Electrolux 2008 Annual Report Download - page 18

The Group’s strong position in appliances and vacuum cleaners in the US and Canada
was reinforced in 2008 through a major launch of Electrolux-branded appliances in the
premium segment.
Consumer Durables North America
Net sales for appliances in the US were in-line with the previous year,
in comparable currencies despite lower volumes. Operating income
declined as a result of higher costs for raw materials, costs related to
the launch of Electrolux for appliances in the premium segment, and
lower volumes.
Sales and operating income for vacuum cleaners declined due to
lower market demand.
Share of operating income
14%
31%
Share of sales
Consumer Durables North America’s share of sales and
operating income 2008
Market
In 2008, the market for core appliances in North America
amounted to approximately USD 19 billion, corresponding to
approximately SEK 155 billion. Demand declined substantially
during the year as a result of economic uncertainty. Demand in
the US has declined for ten quarters in a row. The largest decline
in demand during the year was for appliances for new homes.
Housing starts decreased, and renovations were postponed and
consumers turned to lower priced products. Traditionally, the higher-
price segments have been less affected by business cycles.
The North American market is more uniform than the European,
which has led to a relatively high level of consolidation among both
producers and retailers. Price increases during the year provided
some compensation to producers for higher material costs. In
light of the high transportation costs for appliances, Asian pro-
ducers have relatively small market shares. Competition is more
severe for vacuum cleaners.
The appliances sold in North America are often larger than those
in the rest of the world. For example, side-by-side refrigerators are
popular among North American consumers.
Retailers
Approximately 60% of all appliances in the US are sold through
four large retailers; Lowe’s, Sears, Home Depot and Best Buy.
Sears and Home Depot also have strong positions in Canada.
Vacuum cleaners are sold primarily through supermarkets. A large
share of retail sales are driven by campaigns.
Kitchen specialists such as those in Europe have only a small
share of the market. Kitchens are usually built by construction
companies, which also purchase appliances. Appliance produc-
ers have often focused marketing on such companies, instead of
on consumers. This situation is changing, and consumer interest
in appliances with attractive homogenous design is growing, as in
Europe.
Electrolux position
The Frigidaire brand has given the Group a strong position in the
North American mass market. Since 2004, the Electrolux ICON™
brand has given Electrolux a limited presence in the exclusive
super-premium segment. The major launch of Electrolux-branded
products, which started in April 2008, has enabled positioning of
the Group’s products in the more profitable premium segment.
These products have achieved good market acceptance among
both retailers and consumers.
Electrolux opened its first vacuum-cleaner plant in the US as
early as 1931. Today, most of the Group’s vacuum cleaners are
sold under the Eureka brand. However, following re-acquisition of
the Electrolux brand in 2000, a number of launches of innovative
Electrolux-branded vacuum cleaners have been implemented.
annual report 2008 | part 1 | business areas | consumer durables | north america
50
40
Million units
30
20
10
099 00 01 02 03 04 05 06 07 08
Net sales
Operating margin
10
8
6
4
2
0
06 0807
%
50,000
40,000
30,000
20,000
10,000
0
SEKm
Industry shipments of core
appliances in the US
decreased by 9.9% in 2008 in
comparison with 2007.
Demand in the US has
declined for ten quarters in a
row.
Net sales and operating margin Shipments of core appliances in US
14