The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
Global home improvement and gardening retail value sales have steadily improved following the global financial crisis. Sales climbed by 1.6% in 2017, with home improvement and gardening accounting for one third of total home and garden sales during the year. North America, Asia Pacific and Western Europe lead sales, however, consumer spend in traditionally DIY-markets (i.e. North America and Western Europe) continues to outperform Asia Pacific. While still modest, faster value growth is expected over 2017-2022 as the economic environment in Western Europe improves and demand scales up in Asia Pacific.
Smartphone possession and internet access continue to climb across all markets, both developed and emerging. Retailers and manufacturers need to start thinking in omnichannel, not multichannel terms. While store-based sales reign supreme in home improvement and gardening, online sales represent the fastest-growing channel within the category. For The Home Depot, online sales accounted for 6.7% of total sales in fiscal 2017, but over 45% of the retailer’s online US orders are picked up in-store. Click & Collect represents an opportunity to boost store footfall, while offering consumers the convenience of online sales.
Asia Pacific and the Middle East & Africa will drive global urbanisation growth in the future. In these regions, rapid urbanisation will stimulate demand for apartment living. In contrast, developed regions continue to demonstrate a preference for houses, not apartments. Apartment living is still on the rise, but is more likely to be sought out by millennials looking for job opportunities in city centres. Apartment living means fewer or smaller gardens. Therefore, urbanisation is expected to drive interest in compact gardening solutions, such as indoor plants, hydroponics and smart gardening kits.
Asia Pacific is the second largest region for home improvement and gardening sales. Unlike consumers in North America and Western Europe, Asia Pacific consumers are typically DIY-shy.
Furthermore, international retailers are eyeing up Asia Pacific as a growth opportunity outside core markets. In 2018 Walmart acquired Flipkart, an Indian e-commerce company. Flipkart currently competes with Amazon for share of wallet in India. Methods that work in DIY markets won’t work in DIFM markets. Industry players should consider investing in turn-key solutions, e.g. delivery, design and assembly services, to appeal to local consumers.
Augmented reality apps are quickly becoming ubiquitous, while Instagram is increasingly being used as a sales channel. Akzo Nobel NV’s Dulux Visualizer app uses augmented reality to allow consumers to see what different paint colours will look like in their own home, simulate colour combinations and to share photos with friends and family. Instagram and augmented reality apps are not a substitute for in-store sales, rather they should be viewed as marketing tools that promote digital customer engagement and facilitate online sales.
Recently wireless speakers and voice assistants have paved the way towards the smart home globally. Amazon has partnered with home builder Lennar in the US to install Amazon Alexa in new homes, as well as open Amazon Experience Centers within model homes to facilitate consumer interaction with smart home technology, e.g. controlling the TV, lights and thermostat using Alexa.
The shift towards smart homes represents a major catalyst for change in the home improvement and gardening industry. Home improvement and gardening players that endorse smart home technology now will reap the rewards in the not too distant future.