Competitor Strategies in Home and Garden

November 2023

Acquisitions are focusing on reacting to shifts in demand or increasing capabilities in sustainability, which is now a key planning priority, giving glimpses of how brands will meet 2030 goals. Cross-industry efforts to attract new DIYers are spreading geographically. The cost of living crisis is impacting incomes and shifting the meaning of “value”, while obsolescence is being rejected. Fulfilment and online sales experiences continue as priorities, as the era of retail media begins.

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Key Findings

Sustainability is well beyond lip service, offering glimpses of how companies expect to meet 2030 goals

Sustainability is gaining momentum, with actions pursuing 2030 net-zero goals across Scopes 1-3, with more circularity, and an increase in second-hand sales, linked to the roll-out of marketplaces, putting the pricing of new and nearly new alongside each other. Biodegradable products and packaging are evolving, as are related claims. Energy saving is a priority in messaging/innovation, with water saving on the agenda.

New DIYers increase the size of the sector, with a better ROI than competing only for existing shoppers

Most brand and retailer strategic plans in home improvement include attracting, inspiring, mentoring and retaining new DIYers. Flooring and tools led the way in 2021, with efforts extending to plumbing and water projects by 2023. In-store and online support are evolving in both products and AI technology. Workshops are becoming ubiquitous, and are now impacting new store designs, whilst advanced help is carrying the teaching process into the home.

Disposable income impacts spread in the cost-of-living crisis, shifting the meaning of “value” for shoppers

Big-ticket projects declined the most as the global economy slowed, whilst price discounting is evident, even with lingering inflationary pressures in the supply pipeline. Consumers seek more value, with durability sought as a “must have” at all prices, with premium private label rather than simple low cost being the winner. Supply strategy near-shoring is top-of-mind again, as the planning horizon starts to encompass new risks, and investment moves away from China.

Fulfilment and online sales experiences continue as the investment focus, but we are entering the era of retail media

Emerging markets are closing the gap in e-commerce fulfilment, whilst online sales logistics continue to drive the need for packaging innovation. New reduced SKU and footprint store formats are the main beneficiary of investment in augmented reality, whilst generative AI home design is the next step in AR/VR value creation. Retail marketplaces have spread rapidly, and brands are investing to stay visible, putting advertising spend into “retail media”.

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Scope
Executive summary
Companies at a glance
Top 10 companies concentrated in developed markets, but attempting to grow beyond them
Home furnishings (and retail) favour organic growth; DIY brands show legacy of acquisitions
Home improvement category leaders have a strong presence in the home and garden top 10
Home and garden is highly fragmented at the category level, visible in specialised strength
Asia is visibly consolidating but this is so far at a national rather than continental level
Granularity of growth: This continues as an abnormally turbulent period for scale of change
Examining strategies being deployed in home and garden
Sustainability gains strategic momentum, with circularity and second-hand both rising
The second-hand market is growing, partly due to a glut in supply from social shifts
Second-hand and marketplaces are intrinsically linked in the formal part of this market
Probing what sustainability means to leading companies in DIY and gardening
Circularity has been a weaker aspect of the narrative, but that is changing
Prioritising sustainable and eco-friendly packaging in consumer choices
Biodegradable end-of-life solutions are emerging, and not just within predictable categories
Utilisation of energy: Environmental issues motivate sustainability strategies
Utilisation of energy: Consumers’ consumption preferences
INGKA’s solar and wind strategy is an early example of investing to meet 2030 goals
The cost of energy has also been driving home improvement demand, mainly in Europe
The rise of energy-saving innovations is not limited just to products that use energy
Efforts to nurture the home improvement market size increasingly focus on new DIYer appeal
As a barometer for DIY activity, tools and hardware shows more DIYers still active in 2022
Most strategic plans are starting to include new DIYer inspiration, mentoring and retention
Tools are increasingly targeted at degrees of DIY skill, with easy-to-use entry device thinking
Flooring was the first project type specifically trying to attract new pandemic DIYers
“Did I buy enough” anxiety meets with an AI solution ideal for flooring, tiling and paint apps
The bathroom and plumbing space is the latest to see efforts to recruit DIYers
Studying communications appealing to new bathroom DIYers, target demographics leap out
Gardening has seen widespread efforts to bring children into the grow-your-own trend
DIYer recruitment action is visible in retail efforts to create more approachable “chat” points
Retailers are growing their own DIFM (do-it-for-me) support structures as a strategic defence
Since 2021, DIWM (do-it-with-me) exploded, with most retailers at least testing workshops
There are examples from most regions; Bunnings strongly adapted for Australian DIY novices
Store design moves to support multiple types of shopping journey based on sophistication
More novel and advanced DIWM concepts are taking the teaching moment into the home
In product support for novice DIYers is spreading in good (but under-exploited) directions
Macroeconomic movements put pressure on spend and change what “value” means
Heavy renovations were the big-ticket projects that suffered most in terms of demand
Competitive price discounting is active, even with inflationary pressure remaining on costs
Consumers turn to reduced cost solutions, with durability as a basic “must have” at all prices
Premium private label and durability upgrades are the winners in this shopping scenario
An example from home paint of how a premium private label position is being developed
Supply strategy is back to being top of mind to cope with unstable costs and risks
Emerging markets had a big e-commerce fulfilment job to catch-up, but catching up they are
Most industry contacts focus on the need to engage digital audiences
Digital: Delivering a positive digital experience
Digital strategies: Home and garden in the digital age
Beyond the box: Packaging innovations needed when delivery creates tough new challenges
Compact store formats end up as the main beneficiary of online sales experience investment
Generative AI is getting into home design as the “what is next” after basic augmented reality
The human element in digital retail means personalisation, interaction and livestreaming
The marketplace era has begun, and now brands adapt to cope with this new development
Key takeaways
Projected company sales: FAQs (1)
Projected company sales: FAQs (2)

Home and Garden

This project has a strict focus on sales to consumers only. Trade and professional sales are excluded. Home and garden refers to gardening, home improvement, homewares and home furnishings.

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