The price war for cheap electrical appliances is heating up in the kitchen. Competition between the major multiples in the category is so fierce that customers can now pick up toasters for small change and microwaves for less than £25.
In February this year The Grocer 33's quarterly Non Food Report revealed that the cheapest microwave sold at the major multiples could be bought at Asda for a mere £24.43. Asda was also the place to bag the cheapest stainless steel kettle at £14.77, while at Sainsbury you could pick up the cheapest two-slice toaster for £5.59.
Yet despite the glut of cheap products, the market for kitchen appliances is suffering, according to Nick Gladding, senior analyst at Verdict Research. He says a recent slowdown in the economy means that the category has started to struggle. "Kitchen appliances have had a difficult year and demand has been hit by a slowdown in the housing market," he says. "White goods such as fridges and washing machines have been hardest hit, but cheap kettles and toasters remain bargains for customers."
Gladding does believe that, despite slower than expected trading, retailers will continue to increase their portfolios because of the close links between food and kitchen appliances. "It is not driving sales, but it is a useful category as there is a natural fit between grocery and the kitchen," he adds.
White goods also pose another problem for retailers - one of space. Although kettles and toasters do not take up that much room on shelf, large white goods such as washing machines, fridges and ovens take up valuable space and generally do not sell as fast as smaller goods. To solve this, retailers have moved online. Last year Sainsbury launched www.sainsburykitchenappliances.co.uk, offering more than 4,000 products from 27 major brands. Tesco has also set aside a section of its web site Tesco.com for electricals, offering online deals.
Richard Ratner, analyst at investment bank Seymour Pierce, says online is an attractive medium because it enables shoppers to compare products and prices with much greater ease than having to visit a number of outlets: "Online does give supermarkets more space and consumers are able to compare prices before buying."
Ratner believes that prices are likely to continue to fall as retailers fight for custom.
Emma Newton, product group manager for the breakfast range of products at electrical manufacturer Morphy Richards, which sells a number of kitchen appliances through the multiples, believes retailers will use own label products to wage a price war. "The buying power of the major multiples ensures that they can source own label goods at fiercely competitive prices," she says.
Newton adds that this should not deter other manufacturers from selling their products in the multiples. "Although a customer's initial intention might be to purchase the cheapest appliance, when faced with the range on offer they often trade up," she says.
Morphy Richards is planning to introduce a new range of kettles, toasters and baking products into the multiples this year.