By Zeba Fatima
A growing number of retailers are trying to lure shoppers into stores with restaurant-grade stove tops and ruby-red washing machines. Store chains are escalating their competition to sell appliances because many shoppers still prefer to buy the bulky products in person, making them somewhat immune from showrooming, the trend of consumers trying out merchandise in shops only to purchase it online.
Rivals also perceive opportunity in the struggles of Sears, long the U.S. leader in appliances, which has closed more than 100 large stores this year.
Home Depot is expanding the space devoted to appliances in some of its stores to carry dishwashers and ovens from Whirlpool and Electrolux, popular brands long carried by rivals Sears and Lowe’s.
Best Buy is offering higher-end brands of stoves and refrigerators, such as Viking and Thermador, in more stores in hopes of offsetting slumping sales of TV sets and computers.
Wal-Mart Stores has been testing selling refrigerators and washing machines in 45 Texas stores for the last year as it looks for new ways to increase sales in its cavernous U.S. Supercenters.
The added competition could bode well for consumers if retailers resort to slashing prices to move merchandise. But it could also further commoditize appliance sales, similar to what occurred with flat-screen TVs, eroding the higher profit margins that helped attract retailers in the first place.
Sears remains the largest major appliance seller in the U.S., but its share of all U.S. appliance purchases has dropped to 31% from 40% a decade ago.
Goldman Sachs recently estimated that sales of large appliances will fall 1% this year. While retailers typically offer moderate discounts on appliances to drive traffic to their stores, the companies say they are still able to turn profits on the sales.
30 Best Buy stores in the country now house an expanded appliance area marketed under the name Pacific Sales, a higher-end appliance retailer Best Buy bought six years ago. It is planning similar expansions in more stores this year.
Sales of large appliances currently make up only 6% of Home Depot’s revenue compared with 11% at Lowe’s, according to Goldman Sachs. So in a bid to expand its share, Home Depot is planning to offer the enhanced appliance assortments in 100 of its approximately 2,000 U.S. stores as well as online.
To limit its capital spending, Home Depot won’t stock all the appliances in its warehouses but get them through a special order arrangement with manufacturers, who will deliver the products to Home Depot’s recently expanded network of distribution centers.
