White goods in Belgium; still a safe haven in turbulent times?

19 July 2010
Belgium, Major Domestic Appliances

The technical consumer goods market has undoubtedly experienced much change in recent years. In some instances, we could attribute the label of "revolutionary" evolutions with regards to some categories such as LCD/Plasma Televisions, Portable Car Navigation Devices, Portable Media Players and so on. There was however also a downside to this evolution: speeding up technological innovation has resulted in shorter life cycles and pressure within the supply chain. The most negative consequences for the industry was without a doubt the fierce price erosion that resulted from the continuous boost of new and improved products. A situation many retailers found tough to face.

Chart 1: Belgium Electro Total Growth Evolution
Click image to enlarge Fortunately the Belgian white goods sector (Major Domestic Appliances) has proved to be a ‘safe haven’ for retailers.

Growth figures for the last four years (see Chart 1) clearly demonstrate that neither Major or Small Domestic Appliances once ‘turned red’; not even during the crisis in 2008 which continued into 2009.

Chart 2: Belgium Electro Total Running Report
Click image to enlarge

Even more astonishing is the fact that total turnover for the sales of Major Domestic Appliances exceeded that of Consumer Electronics products (see Chart 2). An unprecedented event!

What lies beneath these positive evolutions for MDA?

The strong focus on ecological awareness that currently exists in several sectors has already been present for some time in the Major Domestic Appliances market and will be a strong growth catalyst again this year. Along with Refrigerators and Freezers continuously and increasingly becoming more energy efficient, the robust sales of Heat Pump Tumble Dryers in particular has also been notable. Growing by 54% in value terms (January-April 2010 compared to the same period last year), this type of dryer now accounts for 20.6% of the total turnover realised through sales of tumble dryers,  even reaching 24% in April. Considering the fact that heat pump dryers sell at an average of 991 euro, this makes the story even more astonishing. Percentages can sometimes be misleading, so to put this into context we can compare these figures with the French market. In France, almost four times as many tumble dryers are sold than in Belgium; when looking at 'heat pump dryers' only however, more units are sold in Belgium than in France!

Changes also occur in the consumers' washing behaviour; studies indicate that consumers – motivated by ecological and economical factors – try to reduce the number of times they use their washing machine. Purchase-wise we find the translation of this evolution in the heavily increased sales of seven kilogram and more capacity Washing Machines. Nowadays the latter represents 52% of total turnover compared to only 34% in the previous year. The highest turnover growth product-wise however is to be found with Cooker Hoods; up 8.6% compared to the first four months of 2009. Such an evolution is nowhere to be found in neighbouring countries: the very distinct preference of the Belgian consumer to opt for flat and discrete types of built-in hoods nowadays– mostly in the higher price basket – is repsonsible for this particularly positive trend.