Channel Review in Home and Garden

Strategy Briefing

About This Report

Oct 2017

Home and garden sales typically flow through two major store-based channels, home improvement and gardening stores, and homewares and home furnishings stores. Despite the supremacy of store-based retail, online sales continue to flourish within home and garden. This report uncovers the major drivers for store-based and internet sales in the home and garden industry, exploring opportunities for growth in developing markets.

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Channel Review in Home and Garden

Positive, yet moderate growth driven by North America and Asia-Pacific

Economic uncertainty, specifically declines in real GDP growth and inflationary pressures, in Western Europe, Eastern Europe and Latin America, dampened home and garden growth in these regions. Nonetheless, global home and garden growth was positive overall in 2016, buoyed by steady and rising consumer demand in North America and Asia-Pacific respectively.

Home and garden specialist retailers continue to dominate

Most home and garden products continued to flow through store-based retail channels, in particular home and garden specialist retailers. Consumers typically turn to home improvement and gardening stores (e.g. Leroy Merlin, Home Depot) and homewares and home furnishings stores (e.g. Ikea).

Private label demand spurs growth for hypermarkets

While home and garden specialist retailers continue to be the largest store-based channel, hypermarkets registered the fastest growth within home and garden store-based retail. Budget-conscious consumers seeking out private label brands in homewares has resulted in hypermarkets gaining value share over the review period.

Shift towards online sales as retailers adopt omnichannel strategies

Home and garden online sales have surged as a result of rising smartphone possession and internet connectivity globally. Retailers and manufacturers alike recognise the need to develop omnichannel strategies to remain relevant to today’s hyper-connected consumers.

Asia-Pacific a key growth opportunity for home and garden in future

Traditionally, home and garden sales have originated from two key regions: North America and Western Europe. Nonetheless, rising incomes and urbanisation in Asia-Pacific are expected to propel the region towards becoming the leading market for home and garden sales in 2021.

Introduction

Scope
Key findings

Industry Snapshot

Positive, yet moderate growth in global home and garden sales
Home improvement the most dynamic home and garden category
Asia-Pacific remains resilient as economic woes plague Europe

Channel Shifts

Internet retailing grows to reach 6.1% of global home and garden sales
Internet retailing influences non-store retailing growth
Penetration of home and garden online sales varies across regions

Store-based Channels

Home and garden specialist retailers dominate store-based sales
Hypermarkets the most dynamic store-based channel
Homewares and home furnishing stores the largest channel in 2016
Ikea’s wide geographic presence contributes to its lead
Big-box formats characterise home improvement and gardening stores
The Home Depot Inc leads due to its dominance in the US
Private labels drive demand for hypermarkets in homewares
Wal-Mart sales concentrated in the US and the UK
Home furnishings represents the largest category for private label sales
Western Europe represents the key region for private label sales
Western Europe demonstrates the highest private label penetration

Non-store Channels

Internet retailing reigns supreme over home and garden non-store sales
Online sales exhibit double-digit growth over historic period
Online sales popular in indoor furniture and home textiles
Asia-Pacific a key future growth opportunity for online sales
Amazon and Alibaba go head-to-head in Asia

Future Developments

Asia-Pacific to overtake North America in 2021
The popularity of online sales presents no sign of abatement
Key recommendations

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