Higher spends, greater brand loyalty, and the caché of offering industry-leading products? No matter the vertical in which you operate, cornering the luxury end of your market is an accomplishment worth striving for. The luxury segment of the large appliance sector represents a real opportunity for the modern retailer. An already profitable space showing continued expansion, North America is the fastest-growing region for the luxury appliance market and is expected to grow by a CAGR of 5. 31% by 2026.

In this article, we’ll examine how the luxury appliance market is shifting, and ask what kind of consumer demand or expectations this acceleration is bringing to retailers within the space. What can we predict for the future? What will be most important in terms of guiding these high-end sales?

The Finer Things in Times of Crisis – The Pandemic and Luxury Spending

Before digging into the specifics of the large appliance vertical, it’s important to examine some of the general drivers that have been influencing the dramatic uptick in luxury spending (and specifically, online luxury spending) since 2020. Online luxury sales reached over $56 billion at the end of 2020, an $18 billion surge compared to 2019, according to estimates by Bain & Company.

This increase hasn’t just been observed amongst the highest earners. Middle-income luxury buyers have also increased. In terms of generational influence, the biggest contributors to the global sales in 2021 were Millennials and Gen Z – two digitally native cohorts that are expected to make up 70% of all spending on luxury items by 2025.

Perhaps more interestingly, the allocation of online purchases for luxury goods reached almost 23% of total sales in 2020. This represented a doubling of its market share – up from 12%. This increasing acceptance of making expensive purchases, linked to perceived high quality, of goods that have never been physically experienced or examined is a telling one. The premium market is becoming increasingly enmeshed with the digital world. A combination of our increased trust and familiarity with the online retail experience? A reflection of the advances made in the digital showroom experience? Or a combination of both factors, working in tandem to secure the ongoing acceleration of the luxury online retail industry?

The Luxury White Goods Sector: Where Do We Stand?

Examining the white goods space specifically, what patterns are we observing? In short – steady, significant growth. From January through September 2021, year over year sales of luxury major kitchen appliances, including refrigerators, cooktops, and ovens, leapt up by 45% in the United States.

What’s driving this change in consumer purchasing behavior? While the pandemic had some undeniably disastrous financial consequences, for many it lead to a short-term boost in disposable income – no socializing, gym subscriptions, expensive holidays, or weddings to attend, coupled with a decrease in commuting costs and for many, the additional boost of a stimulus check. Kept apart from family and friends, the desire to indulge in the few creature comforts that were permitted during lockdown was understandable, and many turned to high-end home improvement as a mood-boosting and productive use of time during the pandemic.

By the end of September 2021, luxury major kitchen appliance sales had already overtaken the total revenue of the entire preceding year. Perhaps reflecting the instinctive need to “lay down supplies” in times of uncertainty and hardship, the biggest sellers within the luxury appliance space in 2021 were French-door refrigerators. These recorded nearly 72% revenue growth, which represented the highest absolute sales-revenue gains across all major kitchen appliances.

An uptick in homeownership is also thought to be a key driver to the kitchen appliance business more generally. There are 10 million more households in the United States than there were four years ago – or 77 million households in total – and they all need white goods. Covid boosted luxury home sales, which were flat pre-pandemic, with a Q3 2020 exodus from crowded cities driving demand (and then prices) up. High-end second home sales and new construction both increased, and quotes for remodeling projects skyrocketed.

High-End Large Appliances: Purchase Patterns

Having examined where the increase in demand for luxury white goods may be coming from, let’s dig a little deeper into the specific purchase patterns that we’re seeing in the space. The impact of “premiumization” – the persuasion of consumers to “trade up” – has been felt within the most competitive verticals. Retailers are increasingly encouraging their customers to opt for aspirational models, often within the high-pressure “time-limited” environment of sales season and the “golden quarter.”

Is this strategy paying off within the major appliances space? The desire certainly seems to be there within the customer base with significant proportions of shoppers saying it’s “important to indulge or pamper myself regularly” or that they “prefer to own fewer but higher quality items.” Combine this with a propensity towards impulsive spending and retailers are onto a winning formula – 10% of shoppers reported spending more than they planned to on their last purchase of a large appliance.

In terms of other purchasing behaviors, we’re also witnessing a steady increase in online research, which has become more familiar (and thus, widespread) as a result of necessity during the store closures forced by the pandemic. The use of online mediums to research appliances increased by 24% whereas sales increased by 15% after the onset of the pandemic.

The pandemic also arguably heightened interest in (and knowledge of) more experiential luxury and the enhanced well-being offered by high-end, technologically advanced appliances. Kept from their favorite restaurants, many gained confidence as home cooks during global lockdowns, experimenting with new kitchen gadgets.

The Association of Home Appliance Manufacturers reported that small kitchen appliances were the second-most common purchases in lockdown, with 32% of respondents making an investment, and nearly half (48%) of respondents reporting that they had cooked at home more often during the pandemic. It follows that both smart appliances and appliances that give multiple functions (i.e. self-cleaning ovens/sous-vide functions) were also popular, boosting the luxury end of the white goods market.

The pandemic also triggered higher interest in and demand for sustainability. This trend was witnessed across many luxury verticals (i.e. fashion) and certainly overlaps with the positioning of many luxury large appliance brands, which will often prominently showcase factors such as local manufacture and operational efficiency.

Finally, with prices inflated by supply chain issues and scarcity, it could also be argued that consumers simply become more accustomed to paying higher prices – or willing to pay more for a high-end brand to secure a purchase and avoid lengthy backorder waits.

Future Proof Your High-End White Goods Sales

With interest in the luxury large appliance market booming, what should vendors be considering to capitalize on the opportunity? Firstly – there’s a distinct need for retailers to focus on promoting the fine “premium” detail of their products (artisanal production, luxe design aesthetic, or cutting-edge tech features.) Consumer interest and demand are high here, and online research can be expected to increase in close correlation with higher product pricing.

Secondly – vendors of high-end white goods need to approach the market with an increased focus on their digital channels. The pandemic pushed everyone online, and while luxury appliances would usually command a more involved showroom-based experience, close rates are reported to have significantly improved, even with reduced “in person” sales time. Ecommerce is still a relatively small portion of total appliance sales (unaided premium and luxury appliances e-commerce sales are estimated to be 5-7% of the industry balance-of-sale) but this share will increase, and consumer expectations regarding digital experience have never been higher.

In short, a personalized, omnichannel approach will be essential to impress tomorrow’s customers. Product-featured video content, chat, and virtual showroom tours are becoming the norm – and to impress the top end of the market, they need to be delivered with strategy and finesse. Retailers must, as a result, keep sales channels functionality constant to deliver a high-end and consistent digital showroom experience, which does justice to the quality of the luxury appliances that tomorrow’s consumer is clamoring for.