Cheap Chinese products to blame for price erosion: whitegoods leader

By Patrick Avenell

SYDNEY: Price erosion is yet to seriously impact the cooking category, with Emilia Glem general manager David Gilmore explaining the key factors that have protected this industry while others suffer terribly from aggressive pricing policies. According to Gilmore, one of these factors is the lack of competition from cheap Chinese imports.

Part of the cooking category’s protection from price erosion is its European traditions. Glem Gas is currently the number one brand for freestanding cookers in Italy, and most of Gilmore’s competitors boast similar records in Germany or France or the Netherlands. But it’s a lot different in smalls, for example, where Gilmore used to work.

“I worked in smalls at Sunbeam for a long time. I thought that was much harder on price points, mainly because it’s so easy for someone to pick up a cheap iron from China. We [cooking] haven’t had natural exposure to Chinese products yet in cooking and that’s probably the main difference.”

Speaking at the launch of the new Glem Gas Monolith range, Gilmore also praised his retail partners for being able to maintain price points year on year, if not improve them.

“We’re going well; we’ve got the right retailers selling our products. We went with Clive Peeters, Harvey Norman, Good Guys, they seem to be going quite well at the moment,” said Gilmore.

“It’d be wrong of me to say it’s extreme, because it’s not, if you look at average selling price for this year, it’s slightly better than for last year.”

When asked why cooking brands have proven resistant to price erosion, whilst at the same time it has become virulent throughout other categories, Gilmore was pragmatic.

“It’s the [supply] cost – it’s gone up around 35 per cent due to the devaluation of the dollar against the euro. That was sitting nicely at 64 cents and then when it dropped to 48 cents, none of us could catch it,” said Gilmore, who also thinks this may have been a factor in Kleenmaid’s collapse.

“No wonder Kleenmaid went broke. They already had sales committed, and they couldn’t get more money for those sales, and they had a huge currency fluctuation like that, it’s very difficult to manage.”

Last week, Panasonic Australia managing director Steve Rust said he monitors price erosion in Panasonic’s categories daily, and yesterday, training specialist Bob Johnson said the loss leader mentality and poor sales skills are responsible for lost profits.

What’s your view on price erosion? Send me an email.

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