For a long period of time, S&P and Moody's have consistently given the United States a good rating for its credit worthiness. The two credit rating companies give a significant weightage to the data provided by the credit reporting bureaus. The US Household Appliance sector has recorded positive growth over the past few years but remains fairly low compared to other major appliances including automobiles and household furnishings. This article will provide the readers with some important information regarding the trends that they should be aware of.
According to the historical data provided by the Federal Reserve Bank, the ups and downs of the US economy depend largely on the distribution channels. Over a period of time the ups and downs of the credit rating of the US Household Appliances sector have been closely associated with changes in the interest rates. As the interest rates continue to remain on the upward swing, the cost of the products is gradually increasing. One important reason why the cost of the appliances has not dropped is because the distribution channels are also not contracting but actually increasing. There are three main reasons why this occurs; first is the increasing popularity of the brands such as Whirlpool, Kohler and Samsung.
Booming sector of US Household Appliance
On a more recent note, it was noted by the economists over two years ago that the increasing popularity of the Korean-based manufacturers had pushed the prices of the leading US household appliances down. However, they noted that the reduction in prices was driven by higher gross margins, which translates into higher income and hence better profits. With respect to the second reason why the pricing has fallen, it can be attributed to two factors. One is that the rising popularity of the brand names has reduced the number of distributors from which the branded household appliances are supplied. Hence the pricing is driven by the volume discount. The other reason is that as many retailers are now offering the same products through their websites at lower prices than the direct suppliers, the prices have become competitive.
Looking at the forecast period for the US home appliances market, we can see some contraction in the current quarter compared to what the experts had previously predicted. According to the US Department of Commerce, there is an expected decline in the shipments of the main home appliances to be replaced at the end of the current year. However, the forecast period does not include the results of the current quarter, which will impact the US economy in the long run.
The contraction in the shipments is believed to be caused by the changing preferences of the customers. In the forecast period, most customers are looking for discounts and offers. They are looking for more value for their dollar, which is possible only if the market remains competitive. It is important to note that according to the economists, one of the major causes of the slowdown in the US household appliances market is the lack of new products to replace the old ones which are decreasing in efficiency. It is interesting to note that the demand for the replacement products are not only continuing but also increasing with the popularity of the latest models.
The demand for the new appliances is still increasing, which means that the supply structure for the appliances is still falling. With a lower demand, there is also a weaker competition in the market. This implies that there is a tendency for the prices of the household appliances to fall. A good example of the demand deficiency is seen in the case of the reference price or the wholesale price provided by the major appliance manufacturers. The price of their appliances have dropped significantly from the previous years, which is below the industry average.
The weak demand and the low production rates are the two major factors that have resulted in the US household appliances market in the United States experiencing a reduction in the number of sales. The strong competition in the market is also one of the reasons why there is still less demand. Another factor that has led to the decrease in the number of sales is the unfavorable terms of supply and demand. When there are less buyers, the manufacturer will be compelled to reduce the prices of its products to gain market share.
The weak demand and the unfavorable terms of supply and demand have led to the US home appliances market in the united states experiencing a reduction in the number of sales. However, the situation is not as bad as it seems. There are still some ways to turn things around. The most important step would be to improve the terms of supply and demand by creating favorable conditions for buyers.