Today’s consumer is shopping across multiple platforms and looking to engage with players across a variety of platforms. The internet is fuelling this trend and also giving rise to direct-to-consumer brands. Store-based retailers are taking note and adapting online strategies to offer a seamless experience. The e-commerce penetration rate in home and garden has been growing strongly and the Coronavirus pandemic is expected to accelerate this growth further.
Internet penetration rates, including mobile internet, are driving the growth of a digitally native consumer base. While home and garden online sales have grown over the years, the industry still has a low 9% share of sales coming from e-commerce channels. Home and garden players have typically been slow in investing in e-commerce when compared to other fmcg industries. However, we expect strong growth from this channel over 2020-2025 due to COVID-19 which is accelerating the adoption of e-commerce.
The value of a physical store is evolving. From enhanced in-store experiences such as JD.com’s tie-up with Qumei Home Furnishings to last-mile offerings such as multiple fulfilment options from the store offered by Home Depot, physical stores continue to offer tremendous value to consumers and hold potential.
Retailers and manufacturers in the home and garden space are adopting augmented reality to help consumers experience the product virtually in their homes. While furniture and paint manufacturers such as IKEA and Asian Paints are leveraging this, there is opportunity for home improvement and gardening players to adopt this technology as well.
COVID-19 is disrupting markets across the world but also presenting new opportunities for home and garden players. A slowdown in construction and housing will refocus attention on small DIY projects in 2020 in some markets. Continued remote working arrangements present immediate opportunities in the home office furniture space. COVID-19 has also emphasised the importance of e-commerce to long-term competitiveness.
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