By Dawn Adams

Contemporary style, HEPA filtration, hygienic dust disposal and a lengthy warranty are all in demand from consumers but only if they come in a floorcare model with a pricepoint they define as reasonable. The price sensitivity in this category has reached new levels that often mean growing sales can only be achieved when average prices fall. The result is this additional turnover often does not translate into increased profits.

Consumers need to be convinced of a product's value even if it is being sold for under $100 or under $200. Suppliers are responding by ensuring additional features are offered in lower-priced options particularly responding to strong growth opportunities in certain product areas like electric sweepers and handsticks. Their sales rose 32.3% and 35.9% respectively, according to data from GfK Retail and Technology Australia that compares the results from the year ending June 2010 to the previous year ending June 2009. Perhaps, extra features and lower prices make a powerful combination capable of securing additional value for this market segment.

Suppliers that have invested in developing compact floorcare may have struck rare gold in this market as this category enjoyed a sharp 88.9% rise in units sold.  While average prices fell 14%, the 62.5% rise in value for this category suggests these models are more price resilient than any other market segment which implies far greater opportunities may exist. While the numbers sold remain modest at 43,593, their meteoric rise in the last 12 months points to a product range to watch and, where possible, prosper from.

Bagged vs Bagless

Suppliers and retailers should also be aware of an important trend evident for combined bagged and bagless solutions. These models suffered the worst downturn in sales dropping 67.1% while their value plummeted 59.1%. Their strong average price rise of 24.3% may have spurred the consumer movement away from this segment. These models now make up an even smaller percentage of the total market with only 7234 units sold in the last year to June 2010, a staggering fall from the 21,962 sold the previous year.

Bagless models appear to have claimed ascendancy with their unit sales up 3% from a solid base with 639,795 sold compared to only 223,304 bagged models sold. The average price of bagless models became more competitive at $254 leading to a 3% fall in value for the category.

A developing strategy being adopted by suppliers to spur on market growth is to take advantage of promotional opportunities that put them in contact with a younger generation of consumers in online forums. The 'Vac from the Sea' project, announced by Electrolux, takes a stance on plastic pollution and allows consumers to follow the project's progress online. This innovative scheme will lead to a limited number of vacuum cleaners being produced from plastic recycled from the world's oceans.

Meanwhile, more targeted promotions tailor-made for individual retailers, may prove a valuable way to foster rewarding business relationships. This more precise marketing approach, designed to reach serious consumers, may also ensure promotional funds are used most efficiently to reap benefits.

Compelling reasons to buy

In a price sensitive environment, offering consumers a compelling reason to upgrade or purchase a new floorcare option will be vital. Hygiene is among the most important factors influencing floorcare purchases, according to Kris Ronsmans, Miele floorcare and extended warranty manager. Ronsmans relates this suggestion to health; an increasingly national obsession with choosing more wholesome alternatives may help to spur on sales. 

Sanyo named educating retailers and consumers as a high priority to ensure they are aware of the company's products and their benefits. Jason Oh, Sanyo consumer product manager, points to, for example, information provided on the benefits of bagless vacuum cleaners while HEPA filters are promoted as offering a more hygienic way to clean. Persuading consumers about the merits of added features may prove critical for the industry to build sales growth.

Other features increasingly built into floorcare to encourage sales include options for noise reduction, tools to clean hard-to-reach places as well as sleek designs in dynamic colours or neat storage alternatives. A perceived demand for easy-to-use floorcare is leading to new models with smoother handling such as, in one instance, a power steering-like maneuverability. Consumers may also be drawn to brands that are already well known for quality or those that offer lengthy warranties, a feature capable of adding a certain comfort level to boost consumer confidence.

Think out of the box

In a market crowded with new offerings from suppliers, there is no doubt consumers will have plenty to choose from if they are willing to open their wallets. With price playing such a phenomenal role in decision making, suppliers and retailers will need to be innovative thinkers to find a circuit breaker to halt this increasing value-for-money mindset that stalls oportunities for profit growth. 

Kim Hiland, Nilfisk-Advance national retail sales manager, urges suppliers to look at the bigger picture. "The traditional channels are becoming very limited and we need to be open to new channels for supplier product expansion," she says. "If Australia is going to stay competitive then we need to lift our volumes through the factories for preferential positioning and pricing. The only way we can do that is to expand into other channels."

She provides a persuasive argument for retailers to provide suppliers with regular and more accurate forecasting to make sure their needs are planned into production lines. "Australian production levels often get pushed back to make way for countries with bigger demand such as China," she said. "Most companies don’t have the funding to keep stock on hand just in case." 

Important to claw back growth in the overall floorcare market will be to look at the category in a new way, to find opportunities where none had seemed to exist and to think outside the box. Investing further in product development in categories that are demonstrating growth potential will, no doubt, aid this pursuit.