Product portfolio management and strengthening the Frigidaire brand offering were key focus areas during the year and operating income improved.
Alan Shaw, Head of Major Appliances North America
Major Appliances North America is in the first phase on the path to profitable growth: Stability & Focus. An important focus area during this phase is product portfolio management. The business area is simplifying its product offering to its best and most profitable. The business area is experiencing an historic market change as consumers shift their buying and delivery preference. At the same time, the retail landscape is also changing as Sears continues to transform and other traditional and new national retailers gain greater market share. Electrolux is adapting to these market changes by refocusing its Frigidaire brand offering, simplifying the organization, increasing the speed of innovation, building a home delivery network for the contract sales and increasing investments in manufacturing for further growth.
During the year, the key focus was to strengthening the Frigidaire brand. This included the launch of the Frigidaire Gallery Freestanding
Induction Range, the first affordable induction offering in the U.S. market. It is produced in the Springfield cooking plant with one of the most cutting-edge robotic technologies being used in the industry.
A product simplification program was launched during the year, with the intention to narrow the products to the most profitable and impactful as well as to simplify operations.
Electrolux also prioritized the growth of sales through new digital channels. The U.S.-based manufacturing capacity is going to increase. To drive cost efficiency and further growth, investments were initiated in automation, modularization and in new global platforms.
The North American Supply Chain launched a new system to track, trace and strategically plan for inbound raw material delivery. It is delivering savings as the company transitions from manual to digitized transportation processes.
Electrolux also continued to strengthen its home delivery network for contract sales in the construction industry.
Electrolux has a strong offering in the U.S. and Canada, particularly for such kitchen appliances as cookers, refrigerators and freezers. The appliances are predominantly sold under the well-established Frigidaire brand in several price segments. The Electrolux brand accounts for a smaller percentage of sales and are sold in the mass premium segment. The Group also sells appliances under private labels.
Demand for appliances increased by 3% in North America in 2017, driven by an improved macroeconomic climate and rising housing starts.
The market is also characterized by competition between several national and global manufacturers. Global competition continued to intensify in 2017 and an increasing number of international manufacturers are now offering a full range appliances. Key competitors comprise Whirlpool, Haier, LG Electronics and Samsung.
Consolidation among retailers is relatively high and nearly 70% of appliances were sold through four major retailers: Lowe’s, Sears, The Home Depot and Best Buy.
33%
6.8%
The product mix improved, due to active product-portfolio management, while lower volumes under private labels and continued price pressure had a negative impact on sales.
Operating income and margin improved as a result of increased cost efficiency and mix improvements which more than offset the negative impact from price pressure, lower volumes and higher costs for raw materials.
| 13 | 14 | 15 | 16 | 17 | |
| Net sales | 31864 | 34141 | 43053 | 43402 | 40656 |
| Operating margin | 6.7 | 5 | 3.7 | 6.2 | 6.8 |
Simplify operations and product offering
Major investments in manufacturing re-engineering
Expanding contract and digital channels
Frigidaire Black Stainless Suite
The Frigidaire Gallery Freestanding Induction Range launched in 2017 as the affordable induction range in the U.S. market. The range was selected for Interior Design magazine’s Best of Year awards in the appliances category. The Group also launched the first affordable black stainless suite in the mass market. Black finish is growing as an alternative to stainless steel.
During the year, the Group continued its strong market roll-out of the award-winning front load laundry line under the Electrolux brand which was introduced during 2016. It is an example of a new product leveraging global modular design, increasing sales and improving the product mix. Its industry first SmartBoost™ washing technology maximizes the cleaning power of detergent by premixing it with water before it touches the clothes to achieve a deeper clean in every cycle. For more information visit www.electroluxappliances.com