Evolving Paths to Purchase in Homewares and Home Furnishings

Strategy Briefing

About This Report

Apr 2018

Homewares and home furnishings retailers continue to adapt to key drivers, such as urbanisation, hyperconnectivity and demographic shifts. Rapid urbanisation in India has resulted in e-commerce players offering furniture rental services to city-dwelling millennials. Meanwhile, online mattress company, Casper, has begun trialling pop-up stores in metro areas. Ikea has announced a collaboration with Virgil Abloh to target millennials, and also acquired TaskRabbit, a gig-economy start-up, in 2017.

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Evolving Paths to Purchase in Homewares and Home Furnishings

Asia Pacific overtakes Western Europe

Asia Pacific overtook Western Europe as the leading region for homewares and home furnishings in 2016. China represents the major engine of growth behind Asia Pacific’s dynamism, and has been the second ranked market for a number of years. Over time, China is likely to surpass the US in terms of market size.

Targeting urban millennials through furniture rental

Global urbanisation rates continue to rise, with roughly 61% of households living in an urban setting in 2017. Along with rising urbanisation, more and more households are residing in apartments. In India, e-tailers such as Pepperfry, Furlenco and Rentickle offer furniture rental services to urban millennials, recognising the nomadic nature of millennials and their desire for portable and versatile products.

Connected consumers make omni-channel strategies a necessity

Online sales of homewares and home furnishings grew to reach USD45.5 billion in 2016. More and more players are expanding their online presence, while key players such as Wayfair, Ashley Furniture and Ikea introduced augmented reality apps in 2017.

Millennials as “generation rent”

Millennials are more prevalent in Asia Pacific, Latin America and the Middle East and Africa, while baby boomers feature more strongly in North America, Western Europe and Eastern Europe. Millennials typically face housing affordability issues and are more likely to rent their homes, and are therefore often labelled “generation rent”.

Do not discount baby boomers

While millennials are a key consumer segment, brands should not ignore baby boomers. Baby boomers typically have higher incomes and therefore a desire to spend on higher value items. They are also likely to be influencers when it comes to kitchen and cookware products.

Introduction

Scope
Key findings

Evolving Path to Purchase

From a linear consumer path to purchase towards a cycle

Leading Regions and Markets

Asia Pacific overtakes Western Europe in 2016
US and China lead homewares and home furnishings
Housing affordability impacts home ownership in the US
The “middle class retreat” in Western Europe
Booming sales in Asia Pacific as incomes rise

Urbanisation

Urbanisation and shrinking households lead to apartment living
Pepperfry, Rentickle & Furlenco offer furniture rental in India
Ikea trials pop-up stores to target city-based consumers

Hyperconnected Consumers

Digital innovation disrupts homewares and home furnishings

HYPERCONNECTED CONSUMERS

Consumer hyperconnectivity makes omni-channel retailing a necessity
Mattress start-up, Casper, moves from online to offline channels
Kmart Australia’s cut-price chic homewares portfolio
The Muji.net community creates online consumer engagement
Alibaba Group opens offline store, Home Times, in China

Demographic Shifts

Rise of the single-person household

DEMOGRAPHIC SHIFTS

Millennials emerge as a key consumer segment
Amazon launches two new private label furniture brands
Ikea makes a conscious effort to target millennials
Baby boomers are no longer technology luddites
Baby boomers still exhibit the highest income levels
Wayfair targets both baby boomers and millennials in the US

Where to Play Analysis

Burgeoning market size, but lower per capita spend in Asia Pacific
Millennials a key segment, but do not discount baby boomers
Mass merchandisers and e-tailers eye up home furnishings
Future opportunities for homewares and home furnishings

Report Definitions

Definitions