Home Appliances Surf on a Wave of Success

GfK forecasts healthy growth for both major and small appliances for 2018

MAJOR APPLIANCES

According to GfK, 4.1% market growth is expected for global sales of major domestic appliances in 2018.  Natalia Andrievskaya, Global Director – Major Domestic Appliances, GfK, told an audience of journalists at the IFA Global Press Conference in Rome last month that online channel is still a driver of the MDA market, adding that this doesn’t cannibalise offline, but brings incremental growth. In 2017, 25% of global sales were online, as opposed to 23.7% in 2016 and 21.7% in 2015. Looking at free-standing refrigerators and washing machines, these figures are higher, with 30% of fridges and 34% of washing machines being sold through online channel.

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Natalia Andrievskaya, Global Director – Major Domestic Appliances, GfK

Smart Appliances

The onset of Smart Appliances is particularly strong in China. According to GfK, 50% of consumers worldwide are sure that Smart Home will change their lives in the near future, however in China, this figure is 75%. In Japan, only 19% of consumers agreed with this statement. The number of smart (major) home appliances sold on the global market has increased exponentially from the early days of the technology. While in 2012, only seven products were on the market, 4,131 smart products could be found in 2017 and this year the figure has climbed to 7,178. Likewise, the value share of smart appliances is increasing globally. APAC has by far the highest share, with 21.8% of major appliances sold in February 2018 being “smart”, as opposed to 9.3% in Western Europe.

China has the highest share of smart appliances in the world, with 19.2% of refrigerators, 36.3% of washing machines and 40.2% of air conditioners being “smart”.

“It’s fascinating to see that in China, smart product groups have already reached levels we didn’t expect before”, says Ms Andrievskaya. “Even though China is one of the most advanced countries in the world, in terms of share of smart appliances, we still see big differences by product.”

Barriers to smart appliance adoption rate

“Consumers are concerned with long life cycles. If you buy a product that you hope to use for another ten years at least, you don’t worry so much about the software of technology in that product, because you know it will be outdated quite soon, and this is a big concern. Should you invest more in this, or wait until the technology is more advanced? Do you care at all about technology if it’s there for ten years?” Ms Andrievskaya says this is a big question mark for the consumers, adding consumers are not sure about the value proposition, which she says is still not clear.

SMALL DOMESTIC APPLIANCES

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Udo Jansen – Global Director SDA – GfK

Udo Jansen – Global Director SDA for GfK states that in this category, the key aspect today is more than ever innovation. New appliances and new product categories are popping up all the time, and major growth is being seen in such product categories as handstick rechargeable vacuum cleaners, robotic vacuum cleaners, and air fryers, where connectivity is increasingly important.

According to GfK, the global market for small appliances in 2017 amounted to US$65.2bn. That’s a rise of 8% over the previous year. The sector is being boosted by product categories that didn’t exist before, such as personal connected scales, massage mats, and new kinds of food preparation machines.

Yet again China leads the world in terms of market share for connected small devices. 50% of robot vacuum cleaners sold in China in 2017 were connected, as opposed to 26% in 2016.

China has also become the biggest virtual marketplace in the world for small appliances, with growth of 38.7% in sales in 2017 to EUR6.4bn. At the same time, Chinese consumers are willing to accept premium products and better equipped appliances over time. For example, pistol-grip hair dryers in the “over 150 CNY” category made up for only 35% of the market in 2016, but leapt to 51% in 2017.

Overall, the global key trends for SDAs are as follows:

  • 1: Continuously good growth rates – the positive and dynamic trend continues;
  • 2: Trading up – consumers are going for higher priced, better equipped appliances;
  • 3: Innovation & new market segments – The SDA market is driven by innovations and smart appliances, as well as new product categories;
  • 4: Energy efficiency: EU energy labels
  • 5: Connectivity & smart homes: This will bring new benefits to consumers
  • 6: Growth of internet sales: This impacts SDA sales, however share of online sales differs greatly country by country.