Where Consumers Shop for Home and Garden

March 2024

With sales slowing down, home and garden retailers around the world made innovative investments to provide consumers with a shopping experience upgrades, with strong efforts to stimulate demand. Compact urban stores to be close to new footfall patterns, phygital stores, drive-through and self-checkout were some of the innovations gaining investment in the realm of store-based retailing. The incorporation of AR/VR tools in online platforms was a spreading novelty seen in non-store-based retailing

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Key Findings

Economic downturn due to Russia-Ukraine crisis impacting home and garden

The Russia-Ukraine crisis in 2022 contributed to economic uncertainty and geopolitical tensions, impacting consumer confidence and spending patterns globally, which impacted sales in home and garden in 2022. Additionally, the heavy sales witnessed during the wake of the pandemic in 2021 led to a temporary saturation of demand, causing a slowdown in purchasing activity in 2022.

Home and garden sector witnessed a rise in phygital stores with heavy investments from retailers

Phygital stores, blending physical and digital elements, have seen significant growth in the home and garden sector over recent years, offering consumers a seamless shopping experience. Retailers such as IKEA, Home Depot and Lowe's have heavily invested in phygital strategies, integrating technologies such as augmented reality (AR) and virtual reality (VR) to enhance product visualisation, room planning capabilities and customer engagement.

Small-format stores are gaining popularity, linked to personalisation and chasing new footfall density patterns

The retail landscape witnessed an evolution in consumer shopping location preferences and a shift in market dynamics. Brands have embraced trends by introducing compact store concepts and planning studios to offer a more personalised shopping environment in locations chasing new footfall patterns. DIY stores rolled out drive-through and self-checkout at scale, in part for a reduced-cost shopping journey, but also to better serve the trade.

Sales in home and garden are likely to increase over the forecast period (from 2025) with the expected slowing down of inflation

Over the next few years, as consumer purchasing power strengthens with reduced inflationary pressures, individuals are likely to allocate more disposable income towards home improvement and gardening projects. Moreover, developments in the housing sector, such as increased construction activity and rising property values, are expected to stimulate demand for home-related products and services, further bolstering sales in the home and garden sector.

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Scope
Key findings
Industry developments: Home and Garden
Heavy sales witnessed in 2021 led to the slowing of demand in 2022
Regions suffering from hyperinflation witnessed low retail value sales in home and garden
Channel shifts: Stores vs non-store
Channel shift by category and region
Shopping 3.0: The rise of phygital stores
A phygital store experience and gaining virtual trial for wider SKU ranges
Livestreaming: A new way of enhancing phygital experience
Live from IKEA: An idea to provide innovative ideas to consumers
Augmented reality: Helping consumers visualise
Decorify: Generative AI improving consumers’ room design experience - a glimpse of the future
Case study: Castorama AI-based virtual assistant in France
Key takeaway: Phygital store developments are the backbone of retail strategy today
Store-based snapshot in 2022
Convenience retail witnessed highest CAGR over 2017-2022, supported by low-priced offerings
Retail value sales of home improvement and garden stores declined in 2022 due to inflation
Majority of consumers visit stores to see, try and touch products before making a purchase
Low consumer confidence in Europe due to rising inflation hampered Kingfisher Plc
Bankruptcy of Bed Bath & Beyond is part of a turbulent shake-up of the retail landscape
Role of modern grocery retailing in home and garden
Store closures affected the positioning of top grocery retailers such as Kroger and Tesco
Rising consumer demand for affordable products aided the sales of private label globally
Importance of private label by region, in home and garden
Retailer investment to expand private label increased in Western Europe and North America
Betwin Space launches SIDIZ store in Seoul to offer holistic “sitting experience” to consumers
Demand for easier operations and low interaction led to the rise of drive-through DIY stores
A strong factor in DIY store strategy (and beyond DIY) is the need for compact urban stores
The post-pandemic drop in shopping journey distances has reset store catchment analysis
DIY retail specialists trying retail formats dedicated to specific products and project types
Incremental revenue efforts escalate in multiple directions - new geographies and categories
Smaller stores and low prices have aided MR.DIY to expand its stores across several regions
E-commerce by category in home and garden
E-commerce growth seen during the pandemic has slowed as consumers return to old ways
E-commerce sales across all regions declined in 2022 as the demand stagnated
Pinduoduo’s retail value sales increased significantly with the launch of Temu in the US
Majority of global consumers perceive that they will get best prices when buying online
Still potential for e-commerce to grow significantly in home and garden across the world
Incremental revenue efforts escalate in multiple directions - the rising retail media strategy
A harbinger of things to come…physical retailers evolve to be more like Amazon and Alibaba
What is needed in the online shopping journey has moved on again since COVID reactions
IKEA launches IKEA Kreativ to empower users to redesign house spaces independently with AI
Atelier de Conception et Commande aids consumers to access virtual settings using tablets
Total sales growth turned negative without price increases; e-commerce grows in real terms
Retail sales return to growth with the return of macroeconomic stability and urbanisation
E-commerce and homewares and home furnishing stores set to see similar growth
E-commerce is set to remain a formidable channel in home improvement and gardening
DIY and gardening companies care more about aspects of sustainability versus other sectors
To help sustainable practice adoption, the large retail trade organisations are getting involved
Kingfisher is also a founding member of the UN’s Race to Zero Breakthrough campaign
Leroy Merlin introduces Home Index, and brings nudge theory to bear on sustainable choices
Home improvement retailers build links to end of life waste collectors with recycling options
Second-hand and marketplaces are intrinsically linked in the formal part of this market
INGKA’s solar and wind strategy is an early example of investing to meet 2030 goals
The home and garden sector is set to witness significant changes over the next few years
Key takeaways

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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