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2004 Best in Category: Household Electrics

The Holmes Group

Bionaire Digital Tower Ceramic Heater

Jerry Kahn, chairman of The Holmes Group, has been watching the downward price spiral in the mass-market small electrics business for years.

And, like many others, he’s frustrated by it. He believes that in such a price-blinded market, everyone eventually loses— the vendors, the retailers, the consumers.

The real irony, Kahn said, is that while you hear about retailers asking for lower prices on basic items, the fastest-growing segments in the categories in which Holmes compete— from Holmes fans to Bionaire heaters to Rival Crock-Pots— are products that raise the bar on design and performance while giving retailers a beefier ring at the register.

It’s all about making added-value the priority in your product development-to-market plan, Kahn said.

“The best way to get to the retail shelf is to come in with something different and exciting,” Kahn told HOMEWORLD BUSINESS®. “It always has been and always will be.

“Everybody is talking about lower prices, but when I come in with a brand new product, the last thing they ask for is price.”

Kahn serves up a recent example of how design and technological innovation can change preconceived retail notions of what constitutes a popular price in a core kitchen electrics category— slow cookers.

“Look, you have to know your business and your marketplace,” Kahn said. “We wouldn’t come in with a new line of Crock-Pots that retail for $350 and expect Wal-Mart to take it. But we did come out with the first programmable Crock-Pot, at almost $20 more than the rest of our Crock-Pots, and it now accounts for a third of all our Crock-Pot sales.

“It’s the only way we can make money, and it’s the only way the retailer can make money. If everybody’s doing the same 2-slice toaster, nobody wins.”

The culture of delivering added value through intensive new product development and proprietary design is not new to Holmes, Kahn said. When he founded the company in 1982, he instilled the need to offer unique function and fashion in a retail home environment business that was gravitating toward commodity status.

A typical trade show for Holmes features a host of appointment-only back-room presentations of new products and concepts. From the Galileo wireless climate center system and Harmony air purifiers to Rival roaster ovens and vacuum sealers, the company has previewed some of its biggest hits during these back-room meetings. Among the introductions last year was the streamlined Bionaire digital tower ceramic heater, which won a Best in Category honor in household electrics at the first annual Housewares Design Awards.

Holmes prides itself on its recent ratio of new product hits to misses, something Kahn attributes to a design and marketing strategy more in tune with consumer needs than ever.

“We talk about our hit rate all the time, how we can get that hit rate up,” Kahn said. “But our culture also encourages risk. In order to become a new product leader, there has to be risk. You can’t just stay in the middle. Some work and some don’t. It’s very expensive to do what we’re doing. But we think we can mitigate the risk by knowing our business.”

Kahn said Holmes introduced more than 100 new products across all its divisions last year. “We work on a lot of new products, in fact, our number one goal is to have more new products than anyone in the industry,” he said. “These are not just color changes. This is new design. Products that are functionally and aesthetically different.”

Kahn said investment in design-related process has been critical to Holmes the past few years. He cited the implementation of rapid model-building capabilities— in resin and metal— at its Boston-area headquarters and Far East factory.

Nonetheless, he stressed investment in innovative design is moot without an overall business model that continually invests in low-cost, high-quality production and dynamic customer service. He noted the company’s recent $11 million implementation of a new SAP information software sys

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