Domestic Electrical Appliances in Italy

Abstract

EXECUTIVE SUMMARY

Large chained specialists and grocery multiples dominate DEA sales

A national economic slowdown has led to a fall in both disposable incomes and consumer confidence, leading to Italian consumers increasingly shopping at multiples, where imported cheaper products and promotions on quality products are often available. In addition, sales at multiples were helped over the review period by the increasing availability of consumer credit solutions, often in the form of zero-interest financing plans.

Large grocery outlets increase non-food shelf space

Following the increasing interest among consumers in inexpensive domestic electrical appliances, large grocery outlets are increasingly targeting the low-end segment, expanding their product portfolios. As Italian consumers prefer to see products and even test them prior to purchase, large grocery outlets have increased the amount of shelf space dedicated to domestic electrical appliances. The increased visibility of such products has attracted more customers, many of whom have shifted from making purchases in large specialist outlets to large grocery stores.

Italian consumers become more price sensitive

The proportion of price sensitive Italian consumers has always been relatively low compared with other European countries. The trend, however, began to change in 2002. Following the introduction of the euro, retail prices increased rapidly, and Italian consumers found their purchasing power reduced. In addition the Italian retail environment, along with the manufacturing industry, still faces many challenges, especially to competitiveness. An additional factor boosting volume sales but hampering value sales comes from the increasing competition posed by Chinese manufacturers, whose products, even if they are often of lower quality, are sold at cheaper prices, stimulating the interest of consumers who have became more price sensitive.

Increasing fragmentation in the DEA environment

The recent entry of Chinese and Asian manufacturers in general, especially in the small appliances niche, has increased the fragmentation of the DEA environment, especially in microwaves and vacuum cleaners. In these product types, players such as DPE - a distributor that applies its own brand to imported products - have recently launched several models. Furthermore, the availability of manufacturing at lower prices has encouraged large retailers to launch their own private label products, often manufactured in China. Gruppo PAM is very active in this field, marketing its own private label.

Energy-saving factor drives sales of high end appliances

Following the increasing price of electricity, consumer preferences have changed in recent years. Italian consumers have started to show even more interest in "class A" appliances, as they seek to reduce their electricity bills. Most manufacturers have adapted their products and strategies to fit in with the actual drivers of the market: rising demand for products in the low- and mid-price segments, and strong demand for energy-saving models.