Did you know most home appliances‘ prices have remained flat for three decades? Despite the introduction of novel commodities that outstrip them, home appliances maintained their cost. The norm has changed recently with an average increase of 10% by different manufacturers.
Most people are now bewildered by the cost, while others are facing a shortage of the same. Companies like Whirlpool and Clorox have plans to increase the cost of home appliances. The idea is to deal with low supply and the increasing cost of shipping. Some people sought to make purchases of home appliances during promotions to cut costs. Sadly, most of them were not successful as holiday promotions failed to meet their demand. Home appliances manufacturing companies face different challenges causing high prices. Here’s why home appliances cost more:
1. Supply Chain Disruptions
The manufacture of home appliances such as TVs, washing machines, and other kitchen appliances requires specific materials. Recently, there’s been a disruption in the supply of copper, steel, and aluminum. With such disturbance, the cost of the input materials rose, directly affecting home appliances’ cost. More so, the supply of the finished product lags as ports deal with a variety of issues.
2. Increase in Ocean and Air Freight Charges
With a three-fold increase in container import, prices rose in a short period. The current shipping price of commodities is fast rising. Most home appliances that are being imported from other countries are expensive. Different ports, like the Los Angeles Port, handle imports and exports from China, Japan, Taiwan, and Vietnam. Los Angeles Port is the largest in the US. The port faces challenges such as congestion due to workload causing supply delays to the market.
3. High Home Appliance Demand
While home appliance manufacturing faces disruptions, market demand is surprisingly on the rise. There is a growing need to purchase home appliances as many individuals acquire new homes. People continue buying the old stock without a replacement in place of the new stock. Over time, the demand has surpassed the supply. The skyrocketing need forced home appliance costs to rise to manage the available.
4. Shortage of Input Materials
One material used across home appliances manufacturing is stainless steel. With a shortage of stainless steel, production of less profitable appliances stopped. For about a year now, Thermador Star Sapphire dishwasher manufacturing stopped. Continuous lack of raw materials affects the prices of the commodities. In addition, crude oil prices are now also very high. So plastics, a product of crude oil, and a raw material in the manufacturing of home appliances has inadvertently become expensive.
5. The Demand on the Refrigerator and TV
Following a surge in home sales over the last year, most people acquired new homes. Furnishing these homes created a high demand for refrigerators , TVs and other appliances. Longer hours spent at home created a need for most families to upgrade their home appliances. Constant wear out of the refrigerators and TVs generated a rise in demand in the market. Well, the refrigerator and television is an exceptional case. Its production is currently affected despite the demand. Among all the home appliances, refrigerators need stainless steel, chips, and most components like plastics. A shortage of these materials caused a reduction in production.
6. Brands with Hiked Cost on Home Appliances
Do you have plans to make a home appliance purchase? Whether to replace or upgrade, you’re likely to miss your favorite brand in the stores, and if you are lucky, get them at a high price. According to sentiments from home appliance brands such as Voltas, LG, and Panasonic, the changing lifestyle forces an increase in cost. The brands predict a 20% – 25% commodity price rise with about 5 – 6 times ocean and freight cost increase.
Mining activities are facing a delay. So, raw materials supply is a big challenge. Besides, the shipping containers’ scarcity affects the total input cost of manufacturing home appliances. High freight charges cause delayed availability of home appliances in the market.
From the mining of raw materials to market supply, the home appliance industry is facing a lot of challenges. Everything is currently expensive; cost of mining, raw materials, and import freight charges. The current lifestyle comes with major demands. People are purchasing homes to have a comfortable place to live. This too places a need on quality home appliances. In addition, home builders also require different home appliances, especially for the kitchen and laundry areas. So, apart from individual homeowners, home builders are on the list too. Currently, the available brands cannot sustain the demand for home appliances.