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Welcome to Gourmet Insider’s 2011 State of the Industry report. This exclusive annual statistical survey of the gourmethousewares industry is our effort to provide readers with key benchmarks for measuring their stores’ performance.
At a time when the economy has forced a number of stores to close their doors and is challenging most to grow or even maintain sales, the ability to offer the right products, in the right quantity, has never been more important.
This year’s study reveals key changes in consumer purchase patterns and correspondingly in the adjustments that retail store operators are having to make. One of the key findings is the challenge that many stores are facing in the sale of high-ticket housewares classifications, most notably cookware and cutlery. Both categories serve as flagship offerings in gourmethousewares stores, as integral to each store’s identity as the name over the door.
However, with many consumers still feeling the recession’s pinch, the lure of higher ticket products has been somewhat dimmed and retailers are being challenged to work harder simply to maintain sales at 2009 levels. Many of those surveyed have reported facing challenges in their better cookware and cutlery business, but interestingly the approaches being taken to those two challenges differ significantly.
While many say they have responded to the cookware challenge by cutting back allocated space to focus on lower ticket, faster turning classifications— both gadgets and bakeware appear to be beneficiaries— the approach to merchandising cutlery appears just the reverse. A significant number of stores say they are increasing their cutlery assortment rather than paring it back.
The reason for this shift appears to be two-fold, with both factors related to product. Growing consumer awareness of ceramic cutlery, coupled with an increasing breadth of available brand and product offerings, has given stores the ability to merchandise sought-after product at pricepoints that are slightly below traditional cutlery offerings. At the same time, the number of products and brands available in conventional cutlery also continues to expand.
Conversely, the high-end cookware business, at least within the gourmet channel, appears to be seeing a narrowing of supplier activity aimed at driving the category. Those suppliers who have committed to the channel are doing all the right things to drive their business; supporting demonstrations, providing training and developing meaningfully differentiated new products. However, the number of suppliers who are actively targeting the segment has narrowed in recent years.
At least part of this appears to be the result of increasing interest in celebrity chef brands. While the number of celebrity chef brands has grown, the nature of such licensing arrangements typically entails a higher volume business model than the independent gourmet channel can support.
While some stores will take their chances with select celebrity brands, merchandising them for little or no profit margin rather than let shoppers migrate to the local big box, most have opted for more traditional high-end brands. As the number of suppliers pursuing celebrity chef brands has increased, the dollars and companies available to support independent gourmet store business has tightened.
Venerable brands that once built their reputation on gourmet channel sales have grown to the point of needing higher volume retail channels in order to support growth. Put simply, achieving a 5% increase on $25 million in sales is an exponential difference from delivering the same percentage growth on $150 or $200 million in annual sales. The former can be achieved within the cozy confines of independent retail channels, the latter requires selling high-volume big box retailers.
Nowhere is this more evident than in anodized cookware, which was once the mainstay of the gourmethousewares channel and today is the near exclusive province of chain store giants. Other materials and brands have emerged to fill the gap.
To some extent that dynamic underpins cookware’s performance in this year’s survey. The category is undergoing an evolution as established brands assess their commitment to the channel and retailers assess those brands. As this situation evolves, we will continue to track its evolution in this study, which will continue to expand to provide a more detailed picture of the industry.