This report covers the market for large domestic electrical appliances (white goods), and includes home laundry appliances and dishwashers, cookers and microwave ovens and refrigeration appliances. The total white goods market was worth £2.36 billion in 1996 and is forecast to reach £2.47 billion in 1997. By volume, retail sales reached 8.9 million units in 1996 and an estimated 9.4 million units for 1997. The market has grown by 5 percent by value and 6 percent by volume between 1995 and 1996, after a period when the market had been relatively stagnant.

The largest sector in terms of volume is the cookers and microwave ovens market, which, at 3.4 million units, accounts for 37.9 percent of all sales. The largest sector in terms of value is the home laundry and dishwashers sector, which was worth £888 million in 1996, accounting for 37 percent of the market. The cookers and microwave ovens market is almost as large in terms of value, worth £833 million in the same year, taking another 36 percent of the market. The fastest growing sector in terms of volume has been the microwave oven market, which had appeared to have peaked but has experienced renewed growth in 1996.

The slowest growing sector between 1995 and 1996 was the refrigeration market. This was because of the exceptional rate of growth in the market in the previous two years fuelled by two successive long hot summers. In this period, 1994-95, sales of refrigeration appliances grew more strongly, by 6 percent in volume terms and 8 percent by value whereas growth from 1995-96 was minimal. This does not, however, reflect any long term decline in this market, rather a return to more normal growth.

The market for white goods in the UK is heavily concentrated between 6 major internationally based companies, notably Electrolux, GEC, Whirlpool, Merloni, Candy and Bosch & Siemens. These companies have pursued policies of expansion via the takeover of smaller manufacturers, with most of the well known brand names in the white goods market owned by one of these companies. The most recent developments in terms of corporate activity have been the proposed sell-off of the Creda and Hotpoint brands by GEC in 1997, with the final details of this deal unresolved at the time of writing but almost certain to go ahead. The Hoover brand, has been heavily promoted and is re-launching into the refrigeration market after a 15 year absence in 1997 following the company being bought from US based Maytag by Candy SPA of Italy in 1995.

The white goods market in the UK is heavily dominated by imports, but the level of import penetration varies widely according to product sector. The highest level of imports is in the dishwasher market, at around 81 percent, and the lowest level of imports is in the free-standing cookers market, at around 27 percent. The reason for the generally high level of imports is the fact that most of the market leaders are non UK based companies and so production tends to be centralised for the whole of Europe in a few manufacturing locations. For example, Electrolux is based in Sweden and has factories here and in Italy, Germany and France as well as the UK. Merloni and Candy are both Italian based companies, whilst Bosch Siemens is a German owned company.

Advertising expenditure for the total white goods market in 1996 totalled £10.76 million, which represents a proportion of 0.5 percent of the total sector retail value, which is relatively low in terms of total expenditure. More marketing and advertising support tends to be by below-the-line and trade promotions, and offers to consumers on finance or money off promotions. There is also a move to more generic main media campaigns for the brand as a whole rather than for individual sectors, especially by the larger brands such as Whirlpool, Zanussi and Hotpoint.

The highest level of advertising expenditure in 1996 was in the refrigeration market, although expenditure does not vary widely between the three main product areas. The higher refrigeration expenditure is partly due to the need to raise consumer awareness of the new energy labelling and the variation in performance between models. Also, with the growth in frost free appliances, this has also stimulated advertising spend. Expenditure generally tends to be lowest in the gas cookers sector, with only New World spending significantly on above-the-line campaigns.

The white goods market is heavily dominated by the electrical multiple retailers such as Currys and Comet, who dominate retail sales in most sectors, except in the built-in market where kitchen specialists play a greater role. The dominance of the electrical multiples has, if anything, been increased by the radical changes that have occurred in the retailing of white goods via the former electricity and gas showrooms. Since the privatisation of the gas and electricity industries, there has been a rationalisation of their retail outlets with a move to larger out-of-town sites and the closure of many town centre high street locations. This reduction in retail presence has been more notable in the electricity industry with far fewer RECs in 1996 than in 1993 prior to privatisation, although those outlets that remain are larger and more profitable. The gas showrooms are now Energy Centres, and a key feature of both retailers is that they now sell both gas and electrical appliances side by side. This has helped to widen the availability of gas appliances and has encouraged electrical appliance manufacturers to enter the gas market and vice versa.

In terms of consumer behaviour, MAPS exclusive consumer research has shown what consumers consider to be most important factors when considering the purchase of a large domestic electrical appliance. Nearly 90 percent of consumers consider value for money, product reliability and good after sales service to be most important when buying an appliance. Slightly fewer, at just under 80 percent, also consider it important that products that are simple to use and have eco features such as water or electricity saving features.

The white goods market has historically been heavily influenced by the state of the economy and by the levels of new product development (NPD) in the market. In recent years, an increasingly important influence has also been the effect of European legislation and environmental concerns. Concerns over energy consumption, and European wide directives to reduce carbon emissions by the early part of the 21^st Century have led to a European labelling scheme for all appliances, giving performance information and an energy efficiency rating on an A-G scale. This currently applies to laundry appliances such as washing machines, dryers and refrigeration appliances and will be extended to all product sectors. Furthermore, after 1999 appliances that are rated below a certain standard (D-G mainly) will have to be withdrawn from sale.

The white goods market has recovered steadily in the last two years, and is expected to show modest growth of 17 percent over the next five years to reach £2,891 million by 2001. By sector, the home laundry and dishwashers market is forecast to increase by 20 percent to reach £1,098 million, the cookers and microwave ovens market will be worth £ 1,022 million, up by 14 percent and the refrigeration market is forecast to increase 17 percent to £ 771 million.