The major domestic appliances (MDA) global market recorded a good trend in the first six months of 2019. The market generated an overall value growth of 2.7 percent. For the full year, GfK expects total sales will reach Rs 14.25 lakh crore, with a growth of 2 percent. The main trends contributing to the growth are performance/capacity, simplification, and borderless shopping. Looking at the regions, in the first half of 2019, the MDA market experienced a recovery in Brazil (+13 percent) and a strong uptake in India (+10 percent). Europe remained on a growth track contributing to the biggest part of absolute Euro growth. However, a 6.2-percent decline in China was a major reason for the overall market slowdown.
“Size definitely matters for consumers when considering major domestic appliances. Capacity is a long-term driver of all major markets. This translates into increasingly larger loading capacities in washing machines, taller and wider refrigerators, and more spacious oven cavities. As an example, sales of washing machines with 9 kg or more capacity grew by 24 percent,” comments Norbert Herzog, GfK expert for the MDA industry.
A very positive trend is visible also for small domestic appliances (SDAs) that continued to grow during the first half of 2019. The global market (excluding North America) showed growth with an overall increase of 9.3 percent, delivering a total market value of Rs 1.9 lakh crore. GfK expects an SDA global sales growth of 9.4 percent for the full year of 2019. The top five segments (vacuum cleaners, food preparation, hot beverage makers, air treatment, and shavers) contribute almost 50 percent of the SDA category. Over 23 percent of global growth is attributed to vacuum cleaners. The strongest growth region has been APAC, particularly the Emerging Asia region. Sales in APAC increased by 21 percent to Rs 45,410.5 crore in the first half of 2019 compared to the same period last year. Product categories, such as cordless handstick vacuum cleaners (+27 percent), robot vacuum cleaners (+18 percent), air treatment (+19 percent), and water filters (+14 percent), are primarily responsible for this growth.
In Europe about 26 percent of the 255-billion euro spent on this year will be for smart appliances like visual cameras, air treatment, TVs, audio home systems, robotic vacuum cleaners, and smart LEDs. GfK’s forecast indicates that the market for smart devices, excluding smartphones and smart watches, will grow by estimated 9 percent globally this year, up from 122 billion to 133 billion euro. Penetration of smart devices ranges in households. Smart TVs accounted in the first half of 2019 for 80 percent of TVs purchased in Germany, UK, France, Italy, and Spain, while robot vacuum cleaners for about 12 percent or 4 percent in the case of dishwashers. In the first half of this year, smart appliances recorded a 42 percent value growth, while smart energy and lighting increased by 25 percent. The trend is not so positive for smart entertainment and connectivity, the largest smart category, that accounted for 6.3 billion euro of the turnover, but shows a zero-percent annual growth in the January to June 2019 period in the five European markets (Germany, UK, France, Italy, and Spain). But what are consumers looking for when buying a smart appliance? GfK Consumer Research indicates that 53 percent of respondents would like optimized energy usage, 48 percent say to remote home monitoring, and 41 percent would prefer their home appliances to communicate with each other. Consumers would also pay more for solutions that really simplify their lives. “It is not about whether or not Smart Home will happen,” explains Igor Richter, GfK expert for the telecom and smart domestic appliances industry, “it is about how to remove barriers for its adoption. We are already witnessing the smart future today. Well-crafted individual solutions within a common ecosystem possess a tangible opportunity to bridge to contextually aware intelligent homes of the future.”
A trend emerged from the latest edition of IFA is undoubtedly the consumer wish of simplification. This is one of the main drivers recurring in the most of technical consumer sectors.
Major domestic appliances make no exception and, together with simplification, also show trends such as performance/capacity and borderless shopping.
Almost half (52 percent) of consumers globally agree with the statement, ‘I am always looking for ways to simplify my life’, according to GfK’s Consumer Life Survey. So, reducing the time needed to carry out household chores is of particular value for consumers, and hence multifunctional and smart appliances are growing in popularity. With 13-percent turnover growth in 2019, washers/dryers are a prime example of this trend. A more recent and substantial trend is steam-supported appliances, which generate multiple use cases, from improved drying in dishwashers to fewer creases in laundry, to healthier cooking. Globally, steam-assisted products jumped to a growth rate of 41 percent in the first half of 2019. Currently, China and India are embracing this trend, which promises future growth. Smart appliances are usually equated with the benefit of simplification.
Borderless shopping is also a key to success – 65 percent of consumers in GfK Future Buy Survey say they feel more empowered than ever before on their purchase journey. With the advent of on-line retail, shopping 24/7 has become the new normal and has enhanced consumer expectations of the buying experience. Consequently, purchase channels become less relevant, and the omnichannel approach is key to success.
Borderless shopping experience
Consumers do not want only an on-line shopping experience, but a borderless purchase experience, with no limits. They want to find the perfect product immediately, at any time, creating the need for 24/7 retailing. In the first half of 2019, e-commerce of technical consumer goods reached `6.26 lakh crore globally (excluding North America). But China and Germany are already showing early signs of online retail’s share plateauing.
A borderless shopping experience is more than purchasing on-line, it is about providing the right retail formats in any given shopping situation. It offers a vital opportunity for all retailers to retain customers within their traditional and on-line shopping universe, ideally switching seamlessly from one to the other. In the first half of 2019, a quarter of the total value of all technical consumer goods sold globally was delivered through on-line sales.
Looking at the regional GfK data, APAC and China remain the key markets for on-line sales. Historically, Chinese e-commerce retailers have recorded significant double-digit growth, but in the last twelve months, growth rates have fallen. While the total on-line market for technical consumer goods in China grew by 8 percent, the major domestic appliances and consumer electronics sectors experienced their first negative rates in the online channel. Despite the share of e-commerce reaching another high of 36 percent of the turnover, slowing growth created a plateau effect. Chinese retailers have reacted with partnerships and mergers with traditional retailers. This gives them two advantages – they can grow by reaching the less-developed regions, and they can offer consumers a true omnichannel purchase experience. In Western Europe, instead, on-line retailers have also been steadily growing their share of e-commerce, from 20 percent in 2016 to 26 percent turnover share today. Owing to such a mature market size of Rs 1.8 lakh crore, on-line channel is starting to see signs of plateauing shares. For instance, in Germany the share has been stable at between 22 percent and 23 percent over the past four years.
What is driving the on-line sales is the right assortment – GfK’s consumer insights reveal that one third of customers choose a retailer based on the right assortment availability, this reason is second only to price. The average assortment of online shops is 2.5 times bigger than that of traditional retailers.
The omnichannel approach is ideal as it offers the best of both worlds. It allows retailers to direct consumers to the retailer’s online channel, should a product be unavailable in-store. Physical outlets help shoppers make up their mind when they cannot easily choose between the more extensive choices online. As an increasing number of consumers believe there are too many choices in the categories they shop, having the option to shop in-store is a real advantage.