Competitor Strategies in Home and Garden

Strategy Briefing

About This Report

Jan 2019

Mergers and acquisitions in the home and garden industry have been driven by digital transformation, smart acquisitions, capital raising, geographical expansion and portfolio diversification. Companies divested non-core businesses owing to an unfavourable operating environment, strategy shifts or financing needs, while the industry was shaken by a number of high profile closures.

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Competitor Strategies in Home and Garden

Key Findings

Digital transformation

Industry players have made strategic acquisitions of direct-to-consumer brands and AR/VR companies in order to enhance their omnichannel capabilities and stay ahead of the digital transformation curve.

Smart acquisitions

Bolt-on acquisitions are all the rage as lighting companies scramble to capitalise on emerging high-growth lighting applications. Companies are looking to industrial and smart Internet of Things (IoT) applications to offset the slowdown in consumer lighting.

Capital raising

The mattress industry is heating up as bold start-ups like Purple, Casper and Saatva raise capital through reverse takeovers and IPOs to fund expansion. The traditional mattress industry is ripe for disruption, creating openings for innovative start-ups to fill the gap.

Geographical expansion

Multinational companies are acquiring local partners in emerging economies to tap into established distribution networks and familiarity with local markets. At the same time, Chinese companies are acquiring established businesses with an international presence in order to expand globally.

Portfolio diversification

Expanding and diversifying products and services is a top priority for companies in search of new growth opportunities. Having a stake in adjacent products and service also allows companies to provide turn-key solutions and add value for customers.

Divestitures and closures

Companies are shedding non-core businesses owing to an unfavourable operating environment, strategy shifts or financing needs. The industry has been rocked by a number of high profile closures.

Introduction

Scope
Key findings

Global Outlook

Home and garden at a glance
Positive, but modest forecast growth for home and garden
Asia Pacific overtakes North America as leading regional market
Necessity divides developed and emerging regions
Mature markets demonstrate highest per capita spend
Store and non-store retailing set to grow in tandem

Leading Companies and Brands

Home and garden is becoming less fragmented
IKEA leads through portfolio diversity
Strong growth driven by developing markets

Drivers: Mergers and Acquisitions – Digital Transformation

Summary : key drivers of mergers and acquisitions
If you can’t beat’em, join’em: Serta Simmons buys Tuft & Needle
La-Z Boy Inc snaps up direct-to-consumer brand Joybird
Williams-Sonoma jumps on the AR/VR bandwagon

Drivers: Mergers and Acquisitions – Smart Acquisitions

Smart acquisitions set to transform the lighting industry

Drivers: Mergers and Acquisitions – Capital Raising

Case study: capital raising in the mattress industry
Case study: bed-in-a-box revolution upends mattress industry
Case study: traditional mattress industry is ripe for disruption
Case study: start-ups address crucial pain points for consumers
Case study: snoozing to better health
Case study: Casper Sleep Inc
Case study: Saatva Inc
Case study: Purple Innovation Inc
Case study: race to riches for Purple, Casper and Saatva
Investments signal high growth potential in Click and Grow

Drivers: Mergers and Acquisitions – Geographical Expansion

Akzo Nobel uses acquisitions to broaden its geographical footprint
Acquisition gives the Lixil Group a foothold in the Indian market
Zahran Group merger serves as a springboard into the Middle East
Chinese companies acquire global lighting brands
Case study: Walmart acquires India’s Flipkart
India’s furniture industry dominated by unorganised players
Small number of organised store-based retailers in India
Case study: Flipkart (Flipkart Online Services Pvt Ltd)
Case study: Walmart and Amazon lock horns in India

Drivers: Mergers and Acquisitions – Portfolio Diversification

Home and garden players diversify products and services
Nitori invests in home remodelling specialist Katitas

Drivers: Mergers and Acquisitions – Divestitures/Closures

Philips Lighting spins off Signify as a separate entity
Lights out for General Electric as it sheds lighting business
Akzo Nobel divests speciality chemicals
Scotts Co narrows its focus back to the US
Easy come, easy go: Heritage Home files for bankruptcy
Failure to change with the times dooms Sears and Mattress Firm
Key takeaways