- US consumers are spending a lot less on home improvement as the housing market cools.
- While most shoppers are more budget-conscious, Lowe's execs say some are spending big on appliances.
- One smart LG fridge that makes "craft ice" is a "top-seller despite retailing for over $2,500," one exec said.
It's no secret that the combination of a slowdown in the US housing market and a post-COVID pivot in consumer spending is putting the squeeze on home improvement retailers' sales numbers.
Lowe's reported a year-over-year decline of 6.2% on Tuesday, a week after rival Home Depot posted its own dip of 3%, due largely to increasingly selective customers.
"The consumer is healthy," Lowe's CEO Marvin Ellison said on the company's fourth quarter earnings call. "They're simply choosing to leverage their spend in different places."
In short, people are picking restaurants and travel over a new kitchen or bathroom. And when they do have a project, they're often hunting for bargains.
But often is not always.
"While some consumers remained budget conscious, we're seeing others trade up for innovation," Lowe's head of merchandising Bill Boltz said on the call.
"A great example is our exclusive LG smart refrigerator, which has a double freezer and also makes the popular slow-melting craft ice. This product is consistently a top seller despite retailing for over $2,500," he added.
Indeed, one model in the LG line that makes the fancy ice has a list price of a whopping $4,299. Even after discounts and incentives, that's still 10 times the price of the store's (admittedly much smaller) entry-level budget offerings.
And the splurging on high-tech appliances isn't just happening in the kitchen.
"They're not afraid to invest in, for example, the GE Profile all-in-one washer-dryer combination that retails for over $2,500," Boltz said. "We could sell every single one that we can get our hands on."
That's more than twice as much as Lowe's basic top-loading, knob-having, traditional side-by-side units, sold as a set.
"It's happening across really all categories of the appliance business," Boltz added.
That's great for Lowe's and Home Depot's bottom line, but as BI's Katie Notopoulos noted last week, there's something to be said for the sheer durability of the "landlord special" white fridges and washing machines.
All the new tech crammed into high-tech appliances is undoubtedly delightful — when it works.
The trouble, as The Wall Street Journal reported, is that the electronic panels, sensors, and touch-controlled interfaces are more prone to breaking down than their simpler mechanical predecessors.
Besides, Notopoulos asks, "do you really need a fridge with a 32-inch screen that lets you watch TikTok on it?"
