Responding to a changing market
North America
Position and Strengths
- Strong market position with around 14% share in core appliances in 2019, predominantly under the Frigidaire brand. The brand has a 100-year heritage and targets consumers who value affordable solutions.
- Economies of scale in core categories, including cost and production efficiencies. The economies of scale are being further strengthened by the Group’s investment to modernize and automate its North American manufacturing.
- Long-standing relationships with retailers, particularly with national and dealer stores. Retailers value the business area’s nimbleness to meet changing consumer demand and to provide consumer buying analysis and insight that helps shape retail strategies.
- Strong aftermarket sales capability.
To achieve profitable growth, Electrolux applies a three-step model.
The business area North America is in the first step, Stability and Focus.
Strategic focus
- Adapting to market changes and to shifting consumer buying and delivery preferences. As the business area has planned for changes in the retail landscape, it has been efficiently targeting new product launches to drive demand and increase online reviews. Electrolux has also addressed the changing landscape by developing new sales channels.
- Continues to simplify its organization, operations and product offering. Strategically, this drives a clear focus on individual product profitability while also significantly reducing the total product offering and cost base. This also drives the growth of its Frigidaire products, which accounts for almost 90% of the business area's sales.
- Investing in manufacturing re-engineering and new product architectures. The Group is investing in automation, modernization and in new lines of innovative Frigidaire kitchen products to drive profitable growth in North America.
- Creating outstanding consumer experience through aftermarket sales innovation.
Net sales and operating margin
share of net sales
33%
Operating margin1)
1.4%
1) Excl. non-recurring items
2019 Execution
- Organic sales decline of 8.7% due to lower volumes, mainly impacted by lower sales under private label and capacity constraints related to manufacturing consolidation. Cost-based price increases and mix improvements contributed positively to sales.
- Reduced operating income and margin due to lower volumes and increased costs related to the manufacturing consolidation. Price increases more than compensated for higher costs from raw material and trade tariffs. Non-recurring items of SEK -1,071 (-596)m included in operating income mainly related to the consolidation of the U.S. cooking production, see note 7 in the annual report.
- Successful execution of new product launches by driving a commercial discipline from the start of a new product’s production through to retail flooring. A strong example is the launch of Air Fry. Guided by consumer insight, Electrolux is the first to bring built-in Air Fry technology to the North American cooker market and the response from consumers has been very good with average star ratings of 4.6.
- The number of products (Stock Keeping Units) were reduced by more than 55% by the end of 2019 compared to start of 2017, eliminating unproductive products, focusing the organization on fewer more meaningful and impactful products at the highest quality level on record.
- During the year, there was significant progress in its U.S. manufacturing investments.
- The new refrigeration and freezer plant in Anderson, South Carolina, began production during the second half of 2019.
- Construction has also started in the Springfield, Tennessee, cooking plant. The new plant will be highly automated.
- During 2019, Electrolux slightly increased its value market share under its own brands.
- Market demand for multidoor refrigerators grew in 2019. Electrolux launched Flex 4, a new four door refrigerator, with an improved icemaker and noise level. This investment led to strong sales growth in this product during the year for the business area.
- Aftermarket sales saw year-on-year growth as the business area launched new online how-to videos, adjacent products and expanded its service network.
Explore our case stories from North America
CASE STORY ~ TASTE
Global presence strengthens offering in attractive refrigerator segment
Electrolux
Electrolux is a leading global appliance company that has shaped living for the better for more than 100 years. We reinvent taste, care and wellbeing experiences for millions of people around the world, always striving to be at the forefront of sustainability in society through our solutions and operations. Under our brands, including Electrolux, AEG and Frigidaire, we sell approximately 60 million household products in approximately 120 markets every year. In 2019 Electrolux had sales of SEK 119 billion and employed 49,000 people around the world.
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