Leading vacuum cleaner manufacturers will be introducing products with new features during 1996. The consistency of new product introduction has caused vacuum cleaner sales to increase each year between 1992 and 1996. Deluxe features enable vacuum cleaner manufacturers to market the appliances at higher prices. Advertising is expected to increase dramatically in fall 1996.
A Persian cat sits on a staircase in the morning sun. Suddenly a violent sneeze sends an explosion of cat hair into the air, followed by furry fallout on the carpeted stairs. A voice-over reminds consumers that life is messy and a certain company's product can help clean it up.
This tongue-in-cheek spot is not only funny, but a good example of how far floor care vendors are willing to go to get consumers to buy vacs with new features. Leading vendors such as Hoover, Eureka, Royal Appliances and Bissell believe new features such as HEPA filtration detectors and noise reduction, with ongoing promotional support, will be the cat's meow this year.
"Significant opportunities exist in uprights with deluxe features that support deluxe price points," said Dave Gault, vice president of marketing at Hoover. "These features include such things as self-propelled, micro/HEPA filtration and embedded-dirt-finder systems. Stretch hoses and tool compartments are means of improving the tools-attached feature that has driven industry sources."
Bob Davis, vice president of sales and marketing for Ryobi Motor Products, agreed. "Everyone's looking for the next `tools on board.' That feature changed the upright category drastically over the past four to five years. This year, I've got several things on my list, including microfiltration."
Add to this, ongoing replacement sales - there are still millions of people who have uprights without tools on board - and a frenzy of advertising this fall, and the business be good, sources said.
"The vac people understand the business needs advertising support," said an East Coast retailer. He added that vac vendors are also very efficient at making floor care products, which gives them "plenty of money on the manufacturing end to support advertising,"
A West Coast retailer added, "Tools on board have become so common, manufacturers are loading more features into products. And that means there will be more promotions on television from manufacturers so there will be more consumer awareness. There will be so many products on television it could end up a free-for-all. Pity the poor retailer who has to decide."
But Cliff Wood, executive vice president of the Vacuum Cleaners Manufacturers Association (VCMA), noted it's that potent combination of product and advertising that keeps the floor care business on an upward swing.
"These people spend a lot of money on advertising and they have stepped that up substantially in recent years," Wood said. "And they're also big on product innovation and keep coming out with new items all the time. Whatever they can do to make a vac new and different, they do."
This response helps explain why the category has had its fourth consecutive year of increases in uprights, canisters and sticks. Last year the VC-MA reported 14.9 million uprights, canisters and stick vacs shipped to retail, up 5.8 percent from 14.1 shipped to retail in 1994; 12.8 million units were shipped in 1993; 12.4 million were shipped in 1992. Sources noted that last year's 14.9 million-unit market was bouyed by single-digit growth in uprights and double-digit growth in stick vacs, while canisters suffered from a double-digit decline.
Uprights shipped 10.4 million in 1995, up 5.8 percent from 9.9 million last year. Stick vacs grew 28.1 percent from 2.1 million in 1994 to 2.7 million this year. Coming off a strong 1994, however, canisters dropped 17.6 percent from 2 million in 1994 to 1.7 million in 1995.
Wood noted a large percentage of all households own more than one vacuum cleaner. "It's a huge replacement business," he said. "And people are using more than one vac in the house, depending on their needs. For wall-to-wall carpeted areas, they're using uprights and for bare floors they're using canisters and stick vacs."
The bulk of floor care sales are in uprights. And the upright business is even more competitive today since tools on board are 70 percent of the market. Last year, $79 and $99 were the opening price points for tools on board in uprights. Today, $69 - last year's promotional price point - is the opening price. One store has even gone as low as $66, though that is not common.
But most sources agreed there are more $79 and above uprights than $69 and lower floating around in the market.
Jim Holcomb, vice president of marketing and strategic planning at Royal Appliance, said prices for uprights with tools on board "have been drifting down" for two years, but now seem to have stabilized. "There's been a lot of activity under $100, but also a resurgence at $129 and up. I'm not sure of the net effect, but overall the whole industry has been pretty good."
Jim Krzeminski, vice president of sales at Bissell, agreed. "In general, we've seen prices fall and, there being lots more features at lower price points, but we're also starting to see from manufacturers new and different features that are taking the value up. There's a lot more imagination with meaningful features versus more amps or extra tools on board and this is how vendors are reaching the $150 and above price points."
He cited Bissell's own portable liftoff to its upright vac, Hoover's system for easily finding dirt and Fantom's HEPA filtration systems.
There is a great deal of interest in filtration systems, particularly HEPA, on the manufacturer side.
"There are all different types of filtration from microfiltration bags to multiple layers of filters before the air exist the machine, but HEPA filtration is the next step that floor care has to take," said Nick Varanakis, vice president of sales, United States, for Fantom Technologies. "The American public is much more in tune with indoor air quality and HEPA filtration fits into that trend."
Sources said Fantom introduced a model called the Fury, which has a suggested retail price of $249. This model, which can be promoted at $229, was sold into mass merchants in March and is said to have done well. Its original Fantom vac was featured on an infomercial at $299 and found at retail at $279.
But Fantom will have considerable competition by yearend from Eureka and Royal Appliance. Miele offers HEPA filtration as an option on its canisters.
"Filtration alone is playing an increased role in upright business," said a Hoover spokesperson. "It's not a feature with universal demand, such as on-board tools, but it is a very viable niche feature. From triple filtration soft bodies to micro bags and HEPA filters, we will see more promotion in this area."
The East Coast retailer agreed. "Filtration is emerging quickly. People are interested in clean air. It's been a building category with microfiltration bags. The next big deal will be HEPA filtration. I just began carrying the Fantom and it's done well on ad."
A mass merchant also carrying the Fantom said it had done well, but he has also brought in the Eureka piece with the HEPA filter, which he thinks will be the benchmark for the industry.
"If that's good, everyone will have one by the first quarter," said the mass merchant. "If it's not good, we'll find something else."
Could the "something else" be noise reduction?
Debra Block Labruna, product marketing manager at Sharp, said noise reduction is important to consumers. "When you vacuum, you don't want it to sound like you have a mac truck in your house," Labruna said. "You still want to watch TV and hear it as you're vacuuming."
John Hoppe, vice president of marketing at Eureka, agreed. "I think noise is a factor. People would prefer vacuum cleaners to be quieter."
But retailers said it's too early to tell if consumers will spend more for this feature. Another issue is how to demonstrate this feature since most retailers are in the mass format and they have no clerks nor any electrical outlets to turn the machine on to let consumers hear the noise level.
A West Coast retailer noted that right now, he didn't think noise reduction was a big issue. "Until vendors and retailers advertise it, it's sort of a non-issue."
And a mass merchant added that even if it does become an issue, "unless it's dramatic noise reduction, it won't make any difference. I saw a European piece Regina had in their booth at a show and, man, was it quiet. But does that mean the customer will step up and pay a few a few extra dollars for it? I don't think so."
If not noise reduction, then could dirt detectors be the ticket? Hoover has been very successful with its system that tells consumers where the carpet is dirty and where it's clean. And Panasonic's national marketing manager Jim Rogers said there is strong consumer interest in its products that offer this feature.
STICK VACS AND CANISTERS
While it remains to be seen which features emerge on top in uprights, sources said they feel comfortable predicting more powerful stick vacs at highly competitive prices will be a back half winner.
Some of the key reasons the business is growing include consumers purchasing different vacs for different tasks and the appeal of this lightweight and easy-to-use product. Hoover noted stick vacs work wen on bare floors and the amount of hard surfaces in homes has been increasing and represents over one-third of the floorcoverings sold in 1995.
"People are finding they have use for an additional vac in the home that's lightweight, easy to use and economical," said Hoppe of Eureka.
Lower prices of $19.99 and $29.99 have played a big role in increased sales. Eureka and White Westinghouse offer units at $19.99, which have proven to be very popular with consumers.
"At these prices, you don't need a family meeting to determine whether or not to spend $20 to $30, so people buy them without consulting others and they're a good gift item," Hoppe said.
Bruce Gold, president of White Westinghouse, said lower prices and consumer awareness of new uses have opened new channels of distribution. "If you go to Osco and Thrifty Payless, you'll see stick vacs there at $19.99. Typically you don't see floor care in these channels. If the product was $34.99, you'd never see it there."
However, while lower prices have been great for a surge in sales, Hoover pointed out that models over $39 still account for more than two-thirds of sales.
And Holcomb of Royal noted that while "Eureka has sold a bunch at $19.99, we do really well at $39 and so does Hoover from what we can see. So there seems to be business at all price points."
Unfortunately, full-size canisters have not fared as well as stick vacs. Straight canisters were down and within that there was a lot of low-priced merchandise.
Sources attributed this to wall-to-wall carpeting, which has reduced the need for a canister, and tools on board in uprights, which provide above-the-floor cleaning ability with adequate suction, a feature previously relegated exclusively to canisters.
But there is still a viable market for canisters in pockets around the U.S. such as the Northeast, where homes have more bare floors.
Gault of Hoover said, "Key retailers and channels show consumer demand still exists, particularly at key price points. When other market segment growth rates begin to subside, floor care retailers across all channels will again see incremental opportunity in the canister category.
"Straight suction models under $100 and power nozzle models at $199 and $299 are still key," he added. "Hoover is taking advantage of these opportunities with product offerings such as Hornet and Portapower [both straight suction models under $100] and with improved feature content in power-nozzle models at $199 and $299."
RETAIL OPPORTUNITIES
Full-size vacuum cleaners can be found in a variety of distribution channels, but the majority of growth is occurring in the mass market, according to industry sources.
HFN's State of the Industry report estimated 30 percent of all business in full-size vacuum cleaners is done in the mass market versus 29 percent the year before. Appliance stores also grew from 7 percent to 9 percent.
Sears has held its own at 15 percent of the market, department stores have lost a little ground, going from 12 percent to 10 percent share, so did door-to-door shopping, dropping to 6 percent from 7 percent last year.
Other segments, including warehouse clubs, mail order, independent vac shops and hardware home centers remained stable at 8 percent, 5 percent, 8 percent and 6 percent, respectively.
Gault of Hoover said most channels are increasing their vac assortment due largely to the opportunity that specific niche and segmentation strategies offer. Uprights at $300 are showing growth, but not at the expense of $99.
"The real challenge is optimizing an offering with a fixed amount of shelf space," Gault said. "Many retailers are finding real financial rewards in diversifying categories and price points rather than diversifying brands."
Hoppe of Eureka agreed. "I see more fine-tuning of retail space. The game plan is, put recognized brand items on the retail floor that are backed by national advertising. You just don't see a wide clutter of products on the floor. In today's market, it more economical to buy from a few select vendors."
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