Is There an Expensive Washing Machine in Your Future?

LG, Others Get in Game as More Consumers Shell Out for Pricier Products

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The battle to be king of the kitchen doesn't only rage in a plethora of reality TV shows: It's also ramping up in the high-end-appliance arena.
With its 'Upgrade' campaign, LG is urging consumers to replace their still-functioning appliances with high-end models.
With its 'Upgrade' campaign, LG is urging consumers to replace their still-functioning appliances with high-end models.

Brands such as Sub-Zero, Miele and Viking have long ruled the upscale kitchens of America. But traditional so-called white-goods manufacturers such as Whirlpool and GE, along with consumer-electronics companies such as LG and Samsung, are now also spying opportunity in pricier products. Thanks to savvy marketing, the upscale segment of the category is thriving even as the middle and low segments stall due to economic and housing squeezes.

According to NPD Group, high-end appliances are growing at double the rate of their lower-priced brethren. Major-appliance sales in total are up 15% in number of units since 2003, but the most expensive -- those valued at $1,500 and higher -- have jumped 30% during the same time period. High-end appliances made up more than 8% of the total $22.4 billion spent on major appliances in all of 2006.

Going upscale
LG, well-known for its consumer electronics and phones in the U.S., has sold appliances here for the past five years; however, only in the last two has it focused on pushing higher-end products. And it's succeeding, said John Taylor, VP at LG Electronics USA, enjoying double-digit growth on an annual basis. "We really don't participate in the commodity part of the business," said Mr. Taylor. "I guess you'd term LG as a mass-market premium brand."

LG last week began running a $20 million effort from Y&R's BrandBuzz, New York, around the concept "Upgrade" -- as in, upgrade your old still-useable-but-rickety-and-unattractive appliances to the sleek LG premium line in colors such as wild cherry and pearl gray.

Mr. Taylor said that while there is wide range of appliance prices today from about $1,500 to $30,000, LG is targeting a range of $6,000-$12,000 for its premium kitchen package.

Jill Notini, director-communications and marketing for the Association of Home Appliance Makers said the No. 1 reason people replace appliances is because they conked out, but the second-most-cited reason is they've decided to upgrade to energy-efficient appliances before the old ones expire. That's up to 25% from 14% in purchases made five years ago.

'Insulated' from market
For marketers, it's an attractive category that seems to almost dovetail well with the housing and credit crunch -- because many consumers who can't sell remodel instead. "I wouldn't say they're recession-proof, but it is certainly insulated from wild market gyrations," said Paul Leuthe, corporate marketing manager for Sub-Zero. "We had robust growth after 2001. ... People were taking their equity and putting us in their homes."

The average price of a dishwasher, for example, has increased 10% during the past 10 years while the selling price of a washing machine has increased 16% in just the past few years. And while front-loading laundry machines make up only 30% of unit sales, they account for 50% of the dollar volume, Mr. Taylor said. The Luxury Home Council 2007 survey ranked high-end appliances as one of the top five most-desired amenities in luxury homes, after gourmet kitchens, master-bedroom suites and specialty construction details.

Sub-Zero, which owns the Wolf cooking brand, has marketed to upscale-refrigeration buyers via mass media for years and is promoting its refrigeration products with a "respect the food" theme.

"We're not about conspicuous consumption or very grand homes," Mr. Leuthe said. "But we are really into the substance behind the form, the function. We take care of your food."

Consumers want fridges that cool -- and have color

The appliance market used to be known as "white goods." Not anymore.

Refrigerators, ranges and the washing machines and the like were once white, perched in some unlovely corner of the kitchen or basement and were utilitarian. But today, they are design-elegant in a multitude of colors meant to be seen.

One in 10 appliances is now in gleaming stainless steel, up from 3% five years ago, according to the Association of Home Appliance Manufacturers. Nonwhite major home appliances accounted for more than 15% of total worldwide shipments in 2006, concentrated in the high-end of the market, according to a recent study by IMS Research. But that number is expected to grow to almost 25% of total shipments by 2011.

"It's part of the consumer trend for customization," said Jill Notini, director-communications and marketing for AHAM. "It's also a reflection of the fact that the kitchen is more of an entertainment area, and with more open floorplans, more visible."

And today, that Kitchen Aid says something about you. "Appliances used to be purely functional," noted Ms. Notini. "Now they are reflection of people's style."
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