Having lived and forged a career in the appliance industry in five different countries, it’s fair to say that Whirlpool UK’s marketing director Marco Falaschetti is well-placed to talk about the standout similarities and differences from market to market. Here, he looks at how the appliance industry operates in Turkey and Russia
I’ve been lucky enough to have lived, and worked, in five different countries – Italy, Turkey, Finland, Russia, and, since the beginning of March this year, the UK – and I’m truly fascinated by the diversity of markets and cultures.
I developed my career at Whirlpool (Indesit Company), through roles in marketing and sourcing, so I have a very good understanding of how the appliance industry approaches and operates in international markets.
Something that remains consistent, in terms of approaching each individual market, is that everything starts with the consumer. Every country has its own culture, cooking, living and eating habits so, when you’re a global player like Whirlpool, it’s very difficult to have one standard approach that works for every single market.
So, we start with the consumer and make sure we have the right insight into how they live, how they cook, how they purchase, what they expect in terms of service and design. These factors generate the product range we invest in and develop for each individual market.
On a global scale, product trends are driven by a number of factors such as housing stock, consumer demographics, cultures and habits. The penetration of a particular product category will differ vastly from one market to another. For instance, the UK consumer traditionally uses their freezer much more on a daily basis than consumers in other European countries. Therefore the UK needs the largest freezer capacity in combi models out of any market in Europe.
Built-in is still a growing trend worldwide and we, as I’m sure like many other leading brands, have an aggressive growth plan for the category.
There are obviously challenges in the market and, typically, there are some regions performing better than others. But in general, the appliance market looks really strong at the moment. It’s growing and I don’t think it’s a trend that’s going to reverse.
I’ve focused here on Russia and Turkey specifically, because of my experience in both and because there are considerable differences in how brands approach these markets in comparison with the UK.
Specialist kitchen retailers are still pretty weak in Turkey. Rather than independent kitchen showrooms, which are still one of the strongest channels in the UK, people tend to buy furniture through small, independent traditional carpenters.
Appliance brands have a really strong reputation and that’s what tends to drive purchases. Eighty-five per cent of appliances are sold through traditional independent electrical shops on the high street. A third of these run their own multi-brand showrooms, where they partner with a range of suppliers, while two-thirds sell through exclusive, branded shops. These retailers will either have a franchise agreement with a brand or an exclusive agreement with a manufacturer.
What’s driven this retail structure in Turkey is the consumer. Before I was based in Turkey, with Indesit, I thought UK consumers were ‘demanding’ – but the Turkish consumer is more demanding than any I have experienced.
UK consumers are very demanding on price, but still expect a superior service. The Turkish consumer considers the purchase of an appliance as a true investment. They still see it as a status symbol and so are prepared to pay a much higher price, relative to the average income, than anywhere else.
The Turkish consumer is also hugely demanding in terms of service and personal interaction – that’s why they choose to buy from showrooms rather than online. They appreciate the expertise, knowledge, and trust a dealer who’s been on their local high street for years can offer.
From a brand perspective, the Turkish market is difficult to break into unless you produce there. If you don’t have a production facility there, as well as a network of branded stores, you face huge import duties, implemented to protect the local market. Most of the market is in the hands of Turkish players like Arçelik – or players like us [Whirlpool], who have factories and branded stores.
Properties there tend to be larger and so kitchens are typically very spacious. Cooking and eating are also a big part of Turkish culture, so consumers are prepared to pay more for a product that will last.
The route to market for appliances in Russia is more similar to the European market than the UK. Obviously, geographically, Russia is extremely vast so there are only a few electrical retailers truly operating throughout the entire country. Most tend to concentrate on certain regions.
In the UK, the internet has impacted hugely on the kitchen appliance market. More and more consumers, looking for a bargain, are confident to make the final purchase online. In Russia, consumers use the internet to research brands, products and trends – but the actual purchase always happens in-store. Online transactions are rare.
In contrast to both the UK and Turkish consumer, the Russian consumer isn’t demanding at all in terms of service. Also, they tend to look more at aesthetics when making a purchasing decision, rather than the functionality of the product. What’s important to consumers in Russia when choosing products for their kitchen is that they can add their own sense of style and have something different from everyone else. For example, appliances with Swarovski crystals and bright colour finishes are sold regularly over there.
All the major players are developing and manufacturing products for the Russian market. It’s a very well-developed market in that sense. All brands have a good offering at all price points in Russia.
It’s a very polarised market though, and I’m afraid we are moving towards that in most other markets as well. On the one hand, Russia has a strong need for entry-level appliances, where £5 or £10 can make all the difference. On the other hand, a large percentage of the population don’t pay any attention to what they spend and only want something that makes a statement.
Russian housing stock is very small and, in most cases, tends to be apartment-style living. Very few households, for example, will have space for a dishwasher, so penetration of that category is very low.