decisions for appliances, etc. However, this strategy was not fruitful as there were no such reports available, and the only information we came across was about the top appliances in the United States, trends, etc. We believed this approach would work as industry associations usually publish information and updates about a particular industry and could have released data on consumer purchase decisions for major appliances.

Finally, we explored for media publications and executive interviews of major appliance manufacturers in the United States. We believed this strategy would work as company executives understand the behavior of consumers purchasing their products and could have revealed relevant information in interviews. Also, we thought that media sites would have published related data as they distribute business articles on various industries, sometimes from third-party research. We searched through sites such as NYTimes, Talk Business, CEO Magazine, among others. This strategy produced some results as we discovered how a price increase impacted the sales of major appliances.

However, there was no information on decision-making while purchasing appliances. The concept behind this strategy was to see if any media publications or an executive reported on any impact on the sales of appliances of their company due to an increase or decrease in price or promotions.
Part
02
of five
Part
02

Major Appliances - Distress Purchase Versus Planned Remodel or Upgrade

Having conducted an extensive study of the available research and literature surrounding the purchase / consumer journey for major appliances, we find no evidence that the journey differs in any significant way from the journey in cases where the purchase was part of a planned upgrade. We hypothesize that this is due to two major factors. First, consumers are increasingly reluctant to call repair persons to fix major appliances, instead turning to online DIY resources in an attempt to fix the problem themselves. This may jumpstart the purchase journey. Second, the purchase journey of even planned upgrades is extraordinarily short, with most purchases taking place within a week of the initial research. That being the case and due to the breadth of available resources online, being forced to rush a purchase decision due to exigent circumstances does not unduly change the overall pathway.

DIY "INTERFERENCE"

While slightly out-of-scope for this request, there is an important detail that precedes the start of a purchase journey to replace a malfunctioning appliance:

  • According to research by Deloitte, an increasing number of consumers facing mechanical issues with their large appliances attempt to avoid calling a repair person by seeking DIY solutions online, particularly in YouTube tutorials.
  • This is because the average price of a large appliance repair is $100 to $300 and the appliance failure is usually due to a single broken part.
  • The driving factors in that decision are a fear of the potential repair cost and/or concern that a repair person will not properly fix their issue (one social media analysis suggests that up to 20% of individuals who call a repair person do not have their problem fixed).
  • These DIY sources are therefore instrumental in helping the customer to determine when it is time to replace an appliance rather than maintain it.

Thus, even before the purchase journey begins in earnest, the cost is the highest concern on a consumer's mind when facing a "distress purchase" in the form of replacing an expensive appliance. This is true for all appliance purchases, regardless of circumstance, but given the above, may be an even larger factor in a distress purchase.

PURCHASES ARE MADE QUICKLY

After careful consideration of the relevant and publicly-available studies on the purchase journey for major appliances, we do not find any evidence that the purchase journey changes significantly when the consumer is forced into a "distress purchase" due to malfunctioning equipment. The reason for this appears to be how quickly purchase decisions are typically made even in planned remodels or upgrades:

  • Even apart from the driving need created by a malfunctioning appliance, the purchase journey for major appliances is very short.
  • 48% of consumers choose a product within a week of beginning research into brands and features online.

RESEARCH STRATEGY

We began our research by reviewing the sources pulled for the other parts of this project, reasoning that if there were a contrast in the purchase journeys for planned appliance upgrades and emergency replacements of malfunctioning equipment, this would likely be noted in the general studies. We did find that many of these studies provided insights about how consumers deal with malfunctioning major appliances, which we have listed in our findings above, but none of the reports pulled for our other brief indicated any major differences in the overall consumer journey.

Therefore, using the existing data as a launching point, we conducted a broad sweep of research material from such credible sources as Deloitte, Ernst & Young, and KMPG as well as credible secondary sources such as Consumer Reports, Business Insider, and Forbes (which often contain details of studies that are not otherwise released to the public). The new approach failed to yield any useful data that had not already been uncovered, so we expanded to even less specialized sources, though still those with a focus on home decor, appliances, or the businesses that serve either. This yielded only a few additional points to our findings, mostly in the form of additional context. This remained the case even when we expanded the range of our research to include sources older than our usual two-year cutoff.

With the utter lack of useful information frustrating our efforts, we circled back and instead focused on understanding why no research had (apparently) been conducted on the consumer journey in "distress purchases" of major appliances. We revisited our existing sources and attempted to corroborate our hypotheses from other credible articles and/or white papers. Where we could neither confirm nor deny our theory from the existing information, we have striven to separate our speculation from our data in our introduction and findings above.

Ultimately, we do not believe that our research is lacking due to pertinent data being hidden behind paywalls or in corporate databases, but rather that there is simply no significant difference in the purchase journey of a major appliance in cases where the purchase is forced by circumstances rather than planned.
Part
03
of five
Part
03

Major Appliances - Showrooming and Webrooming

Our research found that webrooming appears to have more of an impact than showrooming on consumers' major appliance purchase journeys. Our research also found that most consumers purchase major appliances from big box retailers, despite their less-than-favorable perceptions of those retailers.

Findings

1. Role of Showrooming & Webrooming

  • Just under one-third (31%) of consumers who purchase "a major appliance online . . . check out products at a walk-in store first, a practice called showrooming."
  • We reasonably assumed that "major appliances" referred to major laundry and kitchen appliances because a different version of that same report from the same source listed the major appliances included therein as washing machines, dryers, refrigerators, large cooking appliances (ovens, cooktops, ranges, and "over-the-counter microwaves"), and dishwashers.
  • Over 30% of consumers who purchase "a major appliance from the websites of [big-box retailers] Best Buy, Home Depot, and Lowe’s go to a physical showroom first."
  • The percent of major appliances sold online increased to 15% in 2018. For reference, that statistic was 11% back in 2015.
  • Webrooming appears to have more of an impact on major appliance purchases compared to showrooming, as approximately 80% (4/5) of "major- and small-appliance shoppers use the internet to do things such as research their product by checking prices and reading reviews."
  • With regard to webrooming, approximately 70% "of small- and major-appliance shoppers who use the internet while shopping go to a retailer’s website before making a purchase at its store or website."

2. Perceptions of Big-Box Retailers vs. independent Retailers vs. Buying Direct

  • A Consumer Reports survey found that approximately 50% of sales of major home appliances were transacted through big-box retailers Home Depot and Lowes. Those major appliances pertain solely to major laundry and kitchen appliances because the report listed the major appliances referenced therein as including washing machines, dryers, refrigerators, large cooking appliances (ovens, cooktops, ranges, and "over-the-counter microwaves"), and dishwashers.
  • What's more, approximately 20% of sales of major home appliances were transacted through other big-box retailers Best Buy and Sears. We determined that 20% figure because the report stated that Home Depot and Lowes constitute 50% of such sales and when Best Buy and Sears are added to that group, it equates to a 70% market share among those four big-box retailers collectively.
  • Consumers have a less-than-positive perception of big-box retailers Lowes, Home Depot, Sears, and Best Buy with regard to large appliance shopping, as those retailers received mediocre to poor satisfaction ratings from consumers for factors such as service, price, and selection. In fact, consumers' satisfaction ratings about those big-box retailers were described as "middling . . . or worse."

Your Research Team Applied the Following Strategy:

In looking for insights about (1) the role of showrooming and webrooming and (2) perceptions of big-box retailers versus independent retailers versus buying directly, we reviewed numerous sources. The best sources we found were results from consumers surveys conducted by the very credible source Consumer Reports. The reason we didn't find more relevant sources is because the other sources we came across had information that was either global in scope or wasn't specific to large kitchen and/or laundry appliances. In fact, most of the sources used the term "appliances" but then didn't specify what types of appliances, so we couldn't use that information due to a lack of necessary details. Thus, the limited number of relevant sources that we found is not indicative whatsoever of the large quantity of sources we reviewed in researching this topic. We conducted very thorough research on this subject and the research findings included above constitute the best information that we could find on this topic.
Part
04
of five
Part
04

Insights and Trends - Purchasing Behaviors of Consumers: Large Appliances

The standard consumer journey in the purchase of a major appliance is typically divided into five stages: research, shopping, maintenance, customer service, and review. These stages are well-understood within the industry and do not appear to be changing. However, there are some trends within that journey, such as the increasing importance of social media, more desire to match the appliance to the room, a slow shift in the direction of online ordering, and the interplay between a desire for new technology and the desire for the best possible price.

SOCIAL MEDIA IN THE CUSTOMER JOURNEY

Social media has become a key component in the customer journey, which comprises the stages of research, shopping, maintenance, customer service, and review (as attested in multiple studies). According to research from Deloitte, social media usage varies at different stages of the journey:

  • Research (33%) — At this stage, a consumer begins researching brands and features, often asking for advice on social media and reviewing blogs.
  • Shopping (19%) — Consumers still prefer buying major appliances from brick-and-mortar stores and value informed staff.
  • Maintenance (13%) — Consumers are often reluctant to call a repair service due to the potential cost and failure to fix the problem, and turn to forums and YouTube to find a DIY solution.
  • Customer Service (13%) — Consumers often complain of difficulties reaching knowledgeable staff on social media.
  • Recommend (22%) — Consumers share their experiences, both positive and negative, on social media.

Since consumers spend most of their social media time in their journey in research and recommendations, Deloitte recommended to their client, an unnamed "large appliance manufacturer," that they focus on relieving pain points at those particular stages.

  • In the research and shopping phases, brand perception factors extremely heavily into the purchase decision.
  • By the maintenance phase, the customer's emotional experience and brand perception are about at parity in terms of the customer's emotions towards the company.
  • This is key because the maintenance phase is "where the customer service relationship most often broke down," as consumers experience difficulty and frustration in getting the store or customer support service line to help with their problem.
  • Over the customer service phase, brand perception rapidly drops off until only the customer's emotional experience counts at the review phase.
  • The review phase, of course, becomes the starting point for another consumer's purchase journey.

MATCHING THE KITCHEN SPACE

  • A major part of the purchase journey is determining what size and design of appliance will best complement the room (obviously more of a concern with kitchen appliances than for the laundry room).
  • This is particularly important for the refrigerator, which is the largest appliance in the kitchen.
  • Consequently, the customer may spend a significant amount of time researching refrigerators and other kitchen appliances in terms of appearance rather than performance, consulting home decor sites and blogs for ideas.
  • We hypothesize that this is why online purchases in appliances are growing at a relatively slow pace (see below).

ONLINE VS BRICK-AND-MORTAR

  • The vast majority of major appliances (85%) are still purchased in brick-and-mortar stores, compared to 89% four years ago.
  • For comparison, appliances and household goods in general see a 36% online purchase rate, which consumers surveyed suggest could go up to 39% over the next year.
  • However, this is far from universal: Costco, for example, sees 85% of its major appliance sales via its online channels and only 15% from its physical stores, while Abt gets 28% of its sales online.
  • While in-store purchases are the most common, 87% of consumers research online before making a major appliance purchase.
    • One Deloitte survey suggests that "$.56 of every dollar spent in-store in 2016 was influenced by digital — up from $.14 in 2013" (we were unable to locate a more recent follow-up survey).
    • Purchase decisions are made very quickly; 48% of consumers buy an appliance within a week of starting their online research.
  • While only half of consumers know what brand of appliance they want when they begin their online research, 63% have already picked out the retail store they intend to purchase from.

NEW TECHNOLOGY

  • Manufacturers anticipate consumers desire for smart technology and the Internet-of-Things (IoT) technology to be embedded in their major appliances, as demonstrated in the 2018 Consumer Electronics Show (CES) emphasis in this area.
  • However, adoption of smart and IoT major appliances has been slow due to their high cost and long operational cycles. In short, consumers are not rushing to replace their existing refrigerators or washer/dryers with smart appliances, though demand is expected to grow as existing appliances wear out.
  • Essentially, manufacturers are attempting to anticipate and even create trends in the consumer journey based on these new technologies, e.g.:
    • Smart display panels on refrigerators connected to sensors both within and without the appliance and digital assistants already within the home (e.g., Google or Alexa).
    • Smart ovens with sensors that cut off heat and alert the owner when a dish has reached the desired temperature.
    • Washing machines that anticipate the types of loads to be washed; for example, which anticipates a sports-wear wash cycle after a gym appointment in one's calendar app.

THE PRICE IS RIGHT

However, as previously noted, consumers are slow to upgrade their major appliances to adopt these new technologies. Ultimately, that reluctance seems to come down to cost:

  • The price of an appliance is the single greatest determinator in the consumer's choice in where to buy their appliance.
  • Retailers are often willing to accommodate haggling, with 3/4ths of consumers and 60% of online consumers who haggle saving an average of $97 on their purchases:
    • 30% saved by buying more than one appliance at a time.
    • Almost 30% were able to negotiate by researching competitors' prices online (often in the store).
    • 14% saved simply by asking.

RESEARCH STRATEGY

We began our research by building on the data captured in our early research and seeking industry reports that might provide useful insights into the trends in customer journeys for kitchen and laundry appliances. While this resulted in the discovery of numerous salient details, there was little outside of a slow and, thus far, minority shift towards online ordering that could be considered a trend per se. We hypothesize the reason to be that appliances have a very long operational life, so determining trends in the sense of changes in the "average" purchase journey is difficult, and it is even possible that there are few changes to speak of.

However, not content with providing a mostly-static picture, we expanded our research criteria to include sources older than our usual two-year cutoff in the hopes of detecting changes from older sources. While this yielded an older report with some extremely useful observations about the purchase journey which helped to contextualize our existing findings and provided the structure to our report.

We expanded again to include less-reliable sources such as home decor articles and the websites of companies like Whirlpool and retailers such as Sam's Club. In the end, we found these to be largely useless to our purpose; where these companies speak of "trends," they refer to aesthetic and technological trends rather than publicizing whatever data they have gathered about their own customers' habits and journeys. We hypothesize that they see no advantage in giving away a competitive advantage in the form of their internal data.

As a result of the limitations of the data and the relative uniformity in the available sources on the major appliance purchase journey, we are unable to identify companies "leaning" into a trend.
Part
05
of five
Part
05

Demographics - Consumers Purchasing Major Appliances

Generation Xers are the most likely consumers that are purchasing major (large kitchen and laundry) appliances. They are the most likely group buying "high-end appliances."

INCOME LEVEL

  • Generation Xers are more likely than other generations to be buying high-end home appliances. They enjoy the luxury to choose what they want. Unlike millennials, they are most likely opting for large cooking appliances in the "six-burner chef's" range.
  • Gen X currently accounts for about 25% of the United States population. But they also account for 31% of the entire income of the United States. Their average annual salary of an individual in this group is $51,000, which a stable middle-class income in most parts of the country. In two-person income households where Gen Xers live, the average household income is $93,000.

AGE

  • Most empty nesters (Gen Xers) have attained a point in life sufficient to spend on high-end home appliances.
  • Generation Xers were born between 1965 and 1980. They are currently aged between 54 and 39 years, with the calculated average age of 47.

GENDER

  • We have assumed that Gen Xers who are most likely to buy large kitchen and laundry appliances are female.
  • For all newborn through age 36 in the United States, there are males than females. For all generations older than 36, there are more females than male. With the calculated average age of 47, there are more female Gen Xers in the United States.

EDUCATIONAL LEVEL

  • Several studies suggest that Generation Xers are most likely to be the ones purchasing large luxury home appliances.
  • As of 2001, 13% of Gen Xers had less than high school graduate education, 29% had a bachelors degree, 28% had some college degree, and 30% were high school graduates.

MARITAL STATUS

GEOGRAPHICAL DATA

  • Generation Xers who are most likely purchasing luxury/large home appliances are also more likely to be living in urban areas.
  • Millennials have "lower urbanization rates" when compared to Gen Xers, who are more likely living in urban areas.

MEDIA HABIT

  • Generation X is the most likely generation purchasing large kitchen and laundry appliances and other large home appliances.
  • Generation X have the habit of reading newspapers, magazines, listening to the radio, and watching TV (they watch about 165 hours worth of TV every month). However, they are digitally savvy and use about 7 hours every week surfing through Facebook.

RESEARCH STRATEGY

The research reviewed roomscaping, room design, and kitchen design/modeling publications such as Roomscapes Inc., for the demographics of consumers that are purchasing major home appliances. The study investigated those buying large kitchen and laundry appliances such as refrigeration, cooking, dishwashers, and laundry, etc. The study investigated their age, gender, income level, educational level, etc. This strategy disclosed that baby boomers and Gen Xers are most likely the ones buying "high-end appliances." It also revealed that larger appliances don't make sense to millennials and they won't usually buy them.

The research also reviewed credible home furnishing blogs such as MicroD Inc., for generational trends related to those buying large furniture and appliances. The income and earning of the interest group (Gen X)were also investigated. There were no insights specific to appliances. However, MicroD Inc web revealed that Xers are buying bigger furniture as well as newer homes. They need larger furniture to fill their home space (we assumed these larger pieces of furniture include luxury/large kitchen and laundry appliances). This strategy uncovered the income level of generation X.

A plethora of other resources all pointed to generation X as the most likely generation buying luxury home appliances such as big burners/cookers, large refrigerators, etc. The study identified Gen Xers as an interest group and has provided their demographics to suite those buying major appliances.
Sources
Sources

From Part 05
Quotes
  • "Consumers are increasingly gravitating towards RVs — many of which now boast amenities like large refrigerators, televisions and Wi-Fi — as ways to live life, not just camp, Martin said. “It’s this change of lifestyle that you can use an RV to not just go to a campground, but go to a kid’s game for baseball, soccer, lacrosse, concerts,” the CEO said. “It’s a lifestyle piece.”"
  • "CEO of RV maker Thor Industries attributes stock’s 13% rise to younger buyers, ‘changing lifestyle’"
  • "Consumers are increasingly gravitating towards RVs — many of which now boast amenities like large refrigerators, televisions and Wi-Fi — as ways to live life, not just camp, Martin said."
Quotes
  • "Most empty nesters have reached a point in life where they can splurge on high-end appliances,” says Lisa about the buying patterns of Boomers and Gen X-ers. “They have the luxury of choosing what they really want,” she adds"
  • "Age-Appropriate Appliances: Choices often depend on where one is in life Odd choice for a title, isn’t it? What exactly is an “age-appropriate appliance”? Perhaps “stage-appropriate” is a more accurate description, as in stage of life, when describing what our clients are looking for when choosing appliances."
  • "Does a millennial living in a condo in Boston want, or need, a six-burner chef’s range? Probably not. Or does an empty nester nearing retirement age want smart appliances they’re able to control from their iPhone or MacBook Pro? Maybe; it depends on how technologically savvy they are. We checked in with Lisa Lally, a designer at our South Shore kitchen and bath showroom, for her take on what are considered “must-haves” when it comes to appliances."
  • "For millennials living in the city, in an apartment or condo, larger appliances just don’t make sense, especially if they dine out often or tend to rely on to-go food or delivery. Large, luxury appliances may not fit into their home, or lifestyle, so they opt for compact refrigerators and narrow dishwashers"
Quotes
  • "Gen X wants to enjoy the beautiful home and life that hard work affords them. And, historically, they’re also not afraid of “putting it on plastic” versus saving for what they want, although that has changed a bit over the last 5 to 10 years. When it comes to home furnishings, it may seem that selling to this generation is a piece of cake. But there’s probably a lot you don’t know about this generation. For example, they often have the money to spend"
  • "Gen X currently only makes up about 25% of the US population. But they make up 31% of the income. Their average individual annual salary is $51,000, which is solidly middle class in most of the country. Among two-person income households, the average is $93,000. This is a go-getter generation that wants it now. And they’re willing to do what it takes."
  • "There are only around 79 million Xers, compared to 80 million Boomers and 88 million Millennials. But still, Gen X leads the way in new home purchases. Despite the supposed tiny house trend, Xers are still buying bigger and newer homes that need large furniture to fill that space. 4 out of 10 new construction homes were purchased by Gen X last year."
Quotes
  • "Generation X can be reached in various ways, as they use both online media and traditional channels, such as email and television."