The white goods market is finally waking up to the digital revolution as two of its biggest names, Electrolux and Merloni, prepare to do battle over the next generation of appliances.
Electrolux, through its technology brand Zanussi, and Merloni, through its Ariston range, are about to deliver their version of that well-worn cliché, the “kitchen of the future”.
In the second half of this year, the companies will go head to head across Europe, pouring millions into the launch of digital, integrated appliances.
Both systems will feature cookers, fridges, dishwashers and washing machines which can “talk” to each other through the mains electricity system, sharing information on power consumption to take advantage of off-peak electricity.
They are also hooked up to the Internet, enabling users to download and save recipes or connect to home shopping services.
On paper, the Ariston system, which features a central control unit called Leonardo, is the more ambitious of the two. Each individual appliance can automatically report faults to a dedicated service centre.
Zanussi also considered a fault-reporting system but decided the consumer was not ready for it. Graham Drage, business development manager of new and future business at Zanussi, explains: “We want to give consumers the feeling that they are in control. We want to avoid the ‘big brother’ scenario.
“Consumers need to be taken one step at a time, otherwise it could get very frightening. We work with it every day and we are used to it, but for the average consumer it is worrying stuff.”
Ariston marketing director Charlie Jones believes Zanussi’s fears are groundless. “Merloni service engineers will only physically visit a consumer when we have advised customers by telephone that a product needs service attention.
“A service call will be arranged, then the actual visit will be made in the normal way. The service response time will naturally reflect more immediacy and in most cases avoid actual breakdowns, saving time and money for everyone concerned.”
However, Ariston’s plans have been met with scepticism in some parts of the retail trade. One independent electrical dealer says: “I’m surprised Ariston is getting involved in digital – it is a mass-market brand.
“In my experience it hasn’t got a good after-sales service record. I have made appointments for customers and been let down. We don’t deal with the company any more.”
Jones answers the critics by pointing out that the brand has been repositioned towards the top end of the market. “Merloni has successfully stretched the brand over the past ten years and this technology will enable us to build on an already strong brand equity among new and existing customers,” he says.
Merloni’s chief executive Francesco Caio last week announced he was standing down to start a new company, called WRAP (Web-Ready Appliances Protocol), to develop digital technology for Merloni and its Ariston digital appliances.
Research by Zanussi suggests that consumers are increasingly inept in the kitchen and need to be guided through everything but the most basic of meals. The fact that its unit includes a TV, CD player and DVD system means that they may be able to do this with the help of their favourite TV chef.
The Zanussi appliances can also talk to their owners, through the mobile phone network. “If, for example, you leave the fridge freezer door open when you leave the house in the morning, you will get a message on your phone. You can then, maybe, arrange for someone to go and sort the problem out,” Drage explains.
The company has formed a joint venture with mobile phone giant Ericsson, to make products for the “networked home”. Zanussi’s “screen fridge”, which will eventually be able to re-order food as it is used up through a home-shopping link, is also part of the overall package.
The system’s control panel is encased in a retractable, wipe-clean unit which is suspended from kitchen cupboards.
According to Drage it will be marketed first to double income homes, where time is at a premium. Initially, appliances are likely to cost ten per cent more than the existing top of the range lines.
Ariston is aiming at the computer-literate, digital TV enthusiast or the type of consumer who values peace of mind and may currently purchase an extended warranty.
To a certain extent, the development of integrated technology has been guided by the Italian market, where in many homes the electricity supply is still capped, which means there is a limit to the number of appliances that can be used at one time.
The benefits of appliances that can monitor each other’s power consumption and work out the best time to operate are obvious. The attractions of the networked kitchen might be less apparent elsewhere in Europe, but for the manufacturers there is a lot riding on its success.
Not since the advent of microwave in the Eighties has there been a significant technological advance in the sector or a new product category.
In the UK, the big manufacturers have been hit by price deflation and the abolition of recommended retail price. The knock-on effect has been ever tighter marketing budgets and flat sales.
One former executive at Electrolux says: “This is the Great White Hope of the white goods market. I don’t think it can step back and not do it, because there is always the worry that the major electronics manufacturers will come in.”
Another industry observer says: “Promotion is a nightmare for white goods manufacturers. Since recommended retail price ended, margins have been cut even further.
“Marketing budgets are very tight, so they will use these innovations to add brand values. It will draw attention to Zanussi and Merloni.”
Merloni is to pump &£21m over three years into its digital launch. Zanussi’s budget has not been disclosed, but TV ads have not been ruled out.
Geoff Hyams, managing director of Electrolux’s media agency Zed, believes digital could rekindle interest in the sector, without necessarily selling in large numbers. “Zanussi recently brought out a range of coloured fridges, which did very well – but it was the grey one that sold the most. It was the colours that made people interested but in the end they went for a more conservative choice.
“In the same way, people may be attracted into the shop by the intelligent appliances but they might end up choosing a slightly less intelligent version. It’s about reassuring people that any company that can do this must be good.”
This view seems to be borne out by Ariston, which is using digital as a launchpad for other, standalone products, including a digital washing machine. Jones says: “This technology should be viewed like the space race, where the spin-off technology proved more valuable than the original concept.”
Jones believes that within ten years all new houses will be built with digital capability, even if the appliances are not in place.
Other estimates about the speed of take-up vary. Comet Group marketing director Paul Geddes says: “In terms of mass market, the ‘smart kitchen’ is eight to ten years away.”
Whatever the case, this year’s digital launches do not have to be a runaway sales success to stimulate interest in the sector and give a boost to manufacturers currently standing on the digital touchline.