• U.S.

Merchandising: Two in Every Home

3 minute read

To join the electric toothbrush and the powered swizzle stick, the U.S. appliance industry could use an automatic head scratcher—for itself. It has just enjoyed three fat years, and now, with delight bordering on disbelief, is facing a fourth. Last week, closing their books on 1963 sales and pulling together first reports for 1964, appliance manufacturers reported that sales of machines that cool, clean, cook and entertain rose 7% last year, to $9 billion, and last month ran 10% ahead of the previous January. Demand seems to be increasing faster than ever.

Tempting Models. Appliance makers benefit from the same factors that have created the unexpectedly prolonged boom in the auto industry: record rates of personal income and housing construction, the nation’s desire to trade up to fancier models, and a strong replacement market.The two-car family increasingly has its counterpart in the multi-appliance family. Well over 1,500,000 households now are cooled by more than one air conditioner, and about 11 million families have a big TV set in the living room and portables scattered around the house. More than half of the 3,100,000 automatic washers sold last year were bought by people who already had one but wanted a spare or replacement. The trend is symbolized by the refrigerator in the garage; manufacturers report that many families store up beer and soda there, and buy a new refrigerator for the kitchen long before the old stand-by has finished its 15-year life expectancy.

Tempting people to acquire appliances before the old ones wheeze out, the industry is busy adding new—or at least newish—models. After noting that 75% of the 7,000,000 black-and-white TV sets sold this year will be inexpensive portables, RCA last week brought out a new portable priced at $112.88.

Admiral and Kelvinator started producing refrigerators that are lined with plastic foam instead of the bulkier glass fiber, thus have bigger insides than conventional models. General Electric has brought out “self-cleaning” ovens that dissolve grime by melting it down at temperatures up to 880° F.

Skinny Prosperity. Expanding sales are not necessarily followed by bigger profits for dealers. Appliance prices have been pushed down by discounting, intense competition among two dozen major manufacturers, and the spread of the private-label brands sold by the chains. The average refrigerator, which now sells for $278, costs 25% less than in 1951, and prices of washers have dropped 10% in the same period. The appliance dealers’ association estimates that profits will increase less than 1% this year and that 5% of the small dealers will fold. Many of the remaining independents are banding together to buy in carload lots so that they can offer loss leaders as the chains do.

In color television, however, profits are high and prices firm. Color sales rose by 72% to 750,000 sets last year, and RCA, the industry’s biggest producer, expects them almost to double this year. Though Zenith, Sylvania and National Video Corp. have lately joined RCA as manufacturers of color TV tubes, high demand has made for a shortage of tubes that is likely to continue through 1964. Next year RCA will bring out a rectangular tube that will do away with the cropped corners on the screen and make the TV cabinet shallower. Portable color TVs are due in about three years. Looking toward the late 1960s or the 1970s, manufacturers are also working on practically priced home microwave ranges that bake a potato in five minutes, ultrasonic washers that clean without suds or water, and compact thermoelectric appliances that heat, cool and freeze without the aid of moving parts.

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