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The global small domestic equipment market
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Competition on many fronts
The small domestic equipment market remains highly fragmented, with few international manufacturers and a multitude of companies operating nationally or regionally, or else specialised in a given segment, such as vacuum cleaners, irons, food processors or coffee makers, and most often positioned in the high upper end of the market.
For example, our competitors include:
- Large multi-segment companies like Philips, Braun (owned by Procter & Gamble via Gillette), Electrolux, Bosch-Siemens and Panasonic.
- A few small electrical appliance manufacturers with global operations, such as Salton, Conair and De Longhi.
- A wide variety of national companies with operations primarily in their markets, like Jarden Corp., Applica/Black & Decker, Hamilton Beach, Proctor Silex and Arcelik.
- Speciality companies focused on one or two product families, such as Dyson, Magimix, Vorwerk, Jura, Laurastar and Domena.
- Non branded or private label products, the vast majority of which are manufactured in China.
Indeed, competition from China has become an unavoidable fixture of today’s business. Thanks to their very low production costs, Chinese producers have steadily gained share in most mature markets, especially in Europe. Their high output, lifted initially by sourcing contracts from US and international brands and then by rising domestic demand, has also created substantial, and critically important, economies of scale. In certain product families, such as hair dryers, toasters, kettles and filter coffeemakers, more than 90% of global production now comes from China.
Polarised consumer spending
- In recent years, mature markets in Europe and the United States have tended to become “bi-polar”, with fast growth in the bottom and top ends and shrinking sales in the middle. This “hourglass effect” is being driven by changes in spending behaviour, with consumers willing to pay very high prices for higher value-added and truly innovative products, as well as for “must-have” or status purchases (like flat screen TVs, leisure products or espresso machines), while looking for very low prices for products they consider to be secondary. Still, improvements in the product mix over the last two or three years reflect a shift in demand (and supply) towards more upscale products, a phenomenon the Group has done much to stimulate. The launch of the Actifry "oil-free" deep-fryer, for instance, not only reversed the sharp downward price trend in the fryer segment, it also pushed up the average retail price point. The same is true for coffeemakers, where single-serve pods have moved the segment upmarket and virtually eliminated the €4.49 filter coffee makers.
- In emerging markets, on the other hand, the number of appliances per household is still low, so basic products account for most purchases. Nevertheless, the quest for status and the appeal of international brands represent very important growth drivers, which we are actively leveraging. They are also impelling a move upmarket and the emergence of a high-end products niche .
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