The major appliance sector is constantly evolving to keep pace with changing consumer demands. Factors such as new appliances, innovative technology, the constant stream of new brands entering the market, new contemporary interior and design trends, or the latest channels that consumers are choosing to browse and shop on, all play a part in molding the sector.
With more than 668 million major appliances sold worldwide in 2020, the market is as competitive as it’s ever been, and retailers need to keep on top of these trends to ensure market share. Without the right approach, it’s easy to view these trends as challenges to overcome. In this article, we’re going to look at how major appliance retailers can shift their mindsets to start viewing trends – whether they’re here for the long-term or simply passing – as what they really are – opportunities.
By keeping on top of industry trends and adjusting strategies accordingly, major appliance retailers have the chance to raise brand awareness, gain loyal customers, increase profits, and reach new markets.
Trends within the industry come and go, so, which are the trends that are exerting a temporary influence on the market, and which are here for the long-term?
The demand for smart home appliances has risen sharply over the last few years. In the US alone, more than 10% of homes now have one or more smart appliances. But why has it grown so exponentially?
There are several reasons for the rise, which include the impact of the worldwide COVID-19 pandemic and stay-at-home guidance from global governments, which in turn, has resulted in many households having more disposable income due to less traveling and socializing. There’s also been a huge jump in housing construction as the worldwide population continues to grow at speed, alongside the millennial generation now starting to enter the housing market – but we’ll go into more detail about that later…
Consumers also increasingly want more comfortability and luxury integrated into their houses as they’re spending more time in the home environment, and generally want to live a more connected lifestyle with the help of smart technology and home appliances.
The global chip shortage is also ramping up demand for smart home appliances (learn more about how this is impacting the major appliance market, here ). Semiconductor manufacturers simply can no longer keep up with both retailer and consumer demand for chips. Chips aren’t only needed for laptops and cars anymore, they’re needed for a variety of devices including smart appliances like ovens, washing machines, and fridge freezers. This need for chips has resulted in a smart appliance stock shortage, and these appliances are in demand more than ever before.
For the consumers that do have these appliances installed, interoperability is key to ensure greater effectiveness and functionality within the home. The ability to connect a whole host of smart appliances and control them all via a simple platform or app is what consumers are looking for. Innovative features like Bluetooth and WiFi sync are just some examples of how retailers and brands are integrating smart technology into their appliances. Read the recent blog to discover more about how emerging smart technology is impacting trends in the white goods industry.
When it comes to delivering this information to the consumer, retailers need to include these specific information details regarding interoperability and technical capabilities on their product listing pages, to help entice customers with the latest tech and encourage purchases.
Consumers are switching brands at unprecedented rates. The worldwide pandemic has impacted many industries and businesses, but it’s played havoc on supply chains on a global scale. Due to these ongoing supply chain issues, consumers are inevitably shopping around more than ever before making a purchasing decision – now, sometimes ‘quicker’ is preferable than ‘familiar. Brand loyalty is not as prevalent in the major appliance industry as it used to be – an astounding 75% of US consumers have tried a new shopping behavior in response to economic pressures, store closings, and changing priorities.
Consumers can no longer rely on their ‘old favorites’ to provide the goods they want, and as a result, once-loyal customers are more willy and likely to try new brands and retailers for the first time. This general change in behavior has also been reflected in a shattering of brand loyalties – with 36% of consumers having tried a new brand and 25% incorporating a new private-label brand into their routine. Retailers in the major appliances sector need to take note that this change in consumer behavior is not a passing trend, it’s set to have a lasting impact on purchasing behaviors, and it’s here to stay.
This is an important trend for retailers to address if they want to stand out amongst the competition within the major appliances market. As consumers become more and more fickle and more likely to churn, providing a superior customer experience can support a retailer’s chance of successfully securing a purchase and indeed, a loyal customer. While the market remains as competitive as ever, retailers should focus on streamlining the customer journey to improve CX and encourage brand loyalty.
However, providing a superior customer experience simply isn’t enough, retailers also need to get a handle on supply chain disruptions. One way to do so is by being earnest and setting realistic expectations for consumers surrounding things like product availability, and delivery and installation times. By ensuring this information is always to-to-date and including it on product detail pages in real-time, brands and retailers present themselves as more trustworthy, and in return, are more likely to attract and retain a loyal customer base.
Now, back to the increase in the millennial generation entering the housing market that we mentioned earlier.
This generation counts for an increasing market share of the major appliances sector. Why? Because they are starting to jump on and climb the property ladder worldwide. According to the latest research, there are now more millennials – those born between 1980 and 1998 – buying homes than any other generation, and their share of the home buying market is only set to continue growing, figures show that it’s up from 37% compared to 2021 already.
What’s more, whilst millennials start to buy new homes, they are also considered as the generation that is purchasing homes so that they can have pets. Whereas traditionally, people bought homes to start a family, the rise in landlords denying housing for tenants with pets and the increasing cost of pet deposits has resulted in millennials choosing to buy instead of rent, all to house their furry friends. This is known as the ‘DINKY’ concept – Double Income No Kids (Yet) – and it presents a very profitable opportunity for retailers in the major appliances space. This generation may be more willing to channel its disposable income into their homes. For example, a millennial couple working full time who own a house and a dog generally have fewer mouths to feed and more money to spend on big-ticket items such as major home appliances.
To tap into this trend, retailers need to analyze the preferred shopping channels and sales behavior of the millennial generation and adapt their marketing strategies accordingly to successfully target and capture potential buyers. But retailers need to stay mindful of the fact that they are courting a digitally native crowd who have higher expectations of the omnichannel customer experience. This means that retailers need to ensure a smooth, seamless, and consistent experience, regardless of which channel consumers choose.
When it comes to purchasing directly from a brand or utilizing a marketplace platform, 88% of consumers prefer to buy directly from the brand if given the option. However, when it comes to buying major appliances such as refrigerators and washing machines, fewer consumers are choosing to purchase directly from a brand.
Instead, consumers are choosing to leverage websites like Amazon and Best Buy. Major appliances are Amazon’s most lucrative category. According to new data, large appliances top the revenue list, with Amazon sellers boasting the highest average monthly revenue at £364,000. This trend is due to several factors, such as marketplaces tending to offer products at marginally lower costs compared to the brand’s own website. For example, Amazon has some of the cheapest prices for major appliances on the market – it’s such a huge global corporation that it can afford to sell a mass quantity of products at a lower price and still turn over a profit. The company also invests heavily in data tracking technology, so it can always ensure its prices are lower than market competitors. This also means that marketplaces can provide cheaper and improved aftercare services for the products it sells to keep consumers coming back time and time again.
Another key advantage of leveraging marketplaces for major appliance purchases is that they offer better comparisons with other products across sites. If you’re a consumer looking to purchase a washing machine, if you go to the Whirlpool website, you’re only going to be able to browse that brand’s product range. However, if you go to Best Buy to purchase a washing machine, that site is not only going to show you Whirlpool washing machines but a whole host of other brands too. This enables marketplaces to provide genuine comparisons across brands and product ranges, offering more choices to consumers and facilitating greater purchase volumes.
To address this trend, retailers can add greater functionality to their websites such as comparison buttons to allow consumers to compare products across sites and models. However, they also need to bear in mind that personalization plays a huge part here. Retailers should ensure the products they offer for comparison are relative to the consumers’ wants, needs, and browning history, as this is what marketplaces excel at. Offering appropriate targeted messaging and deals that are designed to appeal are just some ways that retailers can achieve this. But that’s not all, major appliance retailers also need to consider reducing any friction that might exist in the pathway to purchase. Retailers can alleviate consumer concerns that may be standing in the way to purchase by including detailed information about things like returns and guarantees and ensuring that information is consistent across channels and easy to find.
Now that the germ and cleanliness trend facilitated by the global pandemic is starting to subside, consumers are shifting their focus and attention back to sustainability.
According to a 2021 consumer survey from Deloitte:
Research shows that it’s clear that consumers want to do their part to ensure a more sustainable planet for generations to come. However, when it comes to the major appliances sector, there are some interesting findings surrounding appliance efficiency.
Whilst consumers are indeed seeking more energy-efficient appliances, the greater appeal of energy-efficient appliances isn’t a reduction in emissions, it’s a reduction in energy costs. A recent poll from Morning Consult found that 76% of survey respondents who said they have taken energy efficiency into account when purchasing electric appliances, cited saving money on their electricity bills as a major reason for doing so. Meanwhile, only 46% of respondents cited that lowering greenhouse gas emissions relating to their consumption has a major influence when considering the energy efficiency of an electrical appliance.
Supply and demand in the global wholesale market is the key reason for already rising energy prices. Whatsmore, the world bank has recently released a statement saying that global energy prices will soar by more than 50% in 2022 in the largest commodity shock since the 1970s.
However, ultimately it doesn’t matter what the reason is for consumers choosing to buy energy-efficient appliances over conventional ones. The result is that demand for them is high and will only continue to rise so, retailers and brands alike need to ensure they’re doubling down to capture market share. Including information such as the EPC rating is something that consumers want to see on product pages. But retailers can go beyond product-level best practices to ensure they’re also leveraging best-in-class ESG (Environmental, Social, and Governance) strategies to support a healthy and sustainable planet.
More and more retailers are signing M&A (Merger and Acquisition) deals to increase the value of their products, and the same applies to major appliance retailers too.
For example, Tovala, a smart oven and meal kit service startup, is a company that wants to help consumers cook a greater variety of healthy meals. Consumers who purchase one of its ovens and sign up for a meal plan can choose from a range of meals every week and simply scan to cook. Similarly, a multinational conglomerate company, LG, announced that its 2019 models and newer ovens will be able to recognize meal kits from Tovala and cook food based on the downloadable recipes. This is a perfect example of how retailers are taking part in cross-industry collaborations with huge benefits like increasing the value of their products and as a result, increasing sales in general.
This shift towards greater collaboration presents a significant opportunity for major appliance retailers. It’s a win-win situation for all parties involved as each partner can include their collaborations on certain products, online to the consumer. Presenting this information directly to the consumer may encourage a potential customer to complete a purchase, as the brand is offering more than just the product itself, they’re upselling through another industry or company.
It’s not just collaboration across products that are on the rise either, more retailers are choosing to also share data. Cross-industry data collaboration is fueling innovation across a variety of industries. Major appliance brands looking to develop new products need input and information from a multitude of sources. A recent research paper on cross-sector partnerships found that many of these sources are not only beyond an organization’s borders but also the organization’s industry.
For example, in manufacturing, companies are using AI to manage supply-chain disruptions. Using data from external sources on weather, strikes, civil unrest, and other factors, they can acquire a full view of supply-chain issues to mitigate risks early. Major appliance retailers stand to benefit hugely from this cross-industry data collaboration as it means they can set more accurate expectations for their customers and increase brand loyalty.
In 2020, online sales of major appliances exceeded those made in physical retail stores for the first time. A few of the reasons for this include greater ease and convenience and people choosing to shop from the comfort of their own homes due to stay-at-home guidance and the global pandemic.
As consumers continue to choose to shop online over bricks and mortar stores for their major appliances, more retailers are choosing to work with marketplace platforms to make consumer buying quick and frictionless. Companies such as Alibaba, JD, and Pinduoduo are also partnering with retail chains to expand their offering. Pinduoduo has purchased 5.6% of Gome’s shares, giving it access to a wider brand range, while being able to offer products at the same price or cheaper than Gome’s stores.
Some large appliance retailers are even turning to live streaming on social platforms such as Instagram to sell their products directly to consumers. Statistics show that 10% of brands on Instagram use live video sessions to promote their products and services, almost 90% of the top brands regularly connect with their followers through live sessions, and about 36% of stories posted are based on product promotion. Although this trend is currently well-established and popular in Asia and the East, it’s becoming increasingly popular in the Western world. Beauty and apparel are just a couple of the industry’s leading the charge. In regard to the major appliances sector, they’ll need to create an additional wow factor to persuade consumers to purchase their big-ticket items via live streams, one way in which to do this is to offer limited-time discounts to followers that tune in.
To truly tap into this growing trend, retailers need to cover every platform that their target consumers are leveraging, whether that’s social media, marketplaces, or in-app purchases.
While some of these trends are here to stay, others will diminish in their importance or evolve entirely. The key thing is that retailers can pivot to keep pace with these trends and provide what consumers are looking for in the right way.
One-way retailers can do this is by implementing a PIM (Product Information Management) or DAM (Digital Assets Management) solution that takes care of all the product information for them, across all distribution channels – no matter how many of these open in the future and regardless of how complex or specific product information or assets need to become. A PIM/ DAM solution enables retailers to ensure they’re always prepared for the next big thing.
ECP provides major appliance retailers with all the tools they need to tap into new and growing trends. Its PIM Dual Syndication feature enables importing from supplier catalogs and exporting to digital marketplaces with ease and accuracy, while the Smoother Workflow function enables its DAM solution to seamlessly integrate with its PIM solution, so all content is synced, easily accessed, and updated – across any number of channels.