While vacuum cleaner vendors are in disagreement on certain aspects of the hand vacuum market, they all concur the increased competition will make for an extremely interesting fourth quarter.
According to industry sources, between 60 percent and 70 percent of all hand vats sold annually are purchased during the holiday season.
While recent reports place the industry at 6.4 million units annually–for both corded and non-corded models–some vendors say the industry is actually between 8 million and 10 million units. At an average retail price of a $40 each, it amounts to between than $320 million and $400 million at retail annually– by conservative estimates. Between $200 million and $240 million comes during the holiday season.
Some vendors say this year should be slightly ahead of last year, due in part to increased promotional activity, advertising and competition in the floor-care industry.
Other vendors say the corded hand-vac market is growing at the expense of the cordless hand-vac market and that overall the market will be flat in terms of unit sales.
“The fourth quarter is always a good selling season for hand vacs,” said Dave Jones, president of Regina, the company that offers the corded Dirt Magnet hand vac.
“The corded hand-vac category continues to grow, but it’s growing at the expense of the cordless market. Overall hand vacs are not growing, so whatever growth you’ see in corded comes at the expense of the cordless market.”
Dancing with the Devil
While Royal Appliance’s Dirt Devil continues to dominate the corded hand-vac market, other vendors are starting to compete on features or on price.
Still, none of the larger players in the electric floor-care industry have been able to take a sizable chunk of Royal’s hand-vac market, said a competitive source.
“I think we’ve all engineered good products that are very competitive and in some cases better than Royal’s models,” said the source. “But no one is willing to spend the unbelievable amounts on advertising in the category that John Balch does. Whoever spends the most will make a go of it.”
“The amount of overall advertising you do helps to support your brand and will pay a dividend in the long run,” said John Balch, president and chief executive officer of Royal. “if this year is any repeat of past years we should sell a couple of more.”
“I really believe that the physical appearance of our unit has helped us the most,” Balch added. “One of my major accounts once told me that the unit looked old-fashioned and that connotes quality. Add to that the fact that it’s red and it works and you have yourself a winner.”
Recent reports of the industry being at approximately 6.4 million units annually are extremely conservative, said Balch. While industry sources said the numbers were “probably as accurate as they (the publication) could get them,” they also said the numbers could be skewed downward because Royal Appliance refuses to report its sales figures for hand vacs.
“This thing has got to be between 8 and 10 million units annually,” said Balch. “The total battery (cordless) market is about 3 million and I’d estimate the corded market is about 5 million on top of that. We don’t report official numbers, because all that would do is give the competition information.”
Balch agrees there has been a dramatic shift toward the corded hand vac, but he is also a staunch defender of the cordless market.
“There will always be a market for the cordless model and I don’t believe that will ever go away,” said Balch. “From a pure convenience standpoint–for the quick pickups–the cordless models are ideal.”
The Heat is On
While Royal continues to dominate, it is starting to feel some heat in the corded category from players like Black & Decker, Hoover and Eureka.
Black & Decker, the dominant player in the cordless category, entered corded market last year with its DirtVac model. While the company has been slow to make its mark in the corded category, it will be more aggressive the fourth quarter of this year and into 1993, said David Stone, president of Black & Decker’s household proucts business.
Stone sees a healthy hand-vac market as long as there is strong advertising to support the category.
“As the saying goes, ‘every ship benefits from a rising tide,’ “said Stone. “The hand-held vac category in particular, and housewares products in general, are under-advertised products. People come in, launch a product and back it with a ton of advertising. Then competitors come out with similar products at lower prices and the original player has to cut his ads to compete on price. In the end, the entire category is basically competing on price, but there’s no advertising to support the category–it’s almost like a death wish.”
While Stone is a firm believer in advertising, he said he doesn’t see anyone in the industry competing head-to-head, dollar-for-dollar with Royal’s program. He also said Royal could be reaching the upper limits on its ad spending.
Pricing would be an obvious avenue of attack for Black & Decker, but Stone views price wars as counterproductive and not. conducive to long term industry growth. This leaves only a third avenue for competition: compete head-to-head on product
“Obviously we’re not going to give details, but we do have product development plans to compete in both the corded and non-corded segments,” said Stone. “When we compete on features we will strive to not only compete on convenience but on performance as well.”
Hoover, the industry leader in full-sized floor care, is also counting on improved features on hand vacs to attract consumers. The company recently introduced two new hand-vac models with EZ Empty Dirt Cups: the S1137 and the S1141. Both models have an 18-foot power cord, full width agitator and dual brushed edge cleaning.