‘‘We want to be the supplier of choice – not the biggest, but the best’
Hoover Candy chief operating officer David Meyerowitz shares the company’s vision for the future and tells Sean Hannam why there are good opportunities out there for retailers who are prepared to change
ERT’s Turning Point campaign to revitalise the electrical retailing sector has certainly made a big impression on David Meyerowitz, chief operating officer of the Hoover Candy Group.
Speaking to us at the Italian appliance manufacturer’s freestanding showroom in Bromborough, near Liverpool, he says that he finds it “inspiring” and adds: “At Hoover Candy Group, we embrace change. With real product innovations, there are opportunities to adapt and to prosper. Now is a really good time, with clear opportunities for your business to make considerable gains, if approached in the right way.”
However, he has a warning: “If you don’t approach it in the right way, or businesses are unable to adapt, they can be put at risk. Think about the consolidation of retailers, distributors and manufacturers over the last 30 years. There is good evidence of those who’ve taken their chances to make a positive step change, and those who didn’t make the necessary changes. During those years, we’ve seen some difficult times, losing customers and friends that have been unable to adapt their businesses.”
He adds: “If you can get it right; predict what’s coming and get ahead of trends, then you really can get a healthy advantage. Be ready for change and you will have gained valuable experience as things accelerate. You’ll also be wiser for making a few mistakes – learning what to do and not to do next time around. Embracing change and getting ahead of trends is the message for businesses of all types.”
Q: How are you finding the market?
David Meyerowitz: To be fair, it’s a bit soft at the moment, especially the freestanding product markets, but there are some explanations for it. We try to be very logical and to understand what’s causing change and what may happen next. It’s worth remembering that, in the mid-term, these mature markets in the UK tend to be fairly resilient.
Q: Are you worried about Brexit?
DM: Not really. There may be some challenges, but whatever may happen will affect the whole of the UK market. It’s a question of being prepared for change, making the right decisions and seeing the opportunities to gain.
Using data from Amdea [Association of Manufacturers of Domestic Appliances], we can say that last year’s market for major appliances was pretty flat – up around half a per cent in volume. Encouragingly, it was up a couple of points in value. We saw freestanding begin to decline and an increase in share of built-in during the same period.
Interestingly, built-in is now almost taking 40 per cent of the market by volume and freestanding is just over 60 per cent. That’s quite a move over the past five or six years. I do remember a 25:75 split [in favour of freestanding] not so long ago. The [UK] markets are still very large, compared with other European countries – over 12.6 million major appliances and over 6.5 million vacuum cleaners. That’s over 19 million MDA and floorcare appliances sold last year.
We had a very good 2016 at Hoover Candy Group. If you include freestanding, built-in and SDA, we sold over 2.2 million appliances in the UK, compared with two million the year before. We had a strong 10 per cent growth in sales, which, in a market that didn’t grow much, meant we did well in terms of our UK share, which moved up from 10 per cent to 11.4 per cent. That was an important step for us. We’re on a journey – back in 2010, we were selling one million units a year. We worked hard to double our annual sales by 2015, achieving two million units in that year. Now we’re looking to increase sales by 10 per cent each year up to 2020. Last year was a good, solid first step, despite a few challenges in the market during the second half.
Q: What’s your strategy for growth?
DM: We are guided by our ‘20:20 Vision’ – a plan for growth that’s driven by our DNA. Some brands have very clear trade positioning – perhaps they’re the cheapest, or the most premium, or perhaps they have the biggest market share. There are various reasons why brands may be considered as “must-haves” by retailers – those that have clear identities.
At Hoover Candy Group we’ve set out a path and an ambition to be the supplier of choice. We want to be the supplier that retailers choose to deal with – not necessarily the biggest, but hopefully the best. We have identified three strands in our DNA. The first is product leadership, which is very important for providing innovation and ‘fuel’ for retailers – it’s interesting for them to present new technologies to their customers with which real value can be created. We’re blessed with numerous examples of product leadership – we’re a privately-owned company and the shareholders are very passionate about products. They invest disproportionately in R&D, which gives us a constant and reliable stream of innovation.
The second strand is operational excellence – to do everything perfectly and to make our company straightforward and effective to deal with. We want to be regarded as easy to trade with. The products arrive when they should, there are good materials available to support them, they are reliable and, if it’s needed, our aftersales service is first class.
The third strand is customer intimacy – to be close to your [trade] customer is important, but to recognise that they are varied and can operate in a very different way according to their business priorities. For example, the needs of, and opportunities for, independents can be quite different from those of an online retailer.
We’ve set tough targets for each strand – to ensure continuous improvements are delivered.
We believe that this approach is difficult for others to replicate. For example, it would be challenging to match our level and pace of innovation without completely changing other business priorities.
Q: When Hoover Wizard launched in 2015, you were the first brand with a full suite of connected home appliances…
DM: Exactly – but importantly we want to make this technology affordable. Our marketing director describes this as ‘democratising technology’.
We develop and launch innovations, but make them attainable. The Hoover Wizard wi-fi products were launched with a starting price of around £400. The next phase of our connected appliances has already been introduced – our One Touch products. They are even more affordable, with some models even retailing below £300. This is a fantastic way to accelerate the acceptance and uptake of new technologies. The key to this is definitely to make them affordable.
The pace of change is accelerating. We realised we must be prepared to ‘start before we’re ready’ – it’s a process of developing and learning at the same time. We cannot wait until we know everything, we’d be too late, because the world moves on. Overall, we’re delighted with our developments in connectivity. It’s put us in a really good position – to be the leader in connected appliances right from the beginning.
We had really good support very quickly from retailers – most have accepted that it is a significant change and the next major trend in the history of appliances. Interestingly, connected appliances are also a good way of increasing consumer interest and generating extra footfall. Hoover Wizard has been winning new customers for our retailers and increasing sales rates.
During 2016, we registered up to a 40 per cent increase in our total sales [not just connected appliances] in retailers when they were actively promoting and advertising Hoover Wizard.
Q: How do consumers use smart appliances?
DM: It’s still early days, but one of the most important features is that we can get feedback directly from the consumer – we understand about their product usage, which programs they like and don’t like. This data can be stored and analysed, so we get a good insight into how to develop products for the future. As sales of connected appliances build, we’ll understand more and more.
Many people assume connected appliances are all about remote control – but that’s just one of the benefits. Perfect programming and assistance are important – products have developed hugely over the past few years, but generally consumers don’t read instruction books, so how do they get the best out of their new products? Some kind of assistance – a Wizard [app] – to help them explore the capabilities of their new appliance is an interesting benefit. Product customisation is important.
Who’s to say the 18 standard programs on a washing machine are the right ones for you? The technology allows the customer to download new programs and, in the case of One Touch, look at new programs on their smartphone and touch it to the machine to transfer the program instantly.
In the future, we want to evolve ‘soft service’ into ‘smart service’. Soft service is when the customer calls us and we can help to resolve the problem over the phone, often eliminating the need for an engineer to visit their home. Smart service will eventually allow us to detect and resolve issues with the maximum convenience and minimum involvement for the consumer.
Q: How are retailers demonstrating smart-home appliances in-store?
DM: To be frank, we’ve seen some very good executions online. These retailers, with our support, have carefully created excellent rich content to communicate the numerous benefits. Honestly, we’ve yet to see a really good in-store execution. It’s a big challenge. To create excitement and interest in the technology, you really have to show consumers what it can do. It doesn’t have to be a huge area. It’s about dedicating some space to it.
We believe that the opportunity for independents is greater. For the consumer to feel comfortable with the technology, and excited enough to buy it, they would benefit from talking to somebody knowledgeable that can demonstrate it, show how it can apply to them personally and answer questions on how it would work in their home. It’s a huge opportunity. In-store is very much our target for this year and next. They want to find someone they can trust, who can guide them and assist them.
Q: How do you see 2017 shaping up?
DM: We’re going to take up some of the challenges that you outlined in Turning Point. We’ll need to manage a market that’s a bit softer than we expected and we may all have some challenges with Brexit. Last year was great for Hoover Candy Group – in addition to good sales growth, we won the Euronics award for “best supporter of the independent” and the Sirius award for “manufacturer of the year”. Hopefully retailers are beginning to feel we could be their supplier of choice. It’s a good step in the right direction and we’ll be sure to build on it.