Floorcare suppliers may need to rethink their pricing strategies as research reveals that consumers are beginning to choose more economical options. A growing strategy to offer greater support to retailers in 2010 may be well advised due to these changing buying patterns. Providing consumers with more information on value-added options is now critical in any effort to convince them of product features and benefits and to demonstrate they are worthy of a higher price tag.

While the most recent results reveal floorcare has remained cushioned somewhat from the ravages of the economic downturn, they also make clear that the industry must find ways to build profitability especially as suppliers have invested vast sums in product development and often, promotion. The priority being placed on educating retail staff about product benefits suggests many suppliers are already acting in this area.

Also concerning, however, is the anecdotal evidence provided by certain suppliers of examples of 'excessive' discounting by some retailers in recent times. They warn that such practices, if not curtailed, could risk creating consumers who always seek a bargain rather than pay full price.

Consumer spending shifts

The latest statistics from GfK Retail and Technology Australia suggest that consumers are changing their spending patterns as suppliers increase average prices. Notable in the GfK data is that the two categories to enjoy significant double-digit unit sales increases offer floorcare options that sell for under $170.

Electric sweepers, with an average price of $80, recorded a 20.8% rise in units sold perhaps assisted by their 5.2% average price decline. The value of this category rose a healthy 14.5%. Recording the highest growth in unit sales, at 41.9%, was handsticks despite their 3.7% average price rise which led to a strong 47.1% value increase off their $164 average price.

In contrast, robot models had a tremendous fall in popularity. Rather than the remarkable 32% growth in units sold and 46.2% value rise noted in the GfK June 2008-to-June 2009 figures, sales in this category suffered in more recent times. Their 26.4% average price rise may have proved a deterrent to consumers as their unit sales decline a sharp 9%.

The only other category to record a fall in average price was wet & dry with a 13.9% decline. However, this segment still recorded a 3.4% rise in units sold but their value fell 11%.

Canisters falter

A 6% rise in average price for canisters may have contributed to its ascendancy faltering somewhat after this segment recorded a 1.4% decline in units sold. While canisters remain the most popular option well ahead of any other category, the result ensured their sales fell under the 900,000 figure achieved the previous year. Uprights secured an 8.3% rise in units sold despite their 2% average price to a solid $467.

A comparison of the latest GfK data with the June 2008 to June 2009 statistics reveals a very different marketplace today. During the June-to-June period, average prices were in decline but unit sales growth was still strong at 7.5% and the value of the sector rose 7.2%. The most recent figures show a vastly different picture, a sector experiencing price rises and slowly momentum in unit sales. For the period December 2008 to December 2009, unit sales rose a more sluggish 2.2% but strength particularly in the lower-priced categories combined with continued growth in uprights still ensured its value rose 6.4% despite an average 4.1% price rise.

Today's marketplace is faced with significant challenges in an environment devoid of economic stimuli for growth and with consumers faced with the prospect of more interest rate rises. It may be timely to consider that the value-for-money formula may have taken a heightened importance in the current climate. Suppliers and retailers should move forward on prices with caution and allocate significant resources to informing retail staff and consumers about key advances that add value.