The global home and garden industry maintained slow but steady development in 2016 at 1.1%, but the next five years are expected to see faster growth, at a CAGR of 2%. Here are five key trends shaping consumer consumption and the future of the industry.
Honey, I shrunk the household
The migration of households from rural to urban, and from houses to apartments, is driving a continuous decline in average household sizes. In particular, China is set to see a boom of 46 million urban households over the next five years at the expense of eight million rural households. Manufacturers are increasingly forced to think outside the box and offer multi-functional, space-saving, stackable solutions targeted at maximising smaller living spaces. More worrisome for the home and garden industry is that as the urban/rural divide grows and apartment living becomes more prevalent, housing costs are soaring and more people are finding themselves living in small homes with no gardens.
Emerging markets to watch
With large developed markets stagnating in terms of replacement sales, the home and garden industry is increasingly dependent on developing economies’ transition from volume to value sales for growth. Asia Pacific has been a tour de force of growth for years and is expected to deliver 59% of global value increment over the forecast period. On the global stage, its impact has been shadowed by low consumer confidence in regions such as Latin America and Eastern Europe, but consumers in these economically turbulent markets are also beginning to adapt. Rapid urbanisation in emerging countries will drive sales, particularly in home furnishings. Several categories are also seeing unexpected benefits, such as Brazil’s stellar growth in food storage as consumers look to cook and store food at home more often to reduce costs.
Hyperconnected retailing in a hyperconnected world
Digitalisation has been revolutionising the traditional home and garden industry, beginning with e-commerce. Despite store-based retailing continuing to command well over 90% of home and garden value sales in 2016, online sales have already seen immense growth in a short amount of time. Its momentum is set to continue, being propelled by connected homes, augmented and virtual reality, and omnichannel retailing, all of which present exciting new opportunities for companies to bring their brands closer to consumers through social engagement and efficient distribution channels designed for the digital age.
A tale of two generations
Two demographics currently stand out in importance for the home and garden industry—Millennials and Baby Boomers, with companies and brands finding themselves at the crossroads of catering to two generations that hold vastly different values. Constantly being discussed are the technologically-savvy Millennials, who are moving into their prime working and spending years and shaping the industry with their demands for sustainability, convenience, and personalisation. However, brands will need to keep in mind the older generation for more than a while longer, as Millennials are also increasingly delaying adulthood in a phenomenon termed “boomerang kids” or “Generation Rent”.
Retailers become educators in the sharing economy
The sharing economy is currently most prominent in allowing consumers convenient access to less-oft-used equipment, such as power tools, without the burdens of ownership, as well as helping consumers recruit helpers to take on the manual labour they are increasingly averse to. IKEA’s acquisition of TaskRabbit in September 2017 acknowledged the existence of customers who cannot muster the time or energy to assemble IKEA’s flat-pack furniture. This Do-It-For-Me demographic is growing as the gig economy makes hired help more accessible and affordable than ever, and young adults find themselves ever more clueless about the ins-and-outs of home-fixing. Home and garden companies will find themselves increasingly having to undertake an “educator” role—teaching consumers how to make their homes smart, how to install LED lightbulbs, how to monitor their gardens’ health—and quite possibly, even how to request (paid) help from others too.