Vacuum Cleaners Discussions

Early news reports in the USA are saying the London financial markets nosed dived today in the worse downturn ever.  This comes on the heels of a 4 percent drop in the Dow Jones Industrials last week alone.  Since today is a Federal Holiday in the US in observance of Dr. Martin Luther King the financial markets are closed.  Not sure what impact the London market fall will have on the US markets--have to wait to see.

What and how long will it take jaydee to realize that he needs to enter the low to middle price range vacuum market to stay competitive in the USA in the big box stores' venue?

Any news yet on the 2007 dyson sales? 

Carmine D.

Ben Bernanke flinched and the Fed cut rates 3/4 percent.  Largest in over 20 years.  He was working Monday at his Fed office despite the Martin Luther King Jr. Holiday.  He was watching the markets fall around the world.  But............did he panic?

The Fed has its usually scheduled meeting on Jan 30.  Why didn't it wait to cut rates by a week?  [Panic?]Because the markets were in free fall on Tuesday morning and decisive and immediate action was needed by the Fed.  Did I mention its an election year?

Yes, there has been a "dead" cat bounce on the markets.  But Fed interest rate moves are done to stimulate and regulate the economy for the long term NOT the fluctuations in global markets in the short term.  

What does the Fed do now on Jan 30?  Another interest rate cut is seen by all.  Two in one week?  [Panic?]  If it doesn't.............then what?  And if it does............is it inflationary?  Stagflation.  What a combo.  Not good for home product sales like high priced big box vacuums.

Carmine D.

Hi Carmine,

Don't want to get too far off the thread but have you heard anything about a plan to reduce foreclosures by dropping the size of mortgage payments?  Someone mentioned that to me in passing the other day and I want to be sure I heard right.  I am assuming, if there is such a thing, it would apply to home owners who were in dire straits and not able to make full monthly payments.  The bank's idea being, "Why foreclose and get nothing at all since real estate isn't moving anyway?

Thanks,

Venson

Venson wrote:

Hello Venson:

Here's some related info:

http://www.lvrj.com/opinion/14177627.html

http://www.lasvegassun.com/news/2008/jan/24/mortgage-crimes/

Carmine D.

Thanks Carmine.  Looks like there's no way to win and no way to help.

Venson

Hi Venson:

The recent Fed rate cut resulted in the big banks reducing their primes.  Of course, prime is for their best customers, not the homeowners with mortgage payments in arrears, default, and foreclosures.  BUT...if the homeowners work with their banks, mortgage holders, and/or lending institutions to "refinance" the existing interest rates downward, based on the recent Fed cuts and next week's pending drop, they may be able to keep the "wolf" away from the door.  At least temporarily to get them through the bad times, which at this point is uncertain in duration.

On a related vacuum note, the sale of HOOVER by Whirlpool to TTA probably happened at the best possible time for all parties involved including the vacuum industry.  If the sale was not consummated when it was, it is very likely it would have fallen through.  Then, HOOVER would have languished without serious business direction during these bad economic times and could have eventually faded away.

Instead, HOOVER under the tutelage of TTA has introduced new competitive floorcare products.  It Is advertising regularly in the papers.  And HOOVER products are stocked and advertised regularly by all the big box retailers.  From all outward appearances HOOVER sales are flourishing since the sale and takeover by TTA.  We'll see what happens in the months ahead.  

Right now, all the anti-HOOVER folks who were luxuriating over the HOOVER tribulations may be eating alot of crow.  Especially if HOOVER in concert with TTA becomes the number one new vacuum sold in the USA not just in units but dollar volume too.  It may happen and sooner rather than later.

Carmine D.

Please indulge me with the post script to this thread.  It now appears that the Fed Chief Ben Bernanke not only flinched and panicked with the January 22 interest rate cut but he was "bluffed" too.

By Friday, January 25, the consensus among all the people in the know was that the international financial markets' drop on Monday January 21, a national Holiday in the US to commemorate Martin Luther King Jr, had nothing to do with the US markets' fall the week earlier.  Notta.

The drops were a result of a low level rogue trader in a French bank who cost the company over $ 7 Billion in losses.  How?  By taking unauthorized positions and making fraudalent trades.  All of which should have been caught by internal control procedures which the 31 year old bank employee circumvented.  The estimated losses may reach over $70 Billion after the company unwinds the trades, which it was doing on Monday unbeknownst to the US Central Bank and the Fed Chairman.  And in all likelihood these trades caused the volatility and declines that rattled European markets on Monday, January 21 and the US market decline on Tuesday morning before the Fed cut the rate by 3/4 point.  The largest single rate cut in over 20 years!

Now, Benboy Bernanke has a perception and credibility problem. 

When Benboy called an emergency teleconference meeting of the Open Market Committee on Monday evening to twist the arms of the Fed Bank Chiefs to drop the rates, ALL but one agreed.  Who was the lone dissenter?  The Fed Bank Chief in St. Louis, Missouri.  The only one to vote "no" on the interest rate cut and say that the Fed should wait until January 30 [during its regular scheduled meeting].  Alas in our democratic scheme of things, majority rules even when the majority is wrong.  The Fed acted Tuesday morning and the rest is history.

If I were Benboy's boss, and I am not fortunate for him, he would have his resignation signed, sealed and delivered to me on my desk this Monday morning.  Two days before the regular meeting of the Fed Open Market Committee.  And Ben's successor would be................you got it.  The man from the St. Louis Fed Bank who bucked the trend. 

Carmine D.

Most economists predict rough economic times ahead.  That could last well into 2009 and beyond.

Drawing parallels in today's economy with that of the Carter years [mid to late 70's] and the Bush 1 years [early 90's].  BUT, most economists say the signs now are much much worse than in these two previous times.  Why?  Unusually high oil and food prices.  And a much worse housing market.  With rising unemployment.  And lower corporate earnings reports.  Plus one of the largest declines in consumer spending.  All bode doom and gloom in the days ahead.  BTW, how many vacuum pros made it to Las Vegas this year for the VDTA?  I recall the brohaha last year when HOOVER wasn't represented.  What happened this year?

How will these rough times ahead affect vacuum sales?  Well, we already know from the NPD that new vacuum sales were off 3 percent in 2007.  After an extended period of increasing annual vacuum sales due in large part to dyson sales.  Most economists say that the first clear cut sign of the bad economic times was the extremely poor consumer spending numbers for the 2007 Holiday season and in January 2008.  The worse in 20 years by some accounts.

So.... I suspect the beginning of the vacuum sales fall off started in late 2007 and will probably get worse as the months ahead unfold.  Who will be hit the hardest?  No question, the big box retailers who enjoyed a bullish market in vacuum sales from 2002-2007 in large part due to dyson sales.  With a fall off starting in mid to late 2007 causing the entrenchment by most big box retailers in their vacuum inventories now.  How?  Lowering prices, offering giftcards in concert with discounts, and culling brands and models with clearance prices.  The latter usually from the ranks of the hard to move sellers [read high end prices]. 

Surely any vacuum insiders here who are privileged to vacuum sales information which contradict mine will correct me if I'm wrong.  Pity the thought that I spread negativity and lies.  

ALL COMMENTS WELCOME EVEN COMPANY PROPAGANDA [READ SALES PUFFING AND ROSY SCENARIOS FROM PRIVATELY HELD COMPANIES NOT SUBJECT TO THIRD PARTY AUDIT SCRUTINY AND REVIEW].

Carmine D.

CarmineD wrote:
I think that those who buy expensive items (vacuums or otherwise) will continue this trend although they may wait for better financial forecasts.   I do not see them running to WM or other stores to buy the low end. 

JMHO...I think the coming years will be good for a company who can come up with a QUALITY vacuum that is healthy, compact and has a good powerhead for $500 or at least, under $600.00 MAX, that is NOT MADE IN CHINA. So it should be good for Eureka/Electrolux. While not a great machine (hard to work on and those hose & wand contact problems). It's priced well and gets a good review from CR (which seems to be the only criteria for many people). If I were the Germans I would take the hit for a few years in exchange for market share. SEBO should offer the K3 in that price range and try to make it up by splitting some of the difference with the dealer in profit margin and raise the back end prices like bags and filters. Also offer less warranty like a 2/5 year or 3 year. It's very hard to get the Germans to think like Americans when it comes to marketing (this is both good and bad and sometimes frustrating) I'm assuming sales are good in Europe so things won't change unless they lose too much market share in the US...then creative thinkers might be listened to.

Lucky1 wrote:

The economic malaise is global.  Europe and Japan are not exempt in part because their markets and economies are tied to oil and food prices which are at record highs worldwide.  The economies faring better are India and China. 

Carmine D.