CHICAGO (McClatchy) — After a quarter century with the same countertops and cabinets in their Glen Ellyn home, the Cook family decided it was time for a change.
Many changes, actually — among them a full lineup of new appliances.
“This is the first stop, but it won’t be the only one,” said Tracey Cook, 49, while her family browsed last month at a Lowe’s in Carol Stream.
In years past, Sears would likely have been the first stop for families like the Cooks. The chain — aided by its trusted Kenmore brand — long dominated sales of appliances like refrigerators, ranges, washers and dryers. But at a time when major appliances are seeing rapid sales growth and reliably drawing shoppers into bricks-and-mortar stores, the struggling retailer’s hold on the category has slipped.
Big-box specialty chains like Home Depot, Lowe’s and Best Buy have been winning over consumers, and even J.C. Penney is bringing major appliances back to stores in a bid to win sales from its department store rival and frequent mall neighbor.
But Dean Schwartz, who oversees Sears’ appliances business as president of hardlines, said the company isn’t shrinking quietly.
“We have to make sure we’re doing things to understand why we’re not (on top) and either get back or protect where we are,” Schwartz said.
Demographic trends are behind the growing sales of major appliances. Millennials are reaching ages where they’re buying their first homes, while older generations are becoming empty nesters or retiring, changes often accompanied by a switch to a smaller home, a long-distance move or a remodel.
“The number of bodies hitting these key life moments is growing,” said Joe Derochowski, home industry analyst with The NPD Group.
Even better, from a retailer’s perspective: higher-end models are doing particularly well in a category that usually has thin profit margins, said Bob Hoyler, a research analyst at Euromonitor. Spending on major consumer appliances in the U.S. rose 46 percent between 2012 and 2017 — well ahead of the 26 percent rise in the number of appliances purchased, according to Euromonitor.
Manufacturers have invested in better aesthetics and more technology, like “smart” washing machines that will send a smartphone alert when the spin cycle is done. Both design and gadgetry can bump up prices.
As the housing market has rebounded from the recession of a decade ago, much of the growth has come from higher-end homes, which should also spur sales of fancier appliances, Hoyler said. Mansion builders are unlikely to skimp on those finishing touches, and consumers priced out of expensive new homes might compromise by renovating and upgrading to midmarket, or “mass luxury,” models.
Retailers with a bricks-and-mortar presence also benefit from the fact that most shoppers — like the Cooks, who scouted products online before checking out top contenders at Lowe’s — still want to see large appliances in person before buying.
But consumers’ preferred destinations for those purchases have been shifting.
In 2012, Sears and Sears Hometown together racked up 30.5 percent of dollars U.S. consumers spent on major appliances, according to Louisville, Ky.-based research firm Stevenson TraQline — almost 12 percentage points more than runner-up Lowe’s.
But last year, Lowe’s overtook the Sears chains for the first time, winning 22.6 percent of consumers’ major appliance dollars.
Stevenson TraQline combined Sears and Sears Hometown in its consumer survey data because shoppers don’t reliably distinguish between the two chains, which separated in a 2012 spinoff. If the chains are considered separately and sales to businesses, such as rental property managers, are included, Sears lost the top perch in 2013 and in 2016 slipped to third, behind Home Depot, according to Twice, a consumer electronics trade publication that used Stevenson TraQline data.
Sears and Sears Hometown still have a sizable share of the major appliances market, accounting for 19.4 percent of consumer dollars spent on items like refrigerators, washers and dryers in 2017, second only to Lowe’s, according to Stevenson TraQline.
But the category isn’t immune to the bigger challenges facing Sears Holdings Corp., which has lost more than $10.4 billion since 2011 and continues to struggle to turn around years of sliding sales and win back shoppers. It has closed hundreds of Sears and Kmart stores in an effort to stem the red ink and has said it expects to shutter 166 more in the first four months of this year.
While Sears’ share of the appliance market has been shrinking, Lowe’s, Home Depot and Best Buy are growing their shares. Consumers buying appliances often need more than just a new refrigerator, aiding retailers that can help with everything a shopper needs in a “life moment” like a renovation, Derochowski said.
Lowe’s attributes its sales growth to the appliance “suites” it has added to its stores, which show customers how a coordinating set of appliances might look in a kitchen, Rob Posthauer, the North Carolina-based chain’s appliances merchandising vice president, said in an email. Since most customers start shopping for major appliances online, Lowe’s also has made it easier to learn about products online, with product videos, 360-degree views and better search capabilities, he said.
It’s not just big-box chains that are fighting for a bigger share of the appliance market. In 2016, J.C. Penney brought major appliances back into stores after a three-decade hiatus. Today, nearly 600 of the retailer’s approximately 875 stores have appliance showrooms, a move squarely aimed at Sears.
“We share over 400 malls with a struggling retailer that was once dominant in this category, and we have some in-house talent that understands this space really well,” J.C. Penney Chairman and CEO Marvin Ellison told investors last year.
The newcomer attracted a relatively tiny share of consumers’ major appliance dollars last year. But Penney’s 0.9 percent matched Amazon and Costco and outstripped Menard’s, Walmart and Target, according to Stevenson TraQline.
“The consumer has a lot of choices,” Sears’ Schwartz said. “As our competitors do what they do, we just have to make sure we provide our members with the right value offering and differentiate ourselves with better value, experience and products.”
That means making it easier to shop online and connect shoppers to delivery and repair services as well as investing in the Kenmore brand, Schwartz said.
Until recently, most Kenmore products were only available at Sears. Now you can buy Kenmore appliances on Amazon nationwide, though Sears still has a broader selection. Sears is also investing in developing smart Kenmore appliances.
Yolanda Powledge, 46, noticed the extra technology while shopping last month at the Sears in Stratford Square Mall in Bloomingdale.
“It’s supposed to be better and more efficient, but it looks different than what I grew up with,” said Powledge, who plans to upgrade all the appliances in the home she’s moving to in Crest Hill. She came to Sears because she heard appliances were on sale. But a $2,879 GE refrigerator with a hot water dispenser prompted sticker shock.
With Kenmore products, Sears typically bundles “smart” features with other perks, like faster washing or drying, so that when customers trade up they don’t feel like they’re only paying for extra tech, Schwartz said. The company wouldn’t be investing in high-tech products if customers weren’t interested, he said.
Sears is also experimenting with smaller, appliance-focused stores that give it a way to keep a presence in markets where it has closed traditional stores or enter growing communities where it hasn’t had a presence.
The first opened in Fort Collins, Colo., in 2016. Since then, three more have opened, also stocking mattresses. Sears also has been experimenting with a slightly broader product selection.
“When people see Sears on the door, they expect to be able to see some things, like Craftsman (tools),” Schwartz said.
Sears “definitely sees them as an expansion opportunity” but also wants to take the time to learn from the early stores, he said.
Sears’ slide from the top spot means it has the “biggest target on its back” among companies looking to increase major appliance sales, like J.C. Penney, said Hoyler, of Euromonitor.
But while he says Penney’s push to win sales from Sears is likely a smart call in the short term, he’s skeptical consumers will abandon the big-box chains and go back to buying washers and dryers at the mall.
“I don’t think this is going to be the magic bullet that saves department stores,” Hoyler said.