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State of the Industry Report

The gourmet housewares industry had a rough year in the wake of a difficult 2008 holiday selling season. No fewer than 20 retail operations in the industry shut their doors over the last year.
However, for the majority of stores that have survived, if not thrived, the economy is inching back and store owners are hopeful.
While many consumers are back in the kitchen, eating and entertaining at home instead of spending precious discretionary dollars on pricey restaurant meals, the majority of stores reported flat sales in 2009, and expressed hope that holiday sales would boost numbers to bring bottom lines back to 2008 levels. The stores that had successful years, growing in sales, space, staff and merchandise, are hoping their business will continue to flourish when the economy bounces back.
All this and more is revealed in the research conducted by Gourmet Insider® for the 2010 State of the Industry Report. The study, which was complied through surveys with independent gourmet housewares store owners and managers, gives store owners the opportunity to compare their stores’ performance with reliable metrics of stores across the country.
Breakdowns of the key categories in the segment show the estimated dollar sales, rank in allocated space, rank in contribution to gross sales and what percentage each category contributes to gross sales. These statistics offer gourmet store owners different perspectives and insight into how other stores treat these major categories, and will hopefully help them measure their stores’ performance and help maximize their business.

While tabletop’s dollar sales saw a slight decline, gourmet store owners are recognizing that functional, versatile, decorative serving pieces are part of a growth category, generating traffic and sales as gift items more than kitchenware.
In the area of more traditional tabletop items— flatware, place settings and serveware— gourmet stores can leverage the consistent bridal market by providing registering brides-to-be with a full offering of housewares in a more intimate setting than a department store. Here, a small range of high-end, traditional collections works well, according to industry insiders.

Though many stores include aprons, dish towels and table linens in their inventories, textiles is a growth area for stores looking to increase add-on sales with a category that takes up relatively little floor space and moves well, according to gourmet store owners.
As with tabletop, seasonal items do well in this category and are also a highly giftable item. From aprons and oven mitts to placemats, runners, napkins and more, holiday-themed items make up a large percentage of this category and cross-merchandise well with items in a
variety of categories, from tableware to bakeware to gadgets.

Cookware traditionally leads the pack in space allocation and is a major contributor to gross sales for nearly every store surveyed. Many store owners attribute this to the high-quality pieces sold in the gourmet channel and the educated salespeople on the floor that can help explain the differences between the various offerings.
Qualifying consumers— identifying their needs and zeroing in on their cooking styles— can make all the difference in their in-store experience, and a customer content with a high-investment purchase is more likely to be a repeat customer, according to gourmet insiders.
Survey respondents cited cookware as one of the areas they will most likely be expanding in the coming year, either in area or the number of products offered.
After the experimentation that followed the serge of single serve coffee makers and super-automatic espresso makers, independent gourmet kitchenware store owners said that beverage electrics remains a challenging category for them. Among the challenges with the category, some retailers cite heavy competition from big box, warehouse and online retailers as reasons for their low space allocation and the category’s low contribution to gross sales. Some say these challenges will lead to pared back electrcis assortments and expansion of the non-electric beverage category, including percolators, French presses and stovetop espresso makers.
Retailers who have been successful with the category have driven sales through demonstration and cross-merchandising. Sales education for associates is critical say store owners. Some further recommend including consumables, specifically coffees and filters, to help with add-on sales and to build repeat customers.

Cutlery’s vertical footprint allows it to make a high contribution to gross sales with a relatively low space allocation. While retailers
reported that 2009 sales remained relatively flat, the category’s popularity continues to grow largely due to the exposure of cutlery and knife skills on television cooking shows and in-store demonstrations.
Another contributor to the success of the cutlery category is the ability of educated sales associates to get the product in consumers’ hands, to let them find the handle and blade and type of knife that is most comfortable for them to use, and educate them on keeping the blade sharp. Add-on sales for cutlery— cutting boards, steels, hones, sharpeners, sheaths, blocks— although not included in the statistics for this category, are a way to increase overall dollars in a sale.

Often encompassing an entire wall, if not more than one, in any given gourmet kitchenware store, kitchen tools and gadgets can be difficult to compare in space with relation to the rest of any given store’s inventory. But given an economic environment in which people are afraid to spend money, tools are a low-risk investment that allows consumers to feel like they are indulging themselves without spending a lot. Ranking first in both allocated space as well as contribution to sales, higher-end kitchen tools and gadgets appeal to the knowledgeable consumer who wants to have the right tool for the right job, as well as the novice cook who can justify the lower pricepoint of kitchen tools in relation to some of the more expensive offerings in a gourmet kitchenware store.

The lower margins of food prep electrics makes it a challenging category for
gourmet housewares retailers. But retailers are committed to the category and to offering products that cannot be found in big box or broader retail channels.
Smaller offerings and tighter inventories of more meaningful food prep electrics products are becoming the norm, and many retailers said they shop this category the most critically, ensuring that their products are unique and really meet their consumers’ needs.

Bakeware is a meaningful category for gourmet kitchenware stores, offering a breadth of high-quality and specialty baking items that serious home bakers can’t easily find elsewhere. A number of stores reported that they had expanded their bakeware offerings or had plans to do so in 2010, based both on consumer request as well as the
variety of offerings in the marketplace. With trends in bakeware shapes as well as materials, this is an ever-changing category.

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