Consumer appliances segment is experiencing high growth due to new trends like premiumisation and cocooning. Another factor affecting purchase behavior is lifestyle changes like a preference for convenience, a shift towards higher quality products, online shopping, increasing health and environment concerns.
Consumer appliances segment is experiencing high growth due to new trends like premiumisation and cocooning. Another factor affecting purchase behavior is lifestyle changes like a preference for convenience, a shift towards higher quality products, online shopping, increasing health and environment concerns. Companies are taking note of these developments to invest and promote growth in the booming UK consumer appliances market. Some of the key trends and developments in the consumer appliances segment of UK are the following:
Energy Efficiency pushing market growth
In 1992, the EU energy label was first introduced, as a means of rating the energy efficiency and energy use of appliances. The label rated appliances from A representing the highest efficiency and lowest energy use to G representing lowest efficiency and highest energy use. On 20 June 2011, this label was further widened to include ratings of A+, A++ and A+++ and to show the amount of energy (kW) use per hour. Although initially applicable to only dishwashers, washing machines and refrigeration appliances, it was later extended to cover ovens and tumble dryers. Law mandates that the label be displayed on consumer appliances like refrigerators, laundry appliances, ovens and dishwashers. For these major appliances, the consumers’ interest in energy efficiency is a main growth driver.
This can also be attributed to the increasing environmental concerns in UK. For small cooking appliances, consumers do not seem to consider energy efficiency with an equal interest. The 15 million old major appliances which are still in use in UK is indicative of the potential future demand for premium and built-in as well as freestanding energy efficient appliances.
Internet Retailing boosting sales
Internet retailing contributed to an impressive retail volume share of 17% in 2013. Internet retailing has empowered customers to compare appliances and get the best deals. Promotional activities too, have played a major role in increasing accessibility and boosting sales of premium consumer appliances. The most popular choices of customers in online purchases are personal care appliances and small, non-cooking kitchen appliances.
This is mainly due to competitive prices and wider availability of products online. Internet retailing has had a significant impact on mixed retailers. The decline in sales volume in variety stores has been offset through the internet sales for retailers like John Lewis Partnership Ltd and Argos Plc. Hypermarkets and supermarkets are expected to take note of this trend and reduce their physical selling space and give a greater emphasis on online promotional activities. Manufacturers try to increase brand loyalty and recognition by targeting specific consumer segments through exclusive distribution partnerships with specialist retailers.
Bottom-end Products Versus High Added-value Products
Consumers are seen to shift towards premium and high value added appliances which have better quality, give better results and last longer. Appliances with advanced technological features such as additional steam technology and built-in microwaves which are easy and convenient to use are also in demand from consumers with busy lifestyles.
This trend of premiumisation happens because the consumers perceive that these appliances facilitate higher savings, especially in the face of increasing home renovations and mortgage approvals. The major premium built-in appliances like refrigeration, cooking and dish-washing appliances have seen a growth in sales because of this trend. In freestanding appliances, consumer demand is high not only in the premium segment, but also among the bottom-end products. This is due to that fact that though the consumers aspire to purchase premium products, they delay these purchases for the purpose of savings and hence use the low-end products.
The good performance of small appliances in terms of both volume and constant value in 2013 can be attributed to the trends of premiumisation and cocooning. While the former trend aided the volume growth of filter coffee machines with aesthetic designs, the latter trend of cooking from scratch and recreating the on-trade experience at home, has driven the sales of pod coffee machines. Consumers’ increasing awareness about healthy eating habits and lifestyle diseases like obesity has also boosted the sale of small appliances like light fryers. On the other hand, vacuum cleaner sales declined in 2013 although it showed a constant value growth.
Market Size and Forecast
Domestic players like Morphy Richards Ltd and Dyson Ltd enjoy strong brand loyalty due to their heritage. Other international companies like De’Longhi UK Ltd and Beko UK Ltd also keep growing supported by their wide portfolios covering both bottom and high-end brands.
Premiumisation has prompted Asian companies like Samsung Electronics (UK) Ltd and Panasonic UK Ltd to invest in premium consumer appliances in UK. These companies have focused on technology, design and innovation to propel growth. Samsung has strengthened its position refrigeration appliances, microwaves and vacuum cleaners and Panasonic is a leader in bread-makers and a strong contender in microwaves and vacuum cleaners.
These companies are expected to take advantage of the growing trend towards larger capacities to stir volume growth within the automatic washing and refrigeration appliance segments.