Almost negligible five years ago, the robotic vacuum cleaner market in Western Europe is now the world’s largest in volume terms, having overtaken North America in 2012. More significantly, Western Europe is also far and away the most valuable market. Already worth US$434 million, twice the size of North America, by 2017 sales in the region are expected to increase by a further 50%. At this rate, in five years time Western European consumers will be spending three times more than their North American counterparts annually. And although still niche, robotic vacuum cleaners have recorded the largest value growth in real terms of all small appliances in 2012.
Robotic Vacuum Cleaners Volume VS Value Sales, 2012-2017
Source: Euromonitor International
In North America robotic vacuum cleaners are not experiencing the same momentum, with sales in the US, which account for well over 90% of the regional market, not expected to grow more than 5% annually over 2012-2017 – growth that other categories can only dream of, but still significantly lower than in Western Europe. When the recession first hit in 2008, the US market entered a three year decline and it is not expected to return to 2007 levels before 2015. The bullish growth that robotic vacuum cleaners enjoyed following their first launch seems to be proving short-lived.
What’s behind the Western European Robotic Potential?
If it is true that consumers on both sides of the ocean are feeling the pinch of unemployment, austerity measures and lack of economic growth, some consumers in the old continent clearly feel able to spend more than ever on this innovative, expensive and non-essential product. Even in the midst of a double dip recession, Western Europeans continue to buy at an unprecedented pace, while in the US consumers are showing a much more cautious approach, despite their economy being in a much better shape. Why is this?
One possible explanation that we see playing out across other high value discretionary items, is the propensity among Western Europeans to save for a rainy day. In a retail environment characterised by heavy discounting, higher savings can translate into very real opportunities for sales of premium small appliances.
Annual Saving Ratio VS Real GDP Growth, 2007-2017
Source: Euromonitor International
As a group Western Europeans save over around 10% of their income, 3.5 times more than their US counterparts, and have been doing so even before the recession hit. Conversely consumers in the US started saving only after the economic downturn. They now save four times what they used to back in 2007, meaning that the same extra pennies they would previously spend on non-essential items, now go straight in their piggy bank.
Put simply, European consumers can realistically take advantage of small appliance discounting fuelled by retailer destocking because they still have the cash to do so. Indeed when they spend, they are willing to pay more on a few added-value and innovative products, which they deem can enhance their at-home experience. This can be seen across several such products, and between 2007 and 2012 robotic vacuum cleaners recorded the largest real value growth, followed by pod coffee machines. In context, these two categories together accounted for 46% of the overall real value increase in small appliances sales.
Can this last? Ultimately it depends on the length of time that austerity measures are in place across the region and perhaps more importantly their growing intensity. Should government spending be cut further, Western European consumers will very likely follow their American counterparts and rein in discretionary spending even on the most enticingly innovative products.