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How has EU legislation impacted the promotion and NPD of vacuum cleaners?

By Chris Elliott

Vacuum cleaner manufacturers have faced a challenging two years, following EU legislation which came into force in September 2014, restricting the wattage of models to 1600 Watts and below, for manufacture and import.

Although there was a 0.4 percent increase in the month before the legislation was introduced (ONS), the manufacturers then had to invest in a significant amount of NPD to replace prohibited models and boost sales with new innovative products, such as cordless vacuum cleaners.

Brand View has analysed the promotional activity in the Vacuum Cleaner category in the past three years. A four week moving average has been used – each data point is the average percentage of range on promotion on that day and the four weeks previous.

Plotting a trendline across the data showed that the average percentage of range on promotion has risen by 15.8 percent in the last three years. It spiked in late March/early April 2016 as retailers promoted vacuum cleaners to shoppers planning their spring clean.

The same peak was observed in 2015, albeit slightly earlier. However, in 2014 the average depth of cut was greater throughout August, September and October as retailers heavily promoted vacuum cleaners before and after the EU legislation was enforced.

The average depth of cut also increased across the period analysed at a rate of 2.2 percent. In 2015 and 2016 the average depth of cut peaked in February and late May/early June, the dip in between was when retailers were promoting more products but at a lower average depth of cut. These years differed from 2014 where the peaks in average depth of cut were observed a month earlier.

A review of the promotional activity by cylinder and upright Vacuum Cleaner sub-categories, showed that the average percentage of range on promotion did not differ. Both sub-categories’ average percentage of range on promotion grew at a similar rate, with 12.8 percent growth for upright vacuum cleaners and 11.6 percent growth for cylinder vacuum cleaners.

The sub-categories followed a similar pattern of promotions throughout the three year period, however one of the most notable deviations was throughout September, October and November in 2014. The percentage of upright vacuum cleaners on promotion increased throughout these months, whereas cylinder vacuum cleaner promotions remained steady. As this period of greater promotion coincided with the introduction of the EU legislation, retailers may have promoted these vacuum cleaners more heavily to help sell prohibited models.

The average depth of cut of the cylinder and upright Vacuum Cleaner sub-categories both increased at a similar rate with 0.7 and 1.0 percent respectively.

The average depth of cut pattern for the cylinder Vacuum Cleaner sub-category increased and decreased in peaks and troughs throughout January and May 2015 and then steadily grew. Looking back at previous Brand View analysis there were still a significant number of cylinder vacuum cleaners above 1600 Watts still listed in 2015. This was not contravening EU legislation, as retailers were permitted to sell the older models until they were out of stock – this increase in average depth of cut could be retailers attempting to clear this stock.

The EU legislation had a significant impact on the number of delistings and new listings with a much greater number in 2014 than in 2015 and 2016 so far. Some 59.1 percent of new listings in 2014 were after the EU legislation came into effect (1 September 2014).

In 2014, Vax had the most new listings at 124 and 94 delistings. Dyson had the greatest percentage difference between delistings and new listings. The manufacturer had 37 delistings, but 50 new listings, which included variations of the DC40 and DC54 now compliant with the new EU legislation.

In 2015 there were 26.5 percent more new listings than delistings. Vax had the greatest number of new listings with 105 products listed. Hoover had the second greatest number of new listings with 103, although it only delisted 54 items. The difference between its delistings and new listings was almost half the total difference in new listings and delistings in the whole category.

How will manufacturers be affected by further legislation in 2017?

On 1 September 2017 the next stage of EU legislation to limit the manufacture and import of vacuum wattage to 900 Watts is due to come into force. However, in light of the results of the EU referendum the UK may choose to not comply to this legislation, although it will have to in the short term.

The number of new listings was noticeably proportionally lower this year so far. This could have been vacuum cleaner manufacturers being more cautious about new listings due to the uncertainty of future legislation. Dyson was the only manufacturer of those analysed to have more new listings and delistings.

These new listings included the Dyson V8 Cordless Vacuum Cleaner which is exempt from the 2017 EU legislation as it is battery powered. Variations of the Dyson Small Ball have also been listed, each with a compliant 900W motor.

Cordless vacuum cleaners have significantly contributed to the sales in the Vacuum Cleaner category as a whole. GfK reported that global sales of cordless vacuum cleaners increased by 66 percent in 2015 and accounted for 16 percent of all Vacuum Cleaner sales.

Dyson accounted for a quarter of cordless vacuum cleaner sales globally. The importance of battery-powered cordless cacuums to the company’s growth plans was affirmed following its announcement to invest £1 billion in battery technology over the next five years.

Since the start of 2015 the number of cordless vacuum cleaner listings in Argos, Co-op Electrical, Currys, John Lewis and Tesco Direct has doubled – this is based on the cylinder, handheld and upright Vacuum Cleaner sub-categories.

Argos was the only retailer that more than doubled its range in this time period with a 134.4 percent increase in cordless vacuum cleaner listings. Co-op Electrical and Currys almost doubled its range with a 93.8 and 91.3 percent increase respectively.

Of the major brands, Vax had the greatest increase in listings – the number of its cordless vacuum cleaner listings increased more than fivefold from seven listings to 36.

The data highlights that Dyson had the greatest presence in the cordless vacuum cleaners sub-category early on. On the week commencing 29 December 2014, Dyson accounted for 30.8 percent of all cordless vacuum cleaner listings across Argos, Co-op Electrical, Currys, John Lewis and Tesco Direct. On the week commencing 3 October 2016 Dyson’s share had diminished to 20.1 percent as its rival brands caught up.

Britain will leave the EU in 2019 at the earliest, therefore legislation restricting the manufacture of vacuum cleaners to 900 Watts or lower will still be enforced on 1 September 2017.

Over the next year further significant changes to the range of vacuum cleaners sold can be expected. Retailers and manufacturers will reduce the number of vacuum cleaners sold with over 900 Watts of power to comply with the new legislation. Given the encouraging sales figures reported by both GfK and Dyson we can expect further innovation and new product releases of cordless vacuum cleaners.

A rise in the number of robotic vacuum cleaners can also be expected – Appliances Direct reported a 243 percent increase in the sales of robotic vacuum cleaners in 2015 (Good Housekeeping). Dyson, Miele and Samsung all released new Robotic Vacuum Cleaners to the UK market in the last year.

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