2018 State of the Industry Report

The International Housewares Association – The Home Authority® – is strategically positioned to connect, inform, support and enable its international membership to lead in the global marketplace. The International Housewares Association (IHA) is committed to maximizing the success of the global home products industry on behalf of its membership by providing a world- class home products marketplace, facilitating global commerce and the buyer-seller interface, increasing consumer awareness and interest in home products, gathering and disseminating essential marketplace intelligence and educating and supporting key constituencies to improve th eir success.

Each year, IHA sponsors the International Home + Housewares Show. With nearly 60,000 attendees, the Show is one of the largest trade events in the world. Future Show dates:

 March 2 – 5, 2019  March 14 – 17, 2020  March 13 – 16, 2021  March 5 – 8, 2022

Additional information, including registration, is available at www.housewares.org.

i 2018 State of the Industry Report 2018 State of the Industry Report

Dear Housewares Executive,

The 2018 IHA State of the Industry Report is a joint endeavor of the International Housewares Association (IHA) and Raftery Resource Network, Inc. This publication includes a compilation of data from the IHA annual membership survey as well as data from several authoritative sources, including the U.S. Government, industry trade journals and industry data services.

The timing of the report coincides with the release of key data about consumer spending during the previous year (2017). The methodology used to project housewares sales incorporates these data and remains consis7tent with prior years’ reports, with one exception, which became effective with the 2008 report.

The data that IHA member companies contribute are from the most current year available, i.e., 2017. In years past, a small percentage of unique category and channel data from prior years were included to expand the sample size. The most immediate year data sample has proven to be very robust for the eighth consecutive year as the number of companies providing data has increased significantly since the change occurred.

Please forward any comments or suggestions for improvement so we can continue to meet your information needs.

Sincerely,

Derek Miller Dan Raftery President President International Housewares Association Raftery Resource Network, Inc. 6400 Shafer Court, Suite 650 593 Crosswind Lane Rosemont, IL 60018 Lindenhurst, IL 60046

phone: 847.292.4200 phone: 708-370-9933 fax: 847.292.4211 email: [email protected] email: [email protected] website: www.RafteryNet.com website: www.housewares.org

ii 2018 State of the Industry Report How to Use this Report

Executive Summary This section contains a succinct synopsis of the U.S. and global data analysis in this report by Raftery Resource Network.

Macro Trends This section looks at several major economic trends and forces affecting housewares consumers: retail stores, raw materials, transportation costs, healthcare costs, inflation, U.S. household expenditures, advertising, the housing market and world economics.

Global & U.S. Housewares Markets This section discusses size and trends in global markets and international trade. With a focus on the United States, the largest housewares market per capita, this section includes U.S. market size data by housewares category.

U.S. Categories & Channels Find out which retail channels gained the most market share in 2017 and in which housewares categories. This section includes analyses by retail channel.

Channel Focus: Digital Commerce This is a special section with selected trend data about Internet retail and how consumers shop online.

IHA Membership Profile This final section includes key statistics about IHA member companies.

iii 2018 State of the Industry Report Table of Contents

Executive Summary & Forecasts...... 1 – Key Findings ...... 2 – Top 10 Retailers Today vs. 1995 ...... 3 Macro Trends ...... 5 – Retail Sales & Inventory ...... 6 – Raw Materials ...... 7 – Transportation Costs ...... 8 – Healthcare Costs ...... 9 – Capital Expenditures ...... 11 – Consumer Economics ...... 12 – Employment ...... 14 – Household Expenditures ...... 16 – Housing Market ...... 17 – Advertising ...... 18 – Global Economy ...... 20 Global & U.S. Housewares Markets ...... 21 – Global Housewares Market ...... 22 – Size of U.S. Housewares Industry ...... 23 – U.S. Housewares by Category ...... 24 U.S. Categories & Channels ...... 25 – Housewares Category Share Estimates ...... 26 – Category Sales by Channel Distribution ...... 27 – Direct-to-Retail vs. Wholesale ...... 28 – Direct-to-Retail Channels Overview ...... 29 – Mass Merchants & Supercenters ...... 30 – Department Stores ...... 31 – Specialty Stores ...... 31 – Supermarkets/Food Stores ...... 32 – Hardware Stores & Home Centers ...... 33 – Warehouse Clubs ...... 33 – Drug Stores ...... 34 – Home Furnishings & Appliances ...... 35 – Gourmet, Gift, Novelty & Souvenir Stores ...... 35 – Variety & One Price Stores ...... 36 – Others...... 36 – Catalogs & TV ...... 37 – Manufacturer Website ...... 37 – Internet Retailers ...... 38

Channel Focus: Digital Commerce ...... 39 – Digital Commerce ...... 40 IHA Membership Profile ...... 43 – Sales Profile ...... 44 – Operations Profile ...... 45 Appendices ...... 46 – Appendix A: Methodology ...... 47 – Appendix B: Top 100 Domestic Housewares Retailers by Sales ...... 48 – Appendix C: About the Author ...... 50

iv 2018 State of the Industry Report

EXECUTIVE SUMMARY AND FORECASTS

1 2018 State of the Industry Report Executive Summary

Key Findings Global housewares market data show an overall retail sales increase of 2.5% in 2017. This is similar to three of the previous four years (i.e., 2.4% in 2016, 2.6% in 2014 and 2.9% in 2013). In keeping with past reports, this State of the Industry Report provides a projection of global sales using current U.S. dollar valuations versus other major currencies. Several basic economic variations are reflected in the housewares global market projections, including changes in Gross Domestic Product, population and currency for all available countries. Total U.S. housewares expenditures, which are at the center of these projections, increased 6.0% in 2017 versus 2016.

Average U.S. household total expenditures increased 6.7% in 2017 versus 2016, according to the U.S. Bureau of Labor Statistics (BLS). Consumers spent more in 2017 in six of eight major areas of household spending. Average household expenditures increased significantly for restaurant meals and pets. Increases were also reported for education, fruits & vegetables, gasoline & motor oil and dairy products. Cellular phone service expenditures were flat. BLS housewares expenditures are combined with data provided by IHA member companies to project the total market.

The average (mean) size of IHA member companies increased to $19.4 million. The median (mid-point) range of the survey remained $5 - 9.9 million. Size distribution shifted higher versus prior years as 65% of these companies reported annual sales under $10 million in 2017.

More than half (61%) of IHA member housewares companies produce all of their products in countries other than the U.S. Another 33% make some products in the U.S. and some overseas. For these companies, 87% of their products are manufactured outside of the U.S., similar to past years.

Most IHA member companies (93%) sell their products globally. Among those who do, 24.7% of their housewares sales are from exports.

The U.S. mass merchants/supercenters channel was the sales leader in all housewares product categories in 2017. Department stores and specialty retailers, the second and third highest largest channels respectively, both posted sales increases. In addition, housewares manufacturers reported higher sales in 2017 versus 2016 to brick and mortar retailers who also have e-commerce divisions.

Most of the total housewares sales gains went to smaller retail channels, including Specialty Stores (+19.0%), Warehouse Clubs (+12.0%), Variety/One-Price Stores (+18.3%), Home Furnishings Stores (+30.5%), Gourmet/Gift/Novelty (+24.7%) and Catalogs, TV (+25.4%).

Overall U.S. non-store retailing had the second largest share of housewares sales in 2017. When combined, these housewares retail channels – Direct to Consumer via Manufacturer Website and Catalogs/TV and Internet Retailers – had 15.9% share of total housewares retail sales in 2017.

The top three categories for 2017 were cook & bakeware (16.1%), kitchen tools & accessories (14.2%) and tabletop (10.7%). Kitchen electrics (10.4%) decreased its share from 2016, and slipped to number four in 2017.

2 2018 State of the Industry Report Executive Summary

Top 10 Retailers Today vs. 1995 Consolidation has concentrated the base of retail customers for the housewares industry. Compared to 1995, the top 10 housewares retailers in 2017 captured .7% more of the sales from the top 100. Their share increased in 2017 to 66.3% from 65.1% in 2016.

Top 10 Retailers 2017 versus 1995 Housewares Housewares Company Stores 2017 Sales 2017 Company Stores 1995 Sales 1995 Walmart 4,761 $21,185 Walmart 2,234 $7,775 Costco 741 $13,330 Kmart 2,477 $4,065 Target 1,822 $7,181 Price Costco 240 $2,125 Bed Bath & Beyond 1,496 $5,232 Sam’s Club 433 $2,080 Sam’s Club 597 $4,493 Target 670 $1,825 Williams Sonoma 607 $4,132 Sears 2,306 $1,695 Amazon.com 456 $3,147 Montgomery Ward 398 $630 Home Depot 2,284 $2,603 Williams-Sonoma 240 $540 Walgreens 8,100 $2,428 Home Depot 423 $510 Kroger 3,902 $1,862 American Stores 1,650 $500 Totals 24,766 $65,593 Totals 11,071 $21,745 Percent of Top 100 17.6% 66.3% Percent of Top 100 15.7% 59.4% Sales in Millions Source: HomeWorld Business September 2018 and September 19, 1996

Sixty companies that were on the 1995 Top 100 list have “disappeared” due to mergers, acquisitions and bankruptcies. This is the same number as last two years, i.e., no additional companies from 1995 “disappeared” in 2017. Six companies dropped off the 2017 list versus 2016 for similar reasons. Their replacements operated 2,181 stores versus 748 operated by the delisted retailers. Housewares sales were similar for the sets of companies.

Among Top 100 Retailers in 1995, but not in 2017 Rank Rank Rank 52 A&P 80 Giant Food 100 Penn Traffic 10 American Stores 49 Hechinger 90 Phar-Mor 21 Ames 30 Hills 90 Proffitt’s 95 Ann & Hope 73 HomeBase 43 Revco 24 Best Products 87 Home Express 64 Rose’s 97 Boscov’s 84 H.W.I. 25 Safeway 28 Bradlees 77 Kitchen Collection 14 Service Merchandise 98 Brookstone 16 Lechter’s 48 ServiStar 64 Builders Square 67 Linens’ n Things** 86 Sharper Image** 16 Caldor 90 L.Luria 63 Smith Food & Drug 90 Carson Pirie Scott 43 Longs 58 Spiegel 50 Consolidated 80 MacFrugal’s 82 Stop & Shop 57 Dayton Hudson 15 May Department Stores 79 Thrift 36 Eckerd 74 McCrory Stores 35 Thrifty/Payless 54 Family Dollar 70 Mercantile Stores 71 Value City 10 Federated 95 Mervyn’s 34 Venture 23 Fingerhut 7 Montgomery Ward 76 Vons 56 Food Lion 64 Pamida 60 Waccamaw 74 Fortunoff 90 Pathmark 38 Winn Dixie 38 Fred Meyer 77 Payless Cashways 62 Woolworth ** Now doing business on the Internet. Some of these retailers are still operating, just not in the top 100. Note: Rank is 1995 rank. Identical rankings indicate ties. Source: HomeWorld Business September 19, 1996

3 2018 State of the Industry Report Executive Summary

The current pace of store closings continues to affect the specialty retail channel. 2018 Store Closure Announcements as of August 24, 2018

Toys "R" Us Walgreens Sears and Kmart Ascena Retail Bon-Ton Best Buy Signet Jewlers Mattress Frim GNC Claire's Foot Locker Brookstone The Children's Place Orchard Supply Hdwr Southeastern Grocers Aaron Brothers National Stores Nine West Gap Total announced closings since start of 2018: Walmart Abercrombie & Finch 4,478 A'gaci Bed Bath & Beyond Shoe Carnival Kiko USA Vera Bradley The Fresh Market Camping World 0 100 200 300 400 500 600 700 800 900 1000 Source: Fung Global Retail & Technology

Variety/one-price retailers continue their recent expansion trend. Other new store openings were widely dispersed over several retail channels 2018 Store Openings Announcements as of August 24, 2018

Dollar General Aldi Five Below Ulta O Bag Ross Stores Gap Walmart Tractor Supply Co Fabletics Gander Outdoors Old Navy Macy's Total announced openings since start of 2018: Untuckit Foot Locker 2,372 Warby Parker Target Casper Sleep Costco Bed Bath & Beyond 0 100 200 300 400 500 600 700 800 900 1000

Source: Fung Global Retail & Technology Although the rate of new store openings is only about half that of closings, the “over-stored” condition in the U.S. is likely to continue, given the growth of the Internet channel and the fact that U.S. per capita square feet of retail space was still 23.6 in 2017 versus 23.7 in 2016, according to the International Council of Shopping Centers. This remains the largest in the world.

4 2018 State of the Industry Report

MACRO TRENDS

5 2018 State of the Industry Report Macro Trends

This section contains a selection of key statistical trends that affect the housewares industry in the U.S. and around the world.

1. Internet sales growth continues to drive overall U.S. retail sales. While Big Box and Department Stores saw higher total 2017 retail sales than Non-store Retailers, the rankings are projected to reverse in 2018.

Annual Retail Sales by Channel $1,000 U.S. $ Billions $900 $800 Big Box & Department Stores $692.0 $700 $600 $500 Non-store Retailers $619.2 $400 $300 $200 Office Supply, Gift, Novelty, Souvenir Stores $126.0 $100 * IHA Projection $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* 2021* Annual Retail Trade Survey, 2008 – 2017, U.S. Census Bureau

Retail inventory turnover in the U.S. rose in 2017, remaining well below the 2011 record high, while total retail sales, including Internet, increased. Six-month sales changes for Internet Retailers are larger than Big Box & Department Stores, but the trends are converging.

Annual Retail Sales & Inventory Turns 15% Change In Sales 9.1 5.5 Six Month Period vs. Prior Year

Non-store Retailers 8.9 10% 5.0 8.7 8.68 8.74 5.1 8.5 4.5 5% Big Box & Department 8.3 Stores

8.1 4.0 0% 3.82 8.15 7.9 Turns 3.5 -5% 7.7 Sales (in Trillions US$) 7.5 3.0 -10% Source: U.S. Census Bureau

SOI INSIGHT

As Internet sales grow, housewares manufacturers may need to take on more inventory at their own locations or at third-party service providers in order to quickly fulfill direct- to-consumer obligations.

6 2018 State of the Industry Report Macro Trends

2. Prices increased in 2017 for many key housewares raw materials. Petroleum pricing, which drives polymer costs, plunged in 2015 but trended higher in 2017. The composite metals price index rose through most of 2016 and 2017. Both aluminum and copper prices increased in 2017, continuing a two-year trend.

Petroleum Prices

$91.09

$97.98

$61.65 $50.80 $43.29

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

U.S. Dollar per Barrel of Crude Oil: Cushing, OK WTI Spot Price FOB. Source: U.S. Energy Information Administration

Composite Metals Index 140 125.82 120 84.11 100

80

60 51.82 40 8- 9- 9- 10- 10- 11- 11- 12- 12- 13- 13- 14- 14- 15- 15- 16- 16- 17- 17- Nov May Nov May Nov May Nov May Nov May Nov May Nov May Nov May Nov May Nov

Commodity Metals Price Index, 2005 = 100, includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead and Uranium Price Indices. Source: Index Mundi

Aluminum Aluminum and Copper Prices Copper

9,067 7,428 $10,000 7,000 6,821

$7,000 5,833 5,720 4,642 $4,000 2,357 2,024 2,087 1,740 1,909 1,497 1,885 $1,000 Jun- De c- Jun- De c- Jun- De c- Jun- De c- Jun- De c- Jun- De c- Jun- De c- Jun- De c- 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17

Aluminum and copper price monthly in U.S. dollars per metric ton. Source: Index Mundi, extracted from the CIA World Factbook SOI INSIGHT

For the past two years, raw materials cost increases have left housewares manufacturers with few options beyond making tough product rationalization or pricing decisions.

7 2018 State of the Industry Report

Macro Trends

3. Container costs were volatile in 2017 as inbound volume grew substantially. The volatility and seasonality of the cost of shipping containers can be seen in the historical cost pattern of the Hong Kong to LA shipping lane, which saw overall price increases in 2016 fall back in early 2017, only to rise again into 2018. Deliveries from suppliers to manufacturers became increasing slower as materials inventories continued to be too low.

Weekly Ocean Container Pricing Supplier Deliveries & Customer Hong Kong to LA Rate (Drewry-Weekly) Inventories $2,500 70 Customer Inventories Index $2,000 60 $1,500 50 $1,000 40 $500 Supplier Deliveries Index $0 30

USD per 40-foot container (FEU) Source: Drewery Container Freight Rate Insight, JOC.com Source: Institute for Supply Management

Imports of goods into the U.S. outpaced exports from the U.S. at 7 of 8 major ports. Imports increased at 7 of these ports in 2017 versus 2016. Exports increased at 5 of these 8 ports. Combined outbound shipments increased 2.6% in 2017 versus 2016; combined inbound shipments increased 8.0%.

Loaded Container Volume Shipments of U.S. Goods

4,716,089

3,863,187 3,396,469

1,899,933 1,875,831

1,677,800 1,521,307 1,470,514 1,415,322 1,380,652 1,372,453 1,319,710 1,101,645

1,076,033 966,197 927,345 - + + + - - + ++ + + + ++ + ++ - +

NY/NJ Houston Virginia Savannah Vancouver Long Beach Los Angeles Seattle/Tacoma 2017 Outbound 2017 Inbound SOI INSIGHT Source: Seaport Statistics for each location

As container costs sit near recent record levels, some housewares manufacturers may be in

a short-term positive inventory position for finished goods, but the current trends on the

supply side indicate a potential for shortages of both materials and containers in the longer

term.

8 2018 State of the Industry Report

Macro Trends

4. Healthcare costs continue to increase for employers and employees. The annual increase in workers’ earnings matched the increase in health insurance premiums for workers in 2017 for the first time in recent history.

Percentage Increase in Health Insurance Premiums and Workers' Earnings, 2008 - 2017 9.5% 10%

8% 5.5% 4.7% 6% 4.5% 4.2% 3.8% 3.4% 3.4% 4% 3.0% 3.0%

2% 3.4%

0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Health Insurance Premiums Workers' Earnings Source: Kaiser Family Foundation, Employer Health Benefits 2017 Annual Survey, family coverage. BLS, Labor Force Statistics from the Current Population Survey

One technique that employers use to manage their healthcare costs has been to increase employee deductible levels. Average employee annual deductibles increased significantly in 2016 for POS healthcare plans, returning to past levels in 2017; deductibles for PPO plans and HMO plans both increased in 2017.

Average Annual Deductibles for Single Coverage, by Plan Type $1,800

$1,600 $1,400 $1,737 $1,200 2013 $1,000 2014 $1,314 $1,301 $1,230 $1,215 2015 $800 $1,175

$958 $1,046 $1,032 $1,028 $1,025 $600 $917 2016 $843 $799

$400 $729 2017

$200

$0 HMO PPO POS

Source: Kaiser Family Foundation, Employer Health Benefits 2017 Annual Survey

9 2018 State of the Industry Report Macro Trends

Companies paid more for both family plans and single person healthcare plans in 2017.

Average Annual Employer Contributions

$11,786 $12,011 $12,591 $12,865 $13,049 $15,000 $11,429 $9,773 $10,944 $9,325 $9,860 $10,000

$5,000 $5,306 $5,477 $3,983 $4,045 $4,150 $4,508 $4,664 $4,885 $4,994 $5,179 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Single Coverage Family Coverage Source: Kaiser Family Foundation, Employer Health Benefits 2017 Annual Survey

Employers’ average premiums are highest for PPO and HMO family plans. Worker contributions are highest for HMO and PPO family plans. Across all types of plans, employers paid 70% of the premiums, down from 71% in 2016.

Average Annual Insurance Premiums

Family $5,714 $13,049 70% All Plans Single $1,213 $5,477 82% Family $4,599 $12,982 74% HDHP/SO Single $1,020 $5,004 83%

Family $5,616 $12,530 69% POS Single $804 $5,912 88%

Family $6,050 $13,430 69% PPO Single $1,312 $5,653 81% Family $6,850 $12,221 64% HMO Single $1,532 $5,520 78%

$0 $5,000 $10,000 $15,000 $20,000 Worker contribution Employer contribution

Source: Kaiser Family Foundation, Employer Health Benefits 2017 Annual Survey

HDHP/SO – High Deductible Health Plan with a Savings Option (e.g., HSA, HRA Plans) HMO – Health Maintenance Organization PPO – Preferred Provider Organization POS – Point of Service

SOI INSIGHT

The economic effect of rising healthcare costs for employers and workers continues to strain corporate operating costs and discretionary consumer expenditures.

10 2018 State of the Industry Report

Macro Trends

5. Capital expenditures in the U.S. increased over 9% in each quarter of 2017, as Asia’s R&D spending continued to outpace the U.S. for the fifth year. Expenditures on capital equipment and software declined for six straight quarters during the height of the recession. After the 13.1% decline in the first quarter, capital expenditures were quiet for the rest of 2016 and came alive in every quarter of 2017.

U.S. Capital Equipment Spending Quarterly Change at an Annual Rate 20.0%

15.0% 9.9% 10.0% 9.1% 5.0%

0.0% 2012 2013 2014 2015 2016 2017 -5.0%

-10.0% Source: Bureau of Economic Analysis

Asian countries’ spending on research and development surpassed the annual U.S. amount for the first time in 2011 and continues to increase at a higher rate than the U.S. figure.

$800 R&D Spending U.S. $ in Billions Annually Asia $700 $600 $500 U.S. $400 EU

$300 $200 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Main Science and Technology Indicators, Organisation for Economic Co-operation and Development

SOI INSIGHT

Increased R&D spending in Asia and the European Union is at least partially driven by the fact that most housewares companies have international partners in those geographies.

11 2018 State of the Industry Report

Macro Trends

6. Average U.S. household income continued to increase in 2017, as household debt moderated.

Median household income rose to Households successfully nibbled away at debt, $61,372 in 2017 from $59,039 in 2016. with household debt decreasing to 101% of income from 115% in 2016.

Median Household Income Household Debt as Percent of $61,372 Personal Disposable Income $62,000 $60,000 135% 132% $58,000 $56,000 125% $54,000 $52,163 115% $52,000 101% $50,000 105% $48,000 95% 90% $46,000 $44,000 $44,883 85% 2017 1997 2002 2007 2012 2017 1997 2002 2007 2012 Income in 2017 CPI-U-RS adjusted dollars. Source: Federal Reserve & BEA Households as of March the following year. Consumer Credit Debt as Percent of Disposable Income: Source: 2017 Current Population Survey, U.S. Census Bureau. 2013 = 24%, 2014 = 25%, 2015 = 28%, 2016 = 25%, 2017 = 25%.

While shopping may be benefitting from increased disposable income, trips to the store do not appear to be negatively impacted by households reducing their debt load.

Change in Quarterly Total U.S. Retail Sales Versus Year Before

13.0%

8.0%

3.0%

-2.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Federal Reserve Bank of St. Louis -7.0% Quarterly Financial Report: U.S. Corporations: Net Sales, Receipts, and Operating Revenues: All Retail Trade: All Other Retail Trade Industry, Not Seasonally Adjusted . -12.0%

$100 in 1987 had the same buying power as $218.38 in 2017

$100 in 1997 had the same buying power as $152.63 in 2017

$100 in 2007 had the same buying power as $119.97 in 2017

Source: BLS CPI Inflation Calculator

12 2018 State of the Industry Report Macro Trends

The personal savings rate peaked in 1984 at 11.1% and steadily declined to a low point of 2.2% in 2005. Consumers increasingly saved more of their disposable income through 2012, when the most recent peak of 8.6% occurred. The savings rate closed 2017 at 6.3%.

Personal Savings as a Percentage of Disposable Income 10% 8.3% 8.7% 9% 8.6% 8% 7% 6% 5% 6.3% 4% 3% 2.2% 2% 1987 1997 2007 2017

Disposable Personal Income (DPI) is personal income less personal current taxes. DPI measures the income that is available to be either spent or saved. Source: Bureau of Economic Analysis

The U.S. poverty rate decreased to 12.3% Costs for and participation in the USDA in 2017. This represents 39.7 million Supplemental Nutrition Assistance Program people, down from 40.6 million in 2016, (formerly USDA Food Stamp Program) declined in 2017 as the American Recovery and and 43.1 million in 2015. Reinvestment Act of 2009 expired on 11/01/2013.

Percent of U.S. Population Supplemental Nutrition Assistance Program Below Poverty Level Cost and Usage 60,000 $80,000 20.0% $68,056 Annual Cost $70,000 (Millions $) 15.1% 50,000 $60,000 15.0% 42,123

11.7% Yearly Avg. # Recipients $50,000 40,000 (Thousands) 12.3% 10.0% $40,000 2001 2005 2009 2013 2017

Source: 2017 Current Population Report, U.S. Census Bureau 30,000 $30,000 2011 2012 2013 2014 2015 2016 2017

Source: United States Department of Agriculture, Supplemental Nutrition Assistance Program. Data exclude the 14 additional USDA assistance Programs such as WIC and school lunch programs SOI INSIGHT

As the number of people below the poverty level declines and participation in public aid programs also declines, housewares manufacturers may benefit from a larger share of the population in the market for their goods.

13 2018 State of the Industry Report Macro Trends

7. Young companies are helping keep unemployment rates low.

Companies less than one-year-old – a common Wages and salaries typically increase faster definition of a start-up – added more jobs than benefits. After the annual change for each versus the prior year, for the seventh cost became comparable in 2012, the more consecutive year. typical relationship returned in 2015.

Private Sector Costs Number of Jobs Created by 6% Year-over-year Percentage Change Establishments Less Than One-Year-Old 5% Wages & Salaries Benefits 5,000,000 4,279,589 4.0% 4% 4,000,000 3.2% 3,117,255 2.8% 3,000,000 3%

2,000,000 2% 2.3%

1,000,000 1% 0.9% 0 0% 2001 2005 2009 2013 2017

Source: U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics

The number of unemployed workers and the number of job openings have been steadily approaching the same level since 2009, when the divergence was at its highest level in recent history. Private sector jobs have been created steadily since then, as the number of unemployed has just as steadily declined.

Unemployed Workers & Job Openings 16,000 Unemployed Job Openings 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Source: U.S. Bureau of Labor Statistics

14 2018 State of the Industry Report Macro Trends

The share of the population of adult men that is either currently working or actively seeking work has been decreasing for decades. Before the turn of the century, adult women were filling the gap, with a slight decline since then. Workforce participation by the prime age group (25 to 54 years old) has been increasing since 2015.

Workforce Participation Share of Population Working or Actively Looking 90 Total Population 25to54 85

80 Men 16+ 75

70

65 Women 16+ 60

55

50 1980 1985 1990 1995 2000 2005 2010 2015

Source: U.S. Bureau of Labor Statistics

Americans are quitting their jobs at the The lure of higher wages may be behind highest rate since the dot-com bubble. some of the churn, making this a job- seeker’s market. Workforce Churn Change in Wages 10.0% 7.0%

9.0% Job Switcher 7.6% 5.0% 3.6% 8.0%

7.0% 3.0% 6.0% Job Stayer 3.3% 5.0% 1.0% 2001 2005 2009 2013 2017 2001 2005 2009 2013 2017

Sum of hires and separations as a percentage of overall Sources: U.S. Bureau of Labor Statistics employment Source: U.S. Bureau of Labor Statistics Federal Reserve Bank of Atlanta

SOI INSIGHT As housewares companies search for talented new employees or invest in retention, they may have little choice beyond offering higher wages and benefits.

15 2018 State of the Industry Report

Macro Trends

8. Household expenditures for housewares increased in 2017. The average U.S. household spent $705 on housewares in 2017, according to U.S. government data. This is more than 2016 ($672) and 2015 ($642). To put annual housewares spending in perspective, it is helpful to compare it to consumer spending in other areas using the U.S. government data. For example, U.S. households spent more on housewares than they did on dairy products and less than on fruits and vegetables. The average expenditure on restaurant meals was four times what was spent on housewares.

Among the eight broad categories, seven saw increased spending per household in 2017 versus 2016, with restaurant meals and spending on pets up significantly. Cellular phone service expenditures were similar to 2016. ++ 2017 Household Expenditures in Key Industries $ per U.S. Household $2,921 $3,000 $2,500 $1,968 $2,000 $1,491 $1,500 $1,118 $705 $710 $837 $1,000 $450 $500 + + ++ + + + ++ $0 Dairy Housewares Pets Fruits & Cellular Education Gasoline & Restaurant Products Vegetables Phone Motor Oil Meals Service Source: Bureau of Labor Statistics Consumer Price Index for All Consumers

Reasons consumers spent more in restaurants are the increase in the cost of food away from home and the growth of restaurant delivery services. The cost of meals at home increased slightly in late 2017 and early 2018.

Cost of Meals at Home and Away Change in Monthly CPI from Year Earlier 15 10 5 0

-5 Meals at home Meals away from home -10 Jan-17 Jul-17 Jan-18 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16

Source: BLS Consumer Price Index, seasonally adjusted

SOI INSIGHT

Housewares companies catering to multiple markets such as retail, food service and pet supplies could continue to benefit from these diverse growth trends.

16 2018 State of the Industry Report

Macro Trends

9. The housing market strengthened further in 2017. Housing starts continued to increase in 2017 but remain at the lowest levels in the last 50 years.

2,500 Housing Starts 2,357 Thousands of Housing Units 2,000 2,068

1,500 849 1,000 1,252 1,014

500 535 - 1960 1970 1980 1990 2000 2010 2015 Source: Census Bureau Annual data.

Home ownership for most age groups increased or leveled off in 2017. Only the 55 – 64 cohort continued to decline. The under 35 set has the lowest home ownership rate. The average asking prices for houses rose to nearly the 2007 peak. Rents continue to set new records.

Home Ownership Rates House and Rent Prices by Age Group Median Annual Asking Sales and Rents 90% $200,000 $1,000 $185,600 80% $187,600 $800 70% $150,000 $600 60% $100,000 50% $400 $50,000 $200 40% Avg. House Avg. Rent 30% $- $0 1996 2003 2010 2017 1989 1993 1997 2001 2005 2009 2013 2017 Under 35 35 - 44 45 - 54 Source: U.S. Census Bureau 55 - 64 65 plus Source: U.S. Census Bureau

SOI INSIGHT

U.S. home real estate market trends continue to favor housewares companies that market products to new homeowners and to younger consumers who may be renting for several years and who have a separate set of needs.

17 2018 State of the Industry Report

Macro Trends

10. Digital and mobile ad spending continue to outpace TV ad spending. U.S. advertisers spent more on digital media than on TV starting in 2016 and are projected to spend more on mobile ads this year. To further complicate the issue, usage is growing for Over The Top options, which contain no commercials. As a result, advertisers are turning to addressable ads, which are projected to be over $3 billion in 2020.

$165 U.S. Total Media Ad Spending U.S. TV Viewers, OTT Video Service Users & Addressible TV Ad Spending $145 Digital* 300 $3.0  TV** 250 TV Viewers $2.5 $125 US Mobile*** 200 $2.0 $105  150 OOT Video Users $1.5 Billions $85

100 $1.0 $ Billions  Addressable Ad Spend

$65 US Viewers Millions 50 $0.5

 Projected  0 $-

$45 2015 2016 2017 2018 2019 Spending Ad TV Addressable US 2016 2017 2018 2019 2020   Projected *Includes all forms of advertising that appears on desktop & laptop TV viewers of any age who watch live or recorded video on a TV computers, mobile phones, tablets, other Internet-connected devices. at least once a month; Over The Top (OTT) users who watch **Includes broadcast (network,syndication and spot) and cable TV. video over the Internet, bypassing traditional distribution at least ***Includes classified, display, email, lead generation, messaging- once a month (eg., HBO Now, Hulu, Netflix, etc.). based and search advertising; includes ad spending on tablets. *Targeted TV Ads delivered to individual homes via cable and Source: eMarketer, March & September 2018 satellite boxes; excludes connected TV, smart TV and OOT. Source: eMarketer, September 2017 & March 2018.

The number of adult viewers of traditional TV (distributed via cable, satellite or telco) declined 3.4% in 2017 as households “cut the cord” in favor of streaming platforms such as YouTube, Netflix, Amazon and Hulu. Smartphones and tablets are projected to be increasingly popular devices for simultaneous viewing with TV.

200 U.S. Simultaneous TV & Internet U.S. Cord-Cutters (Millions and % of Total Population)) 180

60 55.1 25% 160 50.2 50 45 140 Smartphone 20.8% 39.3 20% 40 19.1% 120 33 17.3% 100 Desktop/Laptop 30 24.9 15.2% 15% 12.9% 80 20 Tablet 9.8% 10% 60 10 <- Projected -> 40 0 5% 20

Individuals ages 18+ who no longer have access to 2015 2016 2017 2018 2019 traditional pay TV services Individuals ages 18+ who go online while watching Source: eMarketer, July 2018, 2017 traditional content or digital video on a TV set at least once a month. Source: eMarketer, October 2017

18 2018 State of the Industry Report Macro Trends

Facebook is the leading social media platform in the U.S., with over 60% of Internet users using it TV at least monthly. The number of older users is project by eMarketer to rise, while younger users are expected to move to Snapchat and Instagram. Ad revenues for U.S. social media platforms are expected to double by 2020 versus the 2017 level. Amazon’s share is projected to be 7% by 2020.

U.S. Social Network Penetration U.S Social Network Video Ad Revenues Facebook 60.6% 2017 2018 2019 2020 Instagram 37.4% Facebook* $4,782.2 $6,811.2 $8,558.6 $10,203.3 Snapchat 30.9% Twitter $563.4 $633.3 $692.1 $743.8 Snapchat $334.6 $397.3 $552.3 $724.1 Pinterest 26.1% Other** $3.0 $6.3 $14.8 $18.8 Total $5,683.2 $7,848.0 $9,817.8 $11,690 Twitter 20.1% Includes paid video advertising appearing within

Tumblr 7.4% social networks, social network games and apps; excludes spending by marketers that goes toward developing organic social video content. *Includes Total 71.2% Instagram video ad revenue. **Excludes YouTube. Source: eMarketer, September 2018 0% 20% 40% 60% 80% Internet users of any age who use social networks via any device at least once a month. Source: eMarketer, February, 2018

The amount of time spent on social networks is expected to continue increasing, especially on the newer platforms such as Instagram and Snapchat. However, digital ad buyers say that Google Search and Facebook deliver the best results, both in the U.S. and globally.

Time Spent Daily with Social Networks Best ROI for Digital Ad Spending (Minutes) (% of Respondents) Facebook Instagram Google Search 48%

30 Snapchat Other Facebook 30% 27 Ad Exch/Net 8% 20 Instagram 4% 20 11 YouTube 4% 10 Twitter 2% 8 0 Other 4% 2014 2015 2016 2017 2018 2019 Average time spent per day by individuals ages 18+; includes Source: Cowen & Co, “Ad Buyer Survey VI,” all time spent with each medium, including time spent January 4, 2018 multitasking on other media. Source: eMarketer, September 2017

SOI INSIGHT

Housewares companies involved in digital marketing face an increasingly complex

range of options for reaching consumers of all ages, with social media platforms growing in importance each year.

19 2018 State of the Industry Report Macro Trends

11. Global economic growth is forecast to resume. Looking to the future, the Organisation for Economic Co-operation and Development (OECD) reports a downward trend in the OECD Composite of Leading Indicators (CLI). The CLI is designed to show early signs of economic expansion (above 100) or contraction (below 100).

OECD Composite of Leading Indicators

100

98 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Source: OECD (2018) Composite Leading Indicator (Accessed December 6, 2018)

This global indicator is affected by individual country CLIs, developed by the OECD. A review of the country-level trends shows signs of economic recovery for most of the mature markets. The OECD projections for mature markets predict that India and China will have the strongest growth in Gross Domestic Product (GDP). U.S. GDP is forecast to increase 2.8% in 2019. Inflation is forecast to increase from 2016 levels. Unemployment is predicted to decline. Japan is expected to have the weakest growth in GDP.

Summary of Projections Average 2010-2017 2016 2017 2018 2019 Real GDP growth1 World2 3.5 3.1 3.7 3.8 3.9 G202 3.7 3.2 3.8 4.0 4.1 Total OECD2 2.0 1.8 2.5 2.6 2.5 United States 2.1 1.5 2.3 2.9 2.8 Euro area 1.1 1.7 2.5 2.2 2.1 Japan 1.1 1.0 1.7 1.2 1.2 Total Non-OECD2 4.8 4.2 4.6 4.8 5.1 China 7.6 6.7 6.9 6.7 6.4 India3 6.8 7.1 6.5 7.4 7.5 Brazil 0.4 -3.5 1.0 2.0 2.8 1,4 Inflation 1.6 1.1 2.0 2.2 2.3 Unemployment rate 2 7.3 6.3 5.8 5.4 5.1 1 Percentage changes. 2 Percent of the labor force. 3 Fiscal Year 4 Private consumption deflator. Source: OECD; Economic Outlook, Volume 2018, Issue 1, June 2018 SOI INSIGHT

OECD forecasts for the immediate future are somewhat brighter than in recent years for mature markets where housewares manufacturers may already have or plan to launch international business.

20 2018 State of the Industry Report

Macro Trends

GLOBAL & U.S. HOUSEWARES MARKETS

Global housewares market sales are estimated in current U.S. dollars. In addition to sales, these data are influenced by world economic factors such as the relative strength of the U.S. dollar versus the currencies of other nations and relative inflation rates, for example.

21 2018 State of the Industry Report Global & U.S. Housewares Markets

Global Housewares Market The global market for housewares was (US) $364.2 billion in 2017, up 2.5% from 2016. North America, Western Europe and Asia make up 79.6% of all housewares spending by consumers.

Worldwide Housewares Expenditures (US $ 364.2 Billion)

Asia Western Europe Eastern Europe $109.0 North America $79.1 $24.6 (U.S. & Canada) $ 101.9 Middle East $ 14.5

Africa $14.4

Latin America $ 15.6

Oceania $ 5.1

• The estimated size of the housewares market for all regions except the United States was calculated using International Labor Organization (ILO) expenditure data, United Nations population statistics, Central Intelligence Agency (CIA) exchange rates and Gross Domestic Product (Purchasing Power Parity Method) . • These regional estimates represent all housewares categories in the IHA definition of the industry .

North American total housewares expenditures saw the largest gains in 2017 versus 2016, rising $4.7 billion to $101.9 billion. Total housewares expenditures increased for all markets except Africa. Share of global expenditures increased in the U.S. to 25.1% from 24.5% in 2016. Asia’s share decreased to 30.0% from 30.3%. Global market share increased for the Middle East and Eastern Europe; it decreased for Western Europe and Africa.

2017 Housewares Expenditures and Market Share ($ Millions) Housewares Housewares Region Expenditures* Market Share Asia $109,054 30.0% North America 101,940 27.9% United States** 91,596 25.1% Canada 10,344 2.8% Western Europe 79,078 21.7% Eastern Europe 24,585 6.8% Latin America 15,642 4.3% Middle East (includes India) 14,480 4.0% Africa 14,351 3.9% Oceania 5,089 1.4% TOTAL $364,220 100.0% *Based on the IHA definition of the housewares industry. ** Calculated using the Department of Labor Bureau Labor Statistics data. Sources: ILO Total Consumer Expenditures, United Nations “World Population Prospects,” CIA World Factbook population estimates and projections and National Statistical offices of Eurostat/Euromonitor International, CIA World Factbook (July 2018 update) for Gross Domestic Product (Purchasing Power Parity Method), Wall Street Journal, US Dollar Foreign Exchange Rates.

22 2018 State of the Industry Report Global & U.S. Housewares Markets

Size of U.S. Housewares Industry

Overall, U.S. consumers spent $91.6 billion dollars on housewares in 2017 in categories where IHA member companies participate.

As the global housewares market saw a 2.5% year-to-year increase as measured in dollars, U.S. Housewares Expenditures increased 5.2% from the prior year. These data are significantly influenced by changes in population, currency exchange rates and changes in Gross Domestic Product. (Figures are not adjusted for inflation).

Annual U.S. Housewares Expenditures IHA Definition ($ Billions)

Total % Change Year Expenditures in 1 Year 2017 $91.6 5.2% 2016 $87.1 6.0% 2015 $82.2 9.5% 2014 $75.1 2.3% 2013 $73.4 5.9% 2012 $69.3 3.3% 2011 $67.1 0.4%

Traditionally, the definition of the housewares industry used by government agencies includes a broad variety of categories, many of which are not offered by IHA members. For increased relevance of the information in this report to its membership, IHA uses a subset of the traditional definition, which more accurately reflects the IHA membership categories. This subset is used in the development of all tables and graphs in this report.

23 2018 State of the Industry Report Global & U.S. Housewares Markets

U.S. Housewares by Category Continuing with the methodology change initiated in 2004, the U.S. housewares industry statistics represent “the IHA subset” of more traditional market definitions in order to better reflect product categories manufactured by IHA member companies.

2017 U.S. Housewares Expenditures 2017 Avg. Annual Total Expenditures % Change (millions) Past 5 Years Furniture $10,536 4.8% Infants $1,526 7.5% Outdoor $4,349 9.8% Occasional $4,661 3.5% Appliances $10,544 1.8% Electric Floor Cleaning $2,675 7.0% Sewing Machines $200 -25.0% Miscellaneous Household Appliance $859 31.5% Small Electric Kitchen $4,007 4.2% Portable Heating & Cooling Equipment $1,153 -0.1% Microwaves $1,650 -1.5% Housewares $12,443 7.4% Flatware $833 23.1% Dinnerware, glassware, serving pieces, textiles (1) $4,918 11.0% Non-electric Cookware (2) $2,913 4.5% Tableware, Non-electric Kitchenware (2) $3,779 9.2% Misc. Household Equipment $47,185 7.2% Infant Equipment $1,993 13.1% Laundry & Cleaning Equipment $3,411 12.3% Outdoor Equipment $4,449 14.8% Lamps & Lighting $4,719 6.2% Other Household Decorative $18,526 8.1% Telephone & Accessories $7,930 5.4% Small Misc. Accessories $1,680 8.4% Closet & Storage $2,630 14.6% Other Household Appliances $1,847 11.0% Personal Care Products $10,887 6.3% Non-electric Articles for the Hair $1,355 6.2% Oral Hygiene $5,803 7.3% Shaving Needs $2,471 3.3% Electric Personal Care $1,258 7.1% Total Expenditures $91,595 6.7% Number of Households 130 million (1) was previously reported as plastic dinnerware, china & other, glassware, and Other serving accessories. (2) were previously reported as non-electric cookware Values are rounded for presentation purposes. Source: U.S. Department of Labor/Bureau of Labor Statistics Consumer Expenditures Study for 2017, unpublished (sample of 5,000 U.S. consumers).

24 2018 State of the Industry Report

U.S. CATEGORIES & CHANNELS

25 2018 State of the Industry Report U.S. Categories & Channels

Housewares Category Share Estimates The housewares industry comprises a number of diverse categories for use in the home, with 50.7% of industry sales falling into the cook & bakeware, kitchen tools & accessories, tabletop and kitchen electrics categories. These same top four categories represented 52.7% of industry sales in the prior year. Housewares Category Share Estimates Share of Reported Companies' Sales

Bathroom & Personal Care 3.8%

Cleaning Products & Stick Goods 3.8%

Cook & Bakeware 16.1%

Furniture 2.6%

Home Décor 2.2%

Home Office/Office Supplies 1.2%

Household Electrics 5.5%

Household Textiles 2.8%

Juvenile Products 0.7%

Kitchen Electrics 10.4%

Kitchen Tools & Accessories 14.2%

Outdoor & Hardware 4.0%

Personal Electrics 2.7%

Pet Supplies 0.8%

Seasonal & Holiday Promotional Goods 2.0%

Space Organizers, Closets & Clothing Care 3.0%

Storage 8.2%

Tabletop 10.7%

Other 5.3%

The data in this chart are from 768 IHA member companies who answered the “2018-2019 Membership Profile” survey and represent 23.2% of the projected total housewares industry volume for 2017. The data should not be interpreted as “national” or “industry-wide” benchmarks. These numbers are most useful as general “ball-park” directional indicators of category performance.

26 2018 State of the Industry Report U.S. Categories & Channels

Category Sales by Channel of Distribution $ Millions Mass Super- Hardware Merchants/ Depart- markets/ Stores/ Ware- Variety/ Category Super- ment Specialty Food Home house Drug One Price centers Stores Stores Stores Centers Clubs Stores Stores Bathroom & Personal Care 803 250 336 260 163 132 208 168 Cleaning Products & Stick Goods 605 244 273 374 441 155 119 237 Cook & Bakeware 2,923 2,107 1,593 1,512 573 725 401 303 Electrics Subtotal 3,528 2,137 1,391 374 1,391 742 693 267 Household Electrics 911 554 445 110 585 217 168 66 Kitchen Electrics 1,951 1,425 712 204 728 400 258 126 Personal Electrics 666 158 234 60 78 125 267 75 Furniture 503 159 107 77 86 200 76 52 Home Decor 416 205 195 164 117 108 91 78 Home Office/Office Supplies 231 54 113 44 83 31 47 40 Household Textiles 389 268 192 185 151 224 54 120 Juvenile Products 170 32 85 46 36 43 35 22 Kitchen Tools & Accessories 2,739 1,339 1,538 1,101 813 666 348 359 Outdoor & Hardware 839 216 216 407 506 140 126 147 Pet Supplies 167 65 64 56 50 32 43 44 Seasonal & Holiday Promotional Goods 471 172 175 144 93 85 93 61 Space Organizers, Closets & Clothing Care 618 156 276 184 306 132 51 156 Storage 1,901 585 864 553 628 379 173 277 Tabletop 2,117 1,146 990 857 441 403 226 428 Other 1,133 236 332 355 239 256 131 103 TOTAL 19,554 9,371 8,740 6,693 6,117 4,453 2,915 2,862

Gourmet/ Direct to Home Gift/ End-User/ Category Furnish/ Novelty & Consumer Appliance Souvenir Internet Catalogs, via Your Whole- Rounded Stores Stores Retailer TV Web sale Other* Total Bathroom & Personal Care 64 106 169 179 182 321 139 3,480 Cleaning Products & Stick Goods 39 79 159 139 67 349 201 3,481 Cook & Bakeware 427 396 675 602 395 1,364 748 14,744 Electrics Subtotal 721 271 1,437 1,134 1,126 1,096 732 17,040 Household Electrics 255 72 496 308 171 448 232 5,038 Kitchen Electrics 415 176 818 617 706 573 421 9,530 Personal Electrics 51 23 123 209 249 75 79 2,472 Furniture 177 50 246 149 95 282 122 2,381 Home Decor 48 84 77 99 75 160 100 2,017 Home Office/Office Supplies 57 42 71 50 66 124 44 1,097 Household Textiles 96 107 157 179 110 161 173 2,566 Juvenile Products 13 12 45 17 11 39 33 639 Kitchen Tools & Accessories 255 475 726 669 363 899 717 13,007 Outdoor & Hardware 96 101 198 200 83 181 208 3,664 Pet Supplies 15 11 38 45 34 39 31 734 Seasonal & Holiday Promotional Goods 22 58 117 78 68 103 90 1,830 Space Organizers, Closets & Clothing Care 100 47 194 117 25 216 170 2,748 Storage 251 149 476 278 170 473 354 7,511 Tabletop 225 425 592 348 233 843 526 9,800 Other 104 73 380 157 142 429 786 4,856 TOTAL 2,710 2,486 5,757 4,440 3,245 7,079 5,174 91,595

Sample sizes: 768 companies; 2,358 data points. . Source: IHA 2018-2019 Membership Survey *Other includes convenience stores, garden centers, patio specialty stores and all others.

27 2018 State of the Industry Report U.S. Categories & Channels

Direct-to-Retail vs. Wholesale For companies participating in IHA surveys, the proportion of direct-to-retail versus wholesale sales has varied only slightly over recent years. In 2017, 7.7% of housewares volume was sold through the wholesale channel.

Channels of Distribution

Direct-to-Retail vs. Wholesale (% of Domestic Housewares Sales)

Direct-to- Retail Channel 92.3% 7.7% Wholesale Channel

Source: IHA 2018-2019 Membership Survey

Wholesale Channel Share 2017 7.7% 2016 8.3% 2015 7.8% 2014 10.9% 2013 9.8% 2012 11.7% Source: IHA SOI & Membership Surveys

For the remainder of this report, all sales percentages refer to only the direct-to-retail channel, i.e., they exclude the sales to wholesalers.

28 2018 State of the Industry Report U.S. Categories & Channels

Direct-to-Retail Channels Overview Housewares manufacturers continue to distribute most domestic housewares (92.3%) through 14 retail channels. The major 14 direct-to-retail channels include “non-brick-and-mortar” outlets such as Internet Retailers, Catalogs/TV and Direct to End-user.

2017 U.S. Housewares Industry Direct-to-Retail Channels* Share of Channel Sales Channel Housewares ($ Millions) Retail Market Mass Merchants/ Supercenters $19,554 23.3% Department Stores $9,371 11.1% Specialty Stores $8,740 10.3% Supermarkets/ Food Stores $6,693 7.9% Hardware Stores/Home Centers $6,117 7.2% Internet Retailers $5,757 6.8% Other Retailers $5,174 6.1% Warehouse Clubs $4,453 5.3% Catalogs, TV $4,440 5.3% Direct to End-User/ Consumer via Your Web $3,245 3.8% Drug Stores $2,915 3.4% Variety/One-Price Stores $2,862 3.4% Home Furnishings/Appliance Stores $2,710 3.2% Gourmet/Gift/Novelty & Souvenir Stores $2,486 2.9% TOTAL $84,517 100.0%

* Excluding wholesale channel Source: IHA 2018-2019 Membership Survey The “other” channel includes convenience stores, garden centers, patio specialty stores and all other formats as reported by IHA member companies.

Total non-store retailing (Catalogs/TV, Direct to End-User/Consumer via Your Web and Internet Retailer) accounted for the second largest share of the total retail volume when combined for 2017. Annual totals are:

• 15.9% in 2017 • 21.7% in 2016 • 16.3% in 2015 • 21.8% in 2014 • 15.5% in 2013

The Internet Retailer channel was added in the 2013 report. It was previously reported in the Catalogs, Internet, TV channel. This year, the IHA companies providing channel data reported slightly lower sales to Internet Retailers versus last year. They also reported much higher sales to brick and mortar retailers who also have e-commerce divisions. Other data also show that sales are clearly increasing for the Internet Retailer channel (e.g., HomeWorld Business reports that Amazon.com rose from #8 to #7 on HWB’s Top Ten Retailers list on a 33% sales increase over the prior year). As digital commerce continues to evolve and blend with “brick-and-mortar” business, some of the housewares companies in this survey may report combined channel sales, while others separate sales to large retailers who operate both physical and virtual stores.

29 2018 State of the Industry Report U.S. Categories & Channels

Mass Merchants & Supercenters Mass merchants and supercenters continue to be the leaders of housewares retailing. Their share in 2017 and 2016, as reported by IHA member companies, likely included some sales through their online divisions. See the section on Internet Retailers (page 38) for more information. This channel’s share of direct-to-retail housewares sales declined 0.1% in 2017 versus 2016. Total channel sales increased 4.8%.

Mass Merchants & Supercenters Channel Sales (% of Industry Sales)

2017 23.3%

2016 23.4%

Source: IHA 2018-2019 Membership Survey

This channel sees the majority of its housewares sales in cook & bakeware (15.0%), kitchen tools & accessories (14.0%) and tabletop (10.8%). This channel is the sales leader in all housewares categories.

Supercenters continue to generate the majority of this channel’s overall sales.

Large Format Value Store Housewares Sales Growth Selected Companies 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of Top Discount Store Chains 2017 2016 vs. 2016 Total In 17 Walmart (Bentonville, AR) $21,185 $20,574 3.0% 6.7% Target (Minneapolis, MN) $7,181 $6,914 3.9% 10.0% Meijer (Grand Rapids, MI) $885 $860 2.9% 5.2% Kmart (Hoffman Estates, IL) $759 $1,168 -35.0% 13.5% Shopko (Ashwaubenon, WI) $350 $339 3.2% 10.8%

Source: HomeWorld Business “Top 100 Retailers,” September 2018

Selected companies performance snapshot as a group:  $4,689,000,000 - Total housewares sales in 2017.  1.7 % - Total annual housewares sales decrease. (2017 vs. 2016) Note: HomeWorld Business Total Store Sales exclude Internet sales for all companies starting in 2016. In prior years, Internet sales were included as a separate figure for some companies.

30 2018 State of the Industry Report U.S. Categories & Channels

Department Stores Department stores accounted for 11.1% of all direct-to-retail housewares sales, down from 11.5% in 2016 and up from 10.3% in 2015. Total channel housewares sales increased 2.1% over 2016.

Department Stores Channel Sales (% of Industry Sales)

2017 11.1%

2016 11.5%

Source: IHA 2018-2019 Membership Survey

This channel sees the majority of its housewares sales in cook & bakeware (22.5%), kitchen electrics (15.0%) and kitchen tools & accessories (14.3%). Housewares sales for these five companies declined 1.7%.

Department Store Housewares Sales Growth Top Chains 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of Top Department Store Chains 2017 2016 vs. 2016 Total In 2017 Kohl's (Menomonee Falls, WI) $1,698 $1,655 2.6% 9.0% Macy's (Cincinnati) $1,131 $1,118 1.2% 4.6% Sears (Hoffman Estates, IL) $811 $996 -18.6% 7.3% TJMaxx/Marshalls (Framingham, MA) $784 $742 5.7% 3.5% JC Penney (Plano, TX) $265 $259 2.3% 2.1% Source: HomeWorld Business “Top 100 Retailers,” September 2018

Specialty Stores Specialty accounted for 10.3% of all direct-to-retail housewares sales, up from 9.2% in 2016 and down from 11.5% in 2015. Total channel housewares sales increased 19.0% over 2016.

Specialty Stores Channel Sales (% of Industry Sales)

2017 10.3%

2016 9.2% Source: IHA 2018-2019 Membership Survey

This channel sees the majority of its housewares sales in cook & bakeware (18.2%), kitchen tools & accessories (17.6%) and tabletop (11.3%).

31 2018 State of the Industry Report U.S. Categories & Channels

The top five specialty store operators reported housewares sales increases in 2017. As a group, their housewares sales increased 2.7% over 2016.

Housewares-Dominant Specialty Stores Housewares Sales Growth Top Chains 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of

Top Specialty Store Chains 2017 2016 vs. 2016 Total In 2017 Bed Bath & Beyond (Union, NJ) $5,232 $5,227 0.1% 42.0% Williams Sonoma (San Francisco) $4,132 $3,995 3.4% 78.8% Qurate (Englewood, CO) $1,851 $1,825 1.4% 21.1% Home Goods (Framingham, MA) $1,314 $1,157 13.6% 25.7% The Container Store (Coppell, TX) $742 $717 3.5% 86.6%

Source: HomeWorld Business “Top 100 Retailers,” September 2018 Twenty-eight Specialty Stores are on the HomeWorld Business Top 100 Retailers list.

Supermarkets/Food Stores

Supermarkets/food stores accounted for 7.9% of housewares sales in 2017, versus 8.5% in 2016. Total channel housewares sales declined 0.9% over 2016.

Supermarkets/Food Stores Channel Sales (% of Industry Sales)

2017 7.9%

2016 8.5%

Source: IHA 2018-2019 Membership Survey This channel sees the biggest share of its housewares sales in cook & bakeware (22.6%), kitchen tools & accessories (16.5%) and tabletop (12.8%). Four of the top five chains reported housewares sales increases in 2017. As a group, their housewares sales increased 2.3% over 2016.

Supermarket Housewares Sales Growth Top Chains 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of

Top Supermarket Chains 2017 2016 vs. 2016 Total In 2017 Kroger (Cincinnati) $1,862 $1,852 0.5% 1.6% Publix (Lakeland, FL) $583 $576 1.2% 1.7% Royal Ahold Delhaize (Carlisle, PA) $564 $580 -2.8% 1.3% Albertsons (Boise, ID) $441 $434 1.6% 0.7% H.E.B. (San Antonio, TX) $267 $261 2.3% 1.2% Source: HomeWorld Business “Top 100 Retailers,” September 2018

32 2018 State of the Industry Report U.S. Categories & Channels

Hardware Stores & Home Centers Hardware stores & home centers accounted for a smaller share (7.2%) of housewares sales in 2017, versus 2016 (7.9%). Total channel housewares sales decreased 3.0% over 2016.

Hardware Stores & Home Centers Channel Sales (% of Industry Sales)

2017 7.2%

2016 7.9%

Source: IHA 2018-2019 Membership Survey

This channel sees the majority of its housewares sales in kitchen tools & accessories, kitchen electrics, and storage. The top five operators all reported housewares sales increases in 2017. As a group, their housewares sales increased 6.0% over 2016.

Hardware and Home Center Retailers Housewares Sales Growth Top Chains 2017 vs. 2016 Housewares Sales ($ Millions) Top Hardware and Home % Change Hswrs % of Center Chains 2017 2016 vs. 2016 Total In 2017 Home Depot (Atlanta) $2,603 $2,528 3.0% 2.6% Lowe's (Mooresville, NC) $1,779 $1,702 4.5% 2.6% Ace Hardware (Oak Brook, IL) $1,535 $1,379 11.3% 8.7% True Value (Chicago) $420 $400 5.0% 8.7% Do-It-Best (Fort Wayne, IN) $283 $267 6.0% 3.3% Source: HomeWorld Business “Top 100 Retailers,” September 2018

Warehouse Clubs

Warehouse clubs accounted for 5.3% of housewares sales in 2017, up from 5.0% in 2016. Total channel housewares sales increased 12.0% over 2016.

Warehouse Clubs Channel Sales (% of Industry Sales)

2017 5.3%

2016 5.0%

Source: IHA 2018-2019 Membership Survey This channel sees the majority of its housewares sales in cook & bakeware, kitchen tools and accessories, kitchen electrics and tabletop. As a group, the top five warehouse club retailers saw their housewares sales increase 3.5% over 2016.

33 2018 State of the Industry Report U.S. Categories & Channels

Warehouse Club Retailers Housewares Sales Growth Top Chains 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of Top Warehouse Club Chains 2017 2016 vs. 2016 Total In 2017 Costco (Issaquah, WA) $13,330 $12,355 7.9% 10.6% Sam's Club (Bentonville, AR) $4,493 $4,449 1.0% 7.6% BJ's Wholesale (Westborough, MA) $1,273 $1,239 2.7% 10.0% Bi-Mart (Eugene, OR) $119 $116 2.6% 12.3% PriceSmart (San Diego) $119 $115 3.5% 4.1% Source: HomeWorld Business “Top 100 Retailers,” September 2018

Drug Stores

Drug Stores’ share of housewares sales in 2017 was 3.4%, similar to 3.5% in 2016. Total channel housewares sales increased 5.3% over 2016.

Drug Stores Channel Sales (% of Industry Sales)

2017 3.4%

2016 3.5%

Source: IHA 2018-2019 Membership Survey

This channel sees the majority of its housewares sales in cook & bakeware, kitchen tools and personal electrics. Four of the top five operators reported higher housewares sales in 2017. As a group, their housewares sales increased 6.3% over 2016. Channel leader Walgreens is ranked as the 9th largest housewares retailer by HomeWorld Business magazine for 2017. CVS is ranked 18th.

Drug Stores Housewares Sales Growth Top Chains 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of Top Drug Store Chains 2017 2016 vs. 2016 Total In 2017 Walgreens (Deerfield, IL) $2,428 $2,350 3.3% 2.8% CVS (Woonsocket, RI) $1,269 $1,216 4.4% 1.6% Rite Aid (Camp Hill, PA) $559 $845 -33.8% 2.6% HealthMart (San Francisco) $191 $181 5.5% 1.9% Good Neighbor (Chesterbrook, PA) $170 $160 6.3% 1.7% Source: HomeWorld Business “Top 100 Retailers,” September 2018

34 2018 State of the Industry Report U.S. Categories & Channels

Home Furnishing & Appliance Stores This channel’s share of housewares sales rose to 3.2% in 2017 from 3.0% in 2016. Total channel housewares sales increased 30.5% over 2016.

Home Furnishings/Appliance Stores Channel Sales (% of Industry Sales)

2017 3.2%

2016 3.0%

Source: IHA 2018-2019 Membership Survey This channel sees most of its housewares sales in cook & bakeware and kitchen electrics. The HomeWorld Business Top 100 Retailers does not include five retailers in this channel.

Gourmet, Gift, Novelty & Souvenir Stores Gourmet, gift, novelty & souvenir stores saw their share of housewares sales increase to 2.9 in 2017 from 2.6% in 2016. Total channel housewares sales increased 24.7% over 2016.

Gourmet, Gift, Novelty & Souvenir Stores Channel Sales (% of Industry Sales) 2017 2.9%

2016 2.6%

Source: IHA 2018-2019 Membership Survey

This channel sees the majority of its housewares sales in kitchen tools & accessories (19.1%), tabletop (17.1%) and cook & bakeware (15.9%). No public data are available about retailers in this channel who are primarily privately-held companies.

35 2018 State of the Industry Report U.S. Categories & Channels

Variety & One-Price Stores Variety & One-Price Stores housewares share increased to 3.4% on a housewares sales increase of 18.3%..

Variety & One-Price Stores Channel Sales (% of Industry Sales)

2017 3.4%

2016 2.5%

Source: IHA 2018-2019 Membership Survey

This channel, also known as Extreme Value Stores, sees the majority of its housewares sales in tabletop, kitchen tools & accessories and cook & bakeware. Four of the five major retailers in this channel showed housewares sales increases in 2017. As a group, their housewares sales increased 1.0% over 2016.

Variety & One-Price Stores Housewares Sales Growth

Top Chains

2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of Top Variety & One-Price Chains 2017 2016 vs. 2016 Total In 2017 Dollar Tree (Chesapeake, VA) $1,290 $1,203 7.2% 5.8% Dollar General (Goodlettsville. TN) $1,246 $1,167 6.8% 5.3% Tuesday Morning (Dallas) $588 $565 4.1% 58.8% Fred's (Memphis. TN) $312 $324 -3.7% 17.3% Big Lots (Columbus, OH) $293 $290 1.0% 5.6% Source: HomeWorld Business “Top 100 Retailers,” September 2018

Others Share of housewares sales decreased this year to 6.1% for this channel, which includes convenience stores, garden centers, patio specialty stores and all others. Total channel housewares sales decreased 3.3% over 2016.

Other Channel Sales (% of Industry Sales)

2017 6.1%

2016 6.7%

Source: IHA 2018-2019 Membership Survey This channel sees the majority of its housewares in cook & bakeware and kitchen tools.

36 2018 State of the Industry Report U.S. Categories & Channels

Catalogs & TV Housewares sales through catalogs and TV marketing programs in 2017 accounted for 5.3% of retail sales, up from 4.4% in 2016. Total channel sales increased 25.4% over 2016.

Catalogs & TV Channel Sales (% of Industry Sales)

2017 5.3%

2016 4.4%

Source: IHA 2018-2019 Membership Survey

Example companies include:  Catalogs: Lillian Vernon, Bit & Pieces, Hammacher Schlemmer, etc.  TV: QVC Company (formerly QVC and Home Shopping Network), infomercials, etc. This channel’s top categories are cook & bakeware, kitchen tools and kitchen electrics. No data on this channel were included in the HomeWorld Business Top 100 Retailers for 2017

Manufacturer Website In order to more accurately account for virtual retail channels in the IHA Membership survey, data on the Direct to End-User/Consumer via Your Website channel have been collected since 2007.

Direct to consumer housewares sales share decreased to 3.8% in 2017. Total channel sales decreased 8.0% over 2016.

Direct to Consumer via Manufacturer Website Channel Sales (% of Industry Sales) 2017 3.8%

2016 4.4%

Source: IHA 2018-2019 Membership Survey

This channel’s strongest categories are kitchen electrics and cook & bakeware.

37 2018 State of the Industry Report U.S. Categories & Channels

Internet Retailer Internet Retailer sales accounted for 6.8% of total housewares sales in 2017, versus 7.4% in 2016. Total channel housewares sales decreased 2.6% over 2016.

Internet Retailer Channel Sales (% of Industry Sales)

2017 6.8%

2016 7.4%

Source: IHA 2018-2019 Membership Survey

Top categories in this channel are kitchen electrics (14.2%), kitchen tools & accessories (12.6%) and tabletop (10.3%).

Example companies include Amazon, Wayfair, Overstock.com and Evine.

Internet Retailers Sales Growth Top Retailers 2017 vs. 2016 Housewares Sales ($ Millions) % Change Hswrs % of Chain 2017 2016 vs. 2016 Total In 2017 Amazon.com (Seattle) $3,147 $2,365 33.1% 3.0% Wayfair (Boston) $774 $553 40.0% 16.5% Overstock.com (Midvale, UT) $222 $228 2.6% 12.7% Evine Live (Eden Prairie, MN) $84 $87 -3.4% 13.0% Replacements (Greensboro, NC) $83 $84 -1.2% 96.5% Source: HomeWorld Business “Top 100 Retailers,” September 2018

This year, the IHA companies providing channel data reported lower sales to Internet Retailers versus last year (-2.6%), which may seem counterintuitive at first glance. Last year they reported higher year-over-year sales to Internet Retailers. In addition, housewares manufacturers reported higher sales in 2017 versus 2016 to brick and mortar retailers who also have e-commerce divisions. For example, housewares sales to Mass Merchants and Department Stores increased 4.8% and 2.1% respectively, which may include some sales that were transacted online.

To further complicate interpretation of the Internet Retailer results, most of the total housewares sales gains went to smaller retail channels, including Specialty Stores (+19.0%), Warehouse Clubs (+12.0%), Variety/One-Price Stores (+18.3%), Home Furnishings Stores (+30.5%), Gourmet/Gift/Novelty (+24.7%) and Catalogs, TV (+25.4%). As a group, housewares sales to these six channels increased $4,343 million. The total gain for all channels was $4,520 million.

These results from the survey of housewares companies indicate that they made a measurable shift in 2017 toward the smaller retail channels.

38 2018 State of the Industry Report

CHANNEL FOCUS: DIGITAL COMMERCE

39 2018 State of the Industry Report Channel Focus: Digital Commerce

Channel Focus: Digital Commerce Earlier in this report (on page 29), all Digital Commerce is shown to represent 15.9% of all housewares categories’ sales (Direct to End-User/Consumer via Your Website plus Catalogs/TV and Internet Retail). When combined, this is the second largest share of sales for housewares companies, behind Mass Merchants (23.1%) and ahead of Department Stores (11.1%). This section of the report reviews several important trends in Digital Commerce for consideration by housewares companies.

Total Digital Commerce sales to consumers grew from $5.8 billion in the first quarter of 2000 to $130.9 billion in the third quarter of 2018 according to U.S. Census Bureau. By the year 2020, annual U.S. online sales are projected by eMarketer to reach $700 billion.

Billions 9.8% $140 Digital Commerce Sales 10.0% 9.0% $120 8.0% $100 7.0% $80 6.0% 5.0% 3.5% $60 4.0% $40 3.0% 2.0% $20 1.0% $ 0.0% Q1 2009 Q3 2010 Q1 2012 Q3 2013 Q1 2015 Q3 2016 Q1 2018 Digital commerce % of Total Retail Sales Digital commerce $ (in Billions) Source: Quarterly Retail Digital Commerce, Census Bureau

Excluding the fourth quarter, store traffic has been steadily declining in the U.S., as retail sales are increasingly influenced by the Internet, where free shipping is the biggest draw.

U.S. Retail Store Traffic Top Reasons for Shopping Year Over Year % Change Online Free Shipping Exclusive Deals 17.0% 11.0% No Sales Tax Fast Shipping Store Pickup 10% 5% 9%

23%

-10.5% -4.7% -15.0% -16.5% 54%

Jan-15 Jan-16 Jan-17 Jan-18 Q1 16 Q3 16 Q1 17 Q3 17 Sep-14 Sep-15 Sep-16 Sep-17 May-14 May-15 May-16 May-17 May-18 Percent of respondents selecting each factor as “most Source: Fung Global Retail & Technology important” for online shopping. Source:COMsCORE Custom Surveys

40 2018 State of the Industry Report Channel Focus: Digital Commerce

U.S. digital commerce sales of products and services increased 11% in 2017 to $437 billion, as estimated by U.S. Department of Commerce. Both desktop and mobile sales are increasing.

Desktop + Mobile Retail Digital Commerce Dollar Sales (non-travel) ($ Billions) $32 $23 $23 $16 $22 $24 $7 $7 $7 $11 $16 $17 $17 $11 $11 $11 $99 $87 $72 $77 $68 $70 $67 $78 $80 $79 $56 $55 $54 $61 $60 $58

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017

Source: comScore, 2018 State of the U.S. Online Retail Economy Desktop Mobile

Online sales over the five days around Thanksgiving, collectively known as “Cyber 5,” increased 19.2% in 2018, versus 2017, with Black Friday and Thanksgiving posting the largest gains. When compared to Cyber 5 sales, Amazon’s Prime Day beats out three of the five days.

Online Sales Growth for Cyber 5 Daily Sales for Prime Day & Cyber 5 (2018 vs. 2017) (2018 Daily Sales in Billions)

Thanksgiving 25.5% Thanksgiving $3.05

Black Friday 26.1% Black Friday $6.24

Saturday 13.6% Saturday $2.50

Sunday 19.0% Sunday $3.01

Cyber Monday 14.0% Cyber Monday $7.75

Total 19.2% Prime Day $4.19

Source: Internet Retailer Estimates, December 5, 2018 Source: Internet Retailer Estimates, December 5, 2018

Free shipping has been involved in more than 60% of online sales transactions during 2016 and 2017, according to comScore. The overall trend shows that percentage to be increasing, with 65% of online transactions including free shipping in the last half of 2017.

41 2018 State of the Industry Report Channel Focus: Digital Commerce

Over half of the online shoppers in a survey conducted right after the Cyber 5 “season” said they shopped on Amazon.com.

Websites Shopped Over Cyber 5 57.0% (Multiple Responses)

32.0%

19.6% 13.7% 12.9% 12.3% 9.2% 3.4% 3.3% 3.2%

Source: Internet Retailer and Toluna survey of 1,002 consumers, November 27, 2018

Another recent survey of online shoppers, conducted by Namogoo, an Internet software services company revealed several good and bad experiences. Shoppers liked clear product images, product reviews and descriptions and easy checkout. They did not like checkout experiences that required them to enter the same information twice.

Great Online Shopping Most Frustration at Checkout (Multiple Responses) (Multiple Responses) Required to enter same info 53.5% Clear product images 88% 62.5% twice 63.1% Product reviews 78% Back button doesn't go to 30.6% 35.6% Product descriptions 77% previous page 36.9% Unable to change or modify 36.5% Easy checkout 76% 30.3% order 46.9% Easy search 69% Complicated website 45.9% 42.3% navigation Simple navigation 56% 40.5% 41.5% Easy on mobile device 48% Too many form fields 37.3% 41.4% Payment options 39% 19.8% Unable to find relevant filters 19.2% Remembers me 31% 18.9% Desktop/laptop Smartphone Tablet Product videos 21% Source: Namogoo, 2018 Online Consumer Behavior Study of 1,372 online shoppers, conducted in December 2017

SOI INSIGHT

Whether online sales are direct to consumers or through an Internet retailer, housewares manufacturers can expect increasing volume during the special events and on Web sites that make shopping easy for consumers.

42 2018 State of the Industry Report

IHA MEMBERSHIP PROFILE

43 2018 State of the Industry Report IHA Membership Profile

The 2018-2019 IHA annual membership registration process included a few questions about company sales and operations. Selected data are presented here as a profile of typical IHA member companies and are not intended to represent industry averages or benchmarks.

Sales Profile International Housewares Association (IHA) is composed of nearly 1,600 member companies of all sizes. Among the representative sample of companies surveyed this year, nearly two-thirds had annual sales of less than $10 million (U.S.) in 2017.

Size of IHA Member Companies (Annual Sales Distribution) 23.3%

18.3% 35.3%

11.8% 11.2%

7.2% 7.7% 5.7% 5.9% 4.4% 4.4%

<$1 $1-$1.9 $2-$4.9 $5-$9.9 $10-$14.9 $15-$19.9 $20-$34.9 $35-$49.9 $50-$99.9 $100+ Million Million Million Million Million Million Million Million Million Million Source: IHA 2018-2019 Membership Survey n=858

IHA Membership Sales Data Averages $19.4 million Average annual gross sales per company in 2017 (n=858) 14.6% Weighted average sales growth versus 2016 (n=638)

Percentage of Total Sales Which Is Housewares

All Sales 33.8%

Over 3/4 23.1%

Half to 3/4 15.2%

1/4 to Half 11.3% Less Than 1/4 16.6%

n=979

Among the 824 companies reporting both total annual sales and housewares sales, 30.9% had housewares sales above $10 million in 2017.

44 2018 State of the Industry Report IHA Membership Profile

Most (93.3%) IHA members export to markets outside of their headquarters country (n=666). Among those who do, 24.7% of their housewares sales are from exports.

Operations Profile Most (95.2%) of the surveyed companies are privately held (n=1,002).

Two operations questions were added to the IHA membership survey two years ago. 84.7% of these companies ship their products direct to consumers (n=845) 12.6% of these companies are woman-owned (n=835)

IHA Membership Manufacturing Practices 6% Make all products in U.S. Make all products themselves 48% Make some in US, 33% some outside U.S. 52% 61% Make some products Make all products themselves outside U.S. (n=603) (n=909)

Among the companies answering these questions with a value other than zero:

• 87% of their products are manufactured outside of the U.S. (n=454)

• 35% of their products are manufactured by other companies (n=308) The predominant country of origin mentioned by the 765 companies whose products are manufactured outside of the U.S. is China (67% of respondents).

Within the full population of IHA companies participating in this survey, • 79% are headquartered in the U.S. • 21% are headquartered in 29 other countries, led by Canada (5%) and China (3%).

The states with the highest concentration of housewares company headquarters (among U.S. headquartered companies) are: California (22%); New York (12%); New Jersey (11%); and Illinois (10%).

45 2018 State of the Industry Report

APPENDICIES

46 2018 State of the Industry Report Appendix A: Methodology

The International Housewares Association has published a State of the Industry Report every year since 1996. Beginning with the 2008 report, all category and channel sales data are collected in IHA’s current year membership survey.

Methodology This publication is a compilation of IHA membership annual survey data and other sources of industry information. This report uses the same data sources as previous years for trend analyses. In addition, the same measurement techniques as in years past are followed except where otherwise noted. Raftery Resource Network provided the research, analysis and content development.

The information is consistent with previous years and includes new sections and content. External data sources used for this report include: – U.S. Government data services – Industry trade journals – Industry trade associations – International data services

The IHA data source used for this report is the 2018-2019 IHA Membership Survey, which includes: − 2,358 data points for category and channel data − 768 companies provided these data The data and findings developed from IHA surveys reflect the performance and business activities of IHA members participating in those industry surveys. These findings should not be interpreted as national or industry-wide statistics but rather guidelines of housewares performance. For a profile of IHA membership, please see the final section in this report.

47 2018 State of the Industry Report Appendix B: Top 100 Domestic Housewares Retailers by Sales

Top 100 Domestic Housewares Retailers By Sales (in Millions) House- House- % Chg House- # # Total Total wares wares House- wares % Stores Stores Sales Sales Sales Sales wares Total Rank Chain 2017 2016 2017 2016 2017 2016 Sales Sales 1 Walmart (Bentonville, AR) 4,761 4,672 $318,477 $307,833 $21,185 $20,574 3.0% 6.7% 2 Costco (Issaquah, WA) 741 715 $126,172 $116,073 $13,330 $12,355 7.9% 10.6% 3 Target (Minneapolis, MN) 1,822 1,802 $71,879 $69,495 $7,181 $6,914 3.9% 10.0% 4 Bed Bath & Beyond (Union, NJ) 1,496 1,546 $12,445 $12,216 $5,232 $5,227 0.1% 42.0% 5 Sam's Club (Bentonville, AR) 597 660 $59,216 $57,365 $4,493 $4,449 1.0% 7.6% 6 Williams Sonoma (San Francisco) 607 629 $5,245 $5,084 $4,132 $3,995 3.4% 78.8% 7 Amazon.com (Seattle)** 456 3 $106,110 $79,785 $3,147 $2,365 33.1% 3.0% 8 Home Depot (Atlanta) 2,284 2,278 $100,904 $94,595 $2,603 $2,528 3.0% 2.6% 9 Walgreens (Deerfield, IL) 8,100 8,184 $87,302 $83,802 $2,428 $2,350 3.3% 2.8% 10 Kroger (Cincinnati) 3,902 3,899 $115,889 $115,337 $1,862 $1,852 0.5% 1.6% 11 Qurate (Englewood, CO) 19 14 $8,771 $8,682 $1,851 $1,825 1.4% 21.1% 12 Lowe's (Mooresville, NC) 1,839 2,129 $68,413 $65,017 $1,779 $1,702 4.5% 2.6% 13 Kohl's (Menomonee Falls, WI) 1,174 1,169 $18,899 $18,686 $1,698 $1,655 2.6% 9.0% 14 Ace Hardware (Oak Brook, IL)# 4,418 4,330 $17,543 $15,800 $1,535 $1,379 11.3% 8.7% 15 Home Goods (Framingham, MA) 671 579 $5,116 $4,405 $1,314 $1,157 13.6% 25.7% 16 Dollar Tree (Chesapeake, VA) 14,610 14,334 $22,246 $20,719 $1,290 $1,203 7.2% 5.8% 17 BJ's Wholesale (Westborough, MA) 215 214 $12,755 $12,351 $1,273 $1,239 2.7% 10.0% 18 CVS (Woonsocket, RI) 9,778 9,810 $79,543 $76,034 $1,269 $1,216 4.4% 1.6% 19 Dollar General (Goodlettsville. TN) 14,534 13,320 $23,471 $21,987 $1,246 $1,167 6.8% 5.3% 20 Macy's (Cincinnati) 715 728 $24,837 $24,778 $1,131 $1,118 1.2% 4.6% 21 Meijer (Grand Rapids, MI)* 236 232 $17,150 $16,750 $885 $860 2.9% 5.2% 22 Sears (Hoffman Estates, IL) 570 695 $11,084 $13,488 $811 $996 -18.6% 7.3% 23 TJMaxx/Marshalls (Framingham, MA) 2,285 2,221 $22,249 $21,246 $784 $742 5.7% 3.5% 24 Wayfair (Boston)* 0 0 $4,696 $3,380 $774 $553 40.0% 16.5% 25 Kmart (Hoffman states, IL) 432 735 $5,618 $8,650 $759 $1,168 -35.0% 13.5% 26 The Container Store (Coppell, TX) 90 86 $857 $820 $742 $717 3.5% 86.6% 27 IKEA (Conshohocken, PA) 45 43 $5,858 $5,350 $666 $611 9.0% 11.4% 28 Crate & Barrel (Northbrook, IL)* 105 112 $1,342 $2,103 $628 $901 30.3% 46.8% 29 Tuesday Morning (Dallas)* 724 731 $1,000 $967 $588 $565 4.1% 58.8% 30 Publix (Lakeland, FL) 1,384 1,136 $34,560 $34,000 $583 $576 1.2% 1.7% 31 Ulta Beauty (Bolingbrook, IL) 1,074 974 $5,885 $4,655 $571 $455 25.5% 9.7% 32 Royal Ahold Delhaize (Carlisle, PA) 1,962 2,076 $43,196 $44,241 $564 $580 -2.8% 1.3% 33 Rite Aid (Camp Hill, PA) 2,550 4,536 $21,529 $32,845 $559 $845 -33.8% 2.6% 34 Yankee Candle (South Deeerfield, MA)* 584 575 $563 $536 $461 $439 5.0% 81.9% 35 Albertsons (Boise, ID)* 2,318 2,345 $59,716 $58,735 $441 $434 1.6% 0.7% 36 Sally Beauty (Denton, TX) 3,763 3,781 $2,345 $2,386 $422 $427 -1.2% 18.0% 37 True Value (Chicago)# 4,311 4,460 $4,844 $4,610 $420 $400 5.0% 8.7% 38 Ross Stores (Newark, CA) 1,620 1,533 $14,006 $12,867 $383 $349 9.7% 2.7% 39 Shopko (Ashwaubenon, WI)* 363 350 $3,240 $3,135 $350 $339 3.2% 10.8% 40 Best Buy (Richfield, MN) 1,293 1,600 $42,151 $39,403 $347 $324 7.1% 0.8% 41 Fred's (Memphis. TN) 596 644 $1,805 $1,886 $312 $324 -3.7% 17.3% 42 Big Lots (Columbus, OH) 1,416 1,432 $5,271 $5,200 $293 $290 1.0% 5.6% 43 Do-It-Best (Fort Wayne, IN)# 3,900 $8,584 $8,101 $283 $267 6.0% 3.3% 44 H.E.B. (San Antonio, TX)* 340 339 $23,060 $22,505 $267 $261 2.3% 1.2% 45 JC Penney (Plano, TX) 872 1,013 $12,506 $12,547 $265 $259 2.3% 2.1% 46 Menard's (Eau Claire, WI)* 307 305 $10,950 $10,660 $256 $249 2.8% 2.3% 47 Sur La Table (Seattle)* 131 123 $540 $504 $242 $226 7.1% 44.8% 48 Army Air Force Exchange (Dallas) 168 $7,394 $7,850 $230 $244 -5.7% 3.1% 49 Overstock.com (Midvale, UT) 0 0 $1,745 $1,800 $222 $228 2.6% 12.7% 50 Starbucks (Seattle)** 9,413 9,019 $15,653 $14,795 $209 $217 -3.7% 1.3%

Source: HomeWorld Business “Top 100 Retailers,” September 2018

48 2018 State of the Industry Report Appendix B: Top 100 Domestic Housewares Retailers by Sales

Top 100 Domestic Housewares Retailers By Sales (in Millions) House- House- % Chg House- # # Total Total wares wares House- wares % Stores Stores Sales Sales Sales Sales wares Total Rank Chain 2017 2016 2017 2016 2017 2016 Sales Sales 51 HealthMart (San Francisco) 4,853 4,740 $10,275 $9,750 $191 $181 5.5% 1.9% 52 Wegman's (Rochester, NY)* 96 92 $8,685 $8,300 $186 $178 4.5% 2.1% 53 ShopRite (Keasbey, NJ)* 360 353 $16,300 $16,010 $177 $174 1.7% 1.1% 54 Giant Eagle (O'Hara, PA)* 419 425 $9,040 $9,050 $171 $171 0.0% 1.9% 55 Good Neighbor (Chesterbrook, PA)# 2,852 2,755 $9,795 $9,210 $170 $160 6.3% 1.7% 56 P.C. Richard (Hauppauge, NY)* 66 66 $2,020 $2,000 $159 $162 -1.9% 7.9% 57 Ollie's Bargain Outlet (Harrisburg, PA) 268 234 $1,077 $890 $152 $126 20.6% 14.1% 58 Belk (Charlotte, NC) 294 294 $4,285 $4,200 $145 $142 2.1% 3.4% 59 99 Cents Only (Commerce, CA) 389 390 $2,191 $2,023 $138 $127 8.7% 6.3% 60 Hy-Vee (West Des Moines, IA)* 245 242 $9,640 $9,240 $134 $128 4.7% 1.4% 61 Aldi/Trader Joe (Batavia, IL)* 2,250 2,315 $25,860 $23,510 $130 $118 10.2% 0.5% 62 Bi-Lo (Jacksonville, FL)* 735 730 $10,630 $10,600 $129 $129 0.0% 1.2% 63 Kitchen Collection (Chillicothe, OH) 210 223 $129 $144 $128 $143 10.5% 99.2% 64 Bi-Mart (Eugene, OR)* 77 78 $970 $948 $119 $116 2.6% 12.3% 65 PriceSmart (San Diego) 39 38 $2,910 $2,821 $119 $115 3.5% 4.1% 66 SuperValue Retail (Eden Prairie, MN) 227 217 $4,405 $4,596 $105 $110 -4.5% 2.4% 67 Pier 1 Imports (Fort Worth, TX) 1,003 1,018 $1,799 $1,828 $100 $103 -2.9% 5.6% 68 Burlington Coat (Burlington, NJ) 617 580 $6,038 $5,400 $96 $86 11.6% 1.6% 69 BrandsmartUSA (Hollywood, FL)* 9 9 $1,191 $1,152 $93 $90 3.3% 7.8% 70 Michaels Stores (Irving, TX) 1,236 1,367 $5,362 $5,197 $92 $89 3.4% 1.7% 71 The Bon-Ton Stores (York, PA)## 260 262 $2,494 $2,601 $91 $101 -9.9% 3.6% 72 Save Mart (Modesto, CA)* 209 206 $3,785 $3,815 $87 $88 -1.1% 2.3% 73 Evine Live (Eden Prairie, MN) 0 0 $648 $666 $84 $87 -3.4% 13.0% 74 Replacements (Greensboro, NC)* 1 1 $86 $87 $83 $84 -1.2% 96.5% 75 Stater Bros. (Colton, CA) 171 167 $4,113 $4,040 $81 $80 1.3% 2.0% 76 Winco (Vancouver, WA) 117 110 $7,124 $6,675 $81 $76 6.6% 1.1% 77 At Home (Plano, TX) 149 123 $951 $766 $81 $65 24.6% 8.5% 78 Nebraska Furniture Mart (Omaha, NE)* 4 4 $1,977 $1,514 $78 $60 30.0% 3.9% 79 Price Chopper (Rotterdam, NY)* 135 136 $3,865 $3,810 $76 $75 1.3% 2.0% 80 Ingles Market (Asheville, NC) 199 201 $3,861 $3,657 $75 $72 4.2% 1.9% 81 Hobby Lobby (Oklahoma City, OK) 844 783 $4,910 $4,551 $74 $73 1.4% 1.5% 82 Newegg.com (Industry, CA) 0 0 $2,690 $2,650 $74 $73 1.4% 2.8% 83 Piggly Wiggley/C&S Sprmkts (Keene, NH) 376 348 $3,877 $3,668 $73 $70 4.3% 1.9% 84 Staples (Framingham, MA)** 1,185 1,250 $7,635 $8,275 $72 $80 -10.0% 0.9% 85 Bluestem Brands (Eden Prairie, MN)* 0 0 $1,888 $2,092 $67 $74 -9.5% 3.5% 86 Urban Outfitters (Philadelphia) 613 606 $3,616 $3,546 $65 $64 1.6% 1.8% 87 Tractor Supply (Nashville, TN) 1,853 1,738 $7,256 $6,780 $64 $60 6.7% 0.9% 88 Smart & Final (Commerce. CA) 323 305 $4,571 $4,342 $63 $60 5.0% 1.4% 89 Dillard (Little Rock, AR) 292 293 $6,118 $6,257 $58 $59 -1.7% 0.9% 90 Neiman Marcus (Dallas, TX) 85 91 $4,766 $4,775 $57 $57 0.0% 1.2% 91 RH (Corte Madera, CA) 83 113 $2,440 $2,135 $54 $47 14.9% 2.2% 92 Raley's (West Sacramento, CA)* 121 122 $3,093 $3,004 $54 $52 3.8% 1.7% 93 DeMoulas Mkt Basket (Tewksbury, MA)* 79 78 $3,887 $3,725 $51 $49 4.1% 1.3% 94 Build.com (Chico, CA) 0 0 $1,340 $925 $51 $35 45.7% 3.8% 95 AVB BrandSource (Tustin, CA) 2,953 3,100 $5,494 $5,410 $50 $49 2.0% 0.9% 96 Defense Commissary (Fort Lee, VA) 238 $5,082 $5,225 $49 $50 -2.0% 1.0% 97 Gabe's (Morgantown, W. Va.) 102 80 $1,050 $940 $47 $39 20.5% 4.5% 98 Sprouts Farmers Market (Phoenix, AZ) 285 253 $4,669 $4,048 $46 $40 15.0% 1.0% 99 Harbor Freight Tools (Los Angeles) 840 750 $2,369 $1,958 $46 $38 21.1% 1.9% 100 Office Depot (Boca Raton, FL) 1,378 1,487 $6,390 $6,950 $45 $49 -8.2% 0.7%

Source: HomeWorld Business “Top 100 Retailers,” September 2018

49 2018 State of the Industry Report Appendix C: About the Author

Dan Raftery, president of Raftery Resource Network, has consulted to the housewares, food and drug industries since 1985. He has led a wide range of internal projects for individual companies. Venture capital groups often call on Dan to support due-diligence research. Dan has personally contributed to the development and industry education of initiatives such as Efficient Consumer Response, Category Management, Direct Product Profitability, Activity Based Costing, Frequent Shopper Program Development, Invoice Accuracy, Unsaleables Cost Management, Scan-Based Trading and Direct Store Delivery Operations. Since 2002, Dan has authored the IHA State of the Industry Report. He facilitates four executive round table groups (CORE) for IHA and facilitates IHA’s annual executive conference (CHESS). More information about CORE and CHESS can be found at www.housewares.org. Dan has also developed the following reports for International Housewares Association: • Leveraging Housewares Categories in Supermarkets: IHA White Paper • Sustainability Options for Housewares Companies • Reverse Auctions: An Industry White Paper The following publications were also developed by Dan Raftery for other related industries and may be of interest to housewares companies: • Reverse Supply Chain Improvement: A Joint Industry Project (https://www.fmi.org/docs/supply/fmi_reverse_sc_improvement.pdf) • Improving Efficiencies in Product Discontinuation (http://www.gmaonline.org/downloads/research-and-reports/final.pdf) • Scan Based Trading for Retailer-distributed Products: A Feasibility White Paper ([email protected]) • Variety or Duplication: A Process to Know Where You Stand ([email protected]) The above publications are available upon request. Raftery Resource Network, 593 Crosswind Lane, Lindenhurst, IL 60046 www.RafteryNet.com 708-370-9933, [email protected]

50 2018 State of the Industry Report