2015 CHESS Conference Highlights – The Future of Retail: Implications for the Housewares Industry

CHESS packetBy Vicki Matranga, Design Programs Coordinator

Dana Telsey, Retail Analyst, CEO and Chief Research Officer, Telsey Advisory Group (TAG)

Joe Feldman, Senior Managing Director, Telsey Advisory Group (TAG)

The second day of CHESS kicked off with a bird’s eye view of the retail environment, guided by Dana Telsey and Joe Feldman of the Telsey Advisory Group (TAG). Based in New York, TAG is a leading research, trading, banking and consulting brokerage firm focused on the consumer sector. With their “feet on the street and eyes on the screen,” Telsey and Feldman know the “bricks and clicks” retail landscape.

Telsey and Feldman outlined their cautious optimism for the macroeconomic climate. Consumer confidence holds steady, although people are spending time and dollars differently than in the past. Business is improving. Home sales are in low single-digit growth with home prices increasing. We have lower unemployment and controlled inflationary pressures. Home goods sales are rebounding and home prices are going up. Consumers feel wealthier and spend more. Mortgage rates have stayed down, keeping people in the market. Credit is still tight and home improvement investment continues.

Key factors in household formation: Millennials are still not buying homes but starting to rent, resulting in incremental home goods spending growth. New household formation is on the rise.

Retail industry trends—Mobile and Millennials. Growth in ecommerce and mcommerce are disrupting market share.  Retailers are learning how to attract attention and dollars for this 25 percent of the population. Mobile shopping growth is expected to capture an increasing percentage of U.S. retail commerce annually.
Telsey and Feldman then dug into the details and offered many examples of retailers that are building creative new approaches. They identified category leaders, ranked successes and identified areas for stores that need attention.  The speakers mentioned some recent management changes at several key retailers and what to expect from new leadership. They also discussed mall operators and how real estate allocations are changing.

Dana Telsey and Joe Feldman at podium and screen

Bricks and Clicks

New technologies are changing consumer shopper behavior and retailers must learn how to use all the data they are collecting. Telsey and Feldman gave examples of retailers creating exciting shopping experiences in high-end kitchen and bath, along with food, festivals and concerts to attract shoppers.

Ecommerce is an invisible threat—retailers may not know who their competitors are and face pressures from various online retailers. Technology is changing the way retailing is done as more stores offer online buying with instore pick up and return. This symbiotic relationship requires inventory support that is complex to do and easy to say. Crowdsourcing delivery is moving into a new direction, with individuals driving to deliver purchases to homes.  International retailers, such as U.K.-based Primark, are also establishing a foothold in the U.S.

Ecommerce is now 9 percent of sales and growing, 60 percent of consumers do their research before coming to a store. Both channels work together. The apparel category needs physical presence, as shoppers want to try on clothes and glasses. Retailers develop online and in-person relationships with their shoppers to make it easy to buy several and send return some choices on site. Categories with low shipping costs will be most successful.

Telsey and Feldman interpreted multichannel distribution potential by sector, noting discounters and department stores that are gaining share and expanding their customer base as they get to know their Millennial customers better. Fashion brands continue to expand to home goods.  As the home improvement sector grows, retailers such as Home Depot and Lowes are growing same store sales.


Dana Telsey and Feldman connecting with listener


Favorable catalysts for the retail industry outlook: tightening labor market, rising wages, lower gas prices, higher consumer confidence. The lower gas prices indicate that consumers are reducing debt or adding to savings, little effect in growing sales.

Risks: In the longer term:  declining home ownership rates, rising interest rates, Affordable Care Act.

The broad retail outlook shows that retailers are generally in strong financial positions, with lean cost structures from expense reductions and they hold higher cash balances.

Telsey and Feldman took some detailed questions on costs related to online sales, particularly shipping and delivery methods, ecommerce in the grocery sector, the future of TV shopping and how to develop multichannel loyalty programs. On the purchasing behaviors of Millennials, TAG watches Pinterest and Instagram and notes Millennials’ maturing attitudes toward wealth accumulation, family formation and preferences for experiences over products.

Audience members also asked specific questions about policies and future plans of some major retailers. The lively conversation revealed that CHESS attendees value the access to such top experts who have timely and detailed information on the market.

Telsey Advisory Group (TAG) offers research reports and a daily newsletter. For further information about TAG’s services, see www.telseygroup.com

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See the full conference program here:


2015 CHESS Highlights – China Rising: How to Prepare for What’s Ahead

By Vicki Matranga, Design Programs Coordinator

John Manzella is a world-recognized speaker on global business, competitive strategies and the latest economic trends. His op-eds have been nationally syndicated and his views have appeared in The Wall Street Journal, New York Times and other major media. He is president of Manzella Trade Communications, a strategic communications, publishing and consulting firm, and editor-in-chief of the ManzellaReport.com, the premier source for global business and economic news and analysis.

Manzella began by outlining how economic conditions and political concerns impact understanding how to contract and sell to China. He proceeded to offer detailed information on current changes in the country.


CHESS booklets

Economic Conditions

Since 2007 China’s growth rate in real GDP has declined from 14% to below 7% today. Many Chinese have confused a rising stock market with a healthy one. State-owned enterprises are less productive and use capital less efficiently.

Political Concerns
Checks and balances are to the political order what competition is to capitalism. Chinese state capitalism is not free market capitalism.

Leadership is concerned about social unrest, providing jobs and maintaining stability. China walks a precarious line between economic and political liberties as China tries not to duplicate Soviet mistakes.

As China considers shifting from a state-managed economic system to a market-oriented system, goals shift from developing an export and investment-driven economy based on manufacturing and assembly to a consumer-driven economy. Chinese exports have declined. Consumer spending represents only 35% of GDP; consumer spending in the U.S. represents 70% of the economy.  Moving from an economy based on manufacturing and assembly to stimulating significant consumer spending is difficult due to the lack of safety nets for savings and retirement.


John Manzella China Rising at screen (1)

Trade Deficits

The U.S.-China trade deficit, $343 billion in 2014, continues to add tension in Washington, D.C. But as supply chain patterns shift; the deficit no longer reflects reality. The portion of the U.S. trade deficit with the Pacific Rim fell from 75% in 1998 to 57% in 2014. U.S. media, which is often critical of Chinese imports, doesn’t understand that deficits subsidize the American standard of living, make U.S. products more competitive and help keep inflation low. And the general public has little understanding of these matters.

China’s Currency Volatility

The value of the Chinese Yuan Renminbi  (RMB) per U.S. dollar has fallen since 2005. Lost exports and increases in labor and factory costs have hurt China. Many U.S. companies are automating to bring back production or take the work to other countries.

China may be allowing market forces to play a greater role in determining the yuan’s value, as part of a larger effort toward economic reform. Banks cut interest rates to stimulate borrowing to invest and reduced bank requirements to allow more investment. The currency volatility has encouraged capital flight and discouraged investment and consumer spending. Transition from a state to free market economy is a bumpy road.

Demographics and Labor Concerns

The unintended consequences of the one-child policy forecasts indicate that each Chinese generation will shrink by 25% and that fewer workers must support a large aging population. The relaxed one-child policy now will take generations to balance.

Labor shortages were reported in coastal areas, but are now less severe due to reduced production. Relocating production to the country’s interior is difficult due to lack of infrastructure.

Wages increased by double digits in past years with high turnover. They have now stabilized and turnover has decreased. Chinese wage growth has far outstripped productivity growth. The U.S. labor force is 1/6 the size of China’s yet U.S. GDP is twice as high.


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Energy Concerns and Trade Agreements

Manzella presented facts and forecasts about U.S. and Chinese energy reserves and needs. He offered detailed positions on U.S. Free Trade Agreements (FTAs) with its partners and import tariffs. Trade supports one in five U.S. jobs. He identified goals for the Trans-Pacific Partnership agreement as:  1) the elimination of tariffs/non-tariff barriers in goods, services and agriculture and 2) the establishment of enforceable rules on IP, investment and e-commerce.

Impact for Housewares

Many housewares products continue to require abundant inexpensive labor in China. Import duties are still high for reimporting parts to assemble here.  Social unrest due to lower growth has result in greater governmental restrictions on social freedoms, media, lawyers and nonprofits.

Assess Risks

Are your production facilities/suppliers all located in China? Consider diversifying sourcing to other countries.

Are Chinese suppliers cutting corners without your knowledge? Be careful and stay on top of it. Social media may alert you.

Are your intellectual property and designs likely to be stolen or copied? Transfer of technology is often demanded. Larger companies may have protections in place, smaller companies will find it difficult to prevent theft.

Are you the victim of cyber espionage? Assume everyone is.

Are you subject to unfair treatment as China creates its own national champions and protects certain industries?

Are your costs guaranteed for shorter periods? Do suppliers want payment faster?

Understand that your Chinese competitors are subsidized with artificially low energy costs, bank loans and land costs.


China is undergoing a complicated and risky economic transformation. Leadership fears unrest; 50% of population lives in urban areas. The government will do what is necessary to maintain order and power. We have an interest in maintaining stability.

Manzella took questions from the audience about diversifying production to other countries in Asia, Mexico and Central America, and the strength of the U.S. dollar vs. the RMB. He also addressed the potential for Chinese and U.S. presidential negotiations, intellectual property protection and cyber-espionage, Chinese immigration to varied countries, and political influences for the Trans-Pacific Partnership trade agreements.

To learn more about John Manzella, see www.JohnManzella.com.

2015 CHESS Conference Highlights – Brand Shift: The Future of Brands and Marketing

Chief Housewares Executives Gather at Annual Strategic Senior-Level Conference

Concept to Consumer: Innovative Strategies for Reaching Your Market

By Vicki Matranga, Design Programs Coordinator

CHESS facilitator Dan Raftery introduced futurist David Houle for the Day One keynote presentation.

Houle, who has advised more than 3000 business owners, is the co-author, with Owen Shapiro, of the 2014 book, Brand Shift: The Future of Brands and Marketing. Houle outlined the three key forces of change that have moved culture from the Information Age that began in the 1970s to the Shift Age that began around 2005.

David Houle with screen (1)


The Flow to Global —  No longer “international” but global connections and concerns.  All the major problems we face as a species are global in nature and no single nation can solve all problems.

The Flow to the Individual — Power has migrated from institutions to individuals. Choices and technologies are moving us from hierarchies to networks. The individual, who is also a global citizen, is becoming the primary economic unit.

Accelerating Electronic Connectedness — Until the end of the Industrial Age, entire civilizations and countries could develop without knowledge of concurrent societies.  Commercial cell phone use began in the early 1980s but it took 20 years to grow from the first to the billionth cellphone subscriber in 2002. Now there are about 7.2 billion people alive and close to 6.1 billion have cellphones.

Time, Distance and Place are No Longer Restrictions

In an “always-on” environment that is not place-based but space-based, every person is a media content provider. Houle discussed how this “screen reality” captures all of the details of our lives. He pointed to three recent examples of how connections between communities created cultural memes that rapidly gained momentum and power:  Gangnam style music video, The Ice Bucket Challenge to raise funds for ALS and the Occupy Wall Street movement, which coined the term, “We are the other 99%.” These concepts spread very quickly, with huge financial and political impact to effect social change.

David Houle and audience (1)

Big Data and Brands

The era of Big Data represents a universal challenge of how to identify what data to use.  To survive, organizations will analyze priorities to understand and apply appropriate data for their needs. We are reaching the limits of human ability to communicate effectively and communication must shift from speed and volume to hyper-focused nurturing.  This unfolding reality completely transforms how a company markets and looks at its brand. Brand value is the ability to share, connect and influence.

All brands must target multiple levels of Maslow’s Hierarchy of Human Needs. Brands mediate the psychological tensions of the Shift Age as they communicate with their users in an omni-channel world. Selling becomes sharing when you stop selling – instead, ask people what their problems are. Brands become resources—like nodes in a network—when persuasion becomes aspirational instead of manipulative. Consumers want brands that enhance their own value (“I want to be like that”)—and build/reinforce a person’s self-image. Houle identified the types of core relationships brands can establish with their Shift Age consumers who rapidly assimilate information, are oriented to change and value experiences over products.

Into the Future

Of the top global brands around the world, Houle said that about 2/3 are U.S. based, some 20% are European and aspirational, and roughly 10% are Asian—from Japan and South Korea. He predicts that China’s economy, the second largest in the world, will start creating global brands as it shifts from being a production-based economy to a consumer-based economy.

Houle summarized by stating that in this Golden Age of brands and marketing, companies have the opportunity to absolutely know their consumers and potential consumers. Reach them wherever they are to influence thinking and behavior. In the Q + A period that followed, Houle took questions about convenience vs. digital privacy, what he learned from past predictions (“when I was wrong it was because of a degree of change, for example, 8% actual instead of 10% forecast, three years instead of five years), robotics and interconnected products and the future nature of work.

See the full conference program here:


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Brazil/Colombia Trade Mission September 2015

By Perry Reynolds

A motivated group of International Housewares Association supplier members gathered in September in São Paulo to begin a six day mission that would involve tours of leading retail stores in São Paulo and Bogotá and preset one-to-one meetings with important retailers of housewares and home retailers in both markets.

On Sunday, September 13, our intrepid group boarded a bus in front of our São Paulo hotel on the first leg of our mission; visiting key retailers in this market. We stopped at Etna, Walmart, Tok&Stok, Camicado, Sodimac, C&C Casa e Construção. During each stop the suppliers had the opportunity assess their positioning, competition and pricing in advance of the prearranged meeting with buyers that followed on Monday and Tuesday.

Walmart Brazil - outside of HQ

Even in the face of the strong US Dollar and other economic challenges, the suppliers were able to make a positive impression on the buyers they met. Many felt that the face-to-face meetings with key merchants laid the groundwork for future market growth.

Eduardo Lemus of Picnic Time noted, “The Trade mission to Brazil and Colombia has made it possible for Picnic Time to gain access to key buyers in each market and begin the conversation that we believe will lead to long term relationships.  The Trade Mission also helped us gain so much perspective of these two markets.”

After a dinner with reps and distributors on Tuesday evening, our group boarded an early Wednesday morning flight from São Paulo to Bogotá. We were met at the airport by Manuel Gutt, IHA’s representative in Colombia who served as our guide for the next several days.

Our first agenda item was a bus tour of key Bogotá retailers so that, once again, these suppliers would be armed with first-hand knowledge of the retailers we would meet with on Thursday and Friday. Among the things that we discovered was the vitality of this market. We visited malls and stand-alone retailers and witnessed a vibrant retail scene.

“We were encouraged by the sophistication of the Colombian retailers and their eagerness to do business,” said Alexandra de la Riva of MadeSmart Housewares.

On Thursday and Friday we visited the offices of Home Sentry, Cachivaches, Sodimac (Home Center), for meetings with owners and buyers.

As our mission wound down with a sendoff dinner on Friday night at bustling and energized Andres Carne de Res restaurant in Bogotá, the group agreed that this week in the two markets was time very well spent.

If you are a member of IHA’s International Business Council (IBC) and could not make the trip with us, you have access to the Key Retailer Reports of the retailers we visited at www.housewares.org/ibc. If you are not yet a member of IBC, you can join at no charge by filing out a membership survey at www.housewares.org/ibc.

We hope to see you on future IHA Trade Missions. For more information email Lori Szudarek at Lszudarek@housewares.org.

2015 CHESS Conference Highlights – Concept to Consumer: Innovative Strategies for Reaching Your Market

Chief housewares executives eager to hear the latest from the front lines of the industry learned from experts who addressed IHA’s 2015 CHESS conference on October 6 and 7. The two-day conference, held at the Loews Chicago O’Hare hotel, attracts top executives at IHA-member companies who look forward to the varied and fast-paced program. Seven presentations and panel discussions presented the state of the practice and offered high-level insights into innovation, design, crowdfunding, branding, the future of retail, supply chain challenges and events in China. This engaging and invigorating conference joins veteran and first-time participants who value building relationships that help build their businesses.  This year’s CHESS enjoyed the largest number of participants in its 10-year + history.

Program cover and wrist

Here are highlights from the session:

Housewares Hot Seat—Lessons Learned Along the Innovation Continuum

The conference began with a frank conversation among three chief executives about how different housewares companies define and implement innovation across all aspects of their business—product development, marketing and management. Peter Giannetti, Editor-in-Chief, HomeWorld Business, moderator, noted that panelists John (JC) Collins, president, Global Marketing and Sales, Neatfreak; Alejandro Peña, president USA, Jarden Consumer Solutions; and Gary Seehoff, director and founder, Evriholder, represented  international experience—with South African Seehoff, Canadian Collins and South American Peña as well as perspectives from small to publicly held companies.

Giannetti’s initial question set the program’s pace:  Innovation is not just an idea that leads to a product. As company leaders, how do you create a culture of innovation and then manage the costs of confronting challenges to innovation? How do you create innovative strategies and manage things beyond the product? How do you define innovation?

“Innovation creates value, it’s not just a big idea, but adds value to a product and generates revenue,” said Collins. “It’s not just a product, it could also be process.”

Peter panel 4

At Evriholder, innovation means design and execution of a totally new product that solves a specific solution in a simple way, said Seehoff.

Because Jarden is a large corporation, Peña said they use innovation strategically. “We ask ourselves three questions: What is the consumer need?   Is there a technology to enable that product to be executed? Not every good idea can be done. Will this great idea that be executed with technology to meet the market and make a profit?,” he said.

Protecting their innovation comes from a mix of patents, trademarks and getting to market first. “In the first to file environment, it’s tough. Ultimately the barrier to entry is distribution. The first to market pressure means you have to penetrate with important retailers,” Seehoff said.

Building an innovative organization and managing the culture top to bottom requires a balancing act, the panel said.

“Finding the right talent is critical,” Peña explained. “We look for key characteristics:  a visionary who is consumer-centric and understands the value of discipline and execution. Innovation is about discipline and creativity. You need both.”

Seehoff agreed saying, “It’s a fine balance between discipline and stifling or encouraging innovation and creativity. Creatives often don’t conform to the norm—schedules, budgets—and they need a lot of feedback.”

Peter panel 3

When a new employee begins at Neatfreak, no matter what the position, one of the three partners will meet with the person, Collins said.

“It’s so important that they understand culture of company as the jumping off point,” he said. “Neatfreak is a company of 55 people, so the CEO is on the front lines. It’s important for employees to understand the dynamics and the layers beneath. In a company this size, most of us are close to the action, and employees in all aspects of the operation meet with senior management weekly.”

New ideas blossom from anywhere—consumers, magazines, thinking in the shower. Seehoff’s team works with the inventor community to gather to new ideas and Collins’s group gains insights from observing garment care behaviors in family homes. Pena’s team uses the Internet for real-time information from consumers….”

“We see their sentiment and can understand what made that product successful,” Peña said.

CHESS 2015 was sponsored by the following companies:

Brandwise www.brandwise.com

Design Research   www.designres.com

E-Power Marketing www.epower.com

Experticity   www.experticity.com

International Housewares Shippers Association www.housewares.org/iha/global/ihsa.aspx

Marketstar www.marketstar.com

NSF www.nsf.org

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