Household Equipment

Towards normalization in 2022

Last update – December 2021

Sector rating

MEDIUM RISK FOR ENTERPRISES

Fragmentation

Internationalization

Capital Intensity

Profitability

Strengths & weaknesses

Structural growth drivers (population growth, urbanization)
Capacity to innovate and create profitable niche markets

Strong sensitivity to swings in consumer sentiment and real estate / construction activity
Concentrated customer base (specialty retailers)
Consumer electronics: saturated products markets (computers, mobile phones, TV sets, audio equipment, etc.)
Furniture: fragmented industry, domination of small and medium-sized enterprises

Sector overview

What to watch ?

Normalization of demand as the pandemic boom wanes off
Easing of supply-chain tensions (semiconductors)
Changes in commodity prices (steel, copper, plastics)

The household equipment industry emerged stronger from the pandemic, with booming consumer demand sending sales of appliances, consumer electronics and furniture to all-time highs in Europe and North America, 10-20% above their 2019 levels. Sales and profits peaked in Q2 2021 and have been slowly eroding ever since because of rising procurement costs (steel, copper, plastics) and component shortages (semiconductors). However, the industry believes the pandemic will have a lasting and positive impact on future demand, with consumers paying greater attention toand spending more on their interiors.

Looking forward to 2022, we anticipate the risk environment to deteriorate slightly:

Demand will normalize – H2 2020 and 2021 sales were boosted by an exceptional mix of favorable factors (high consumer savings, record time spent at home, limited spending on services etc.). Sales should decline by a low single digit rate in 2022.
Manufacturers may have more difficulties to pass rising costs onto prices if demand begins to cool, meaning profit margins may be more at risk.
The real estate market could cool down as financing conditions will progressively become more restrictive in advanced economies.

Subsectors

Household Equipment comprises different industries involved in the design and manufacturing of domestic equipment for households. While companies exhibit very different profiles between segments, they have in common a strong sensitivity to consumer spending and a reliance on Asia Pacific, mostly China, for their manufacturing activities. Mature economies still make up for the vast majority of demand.

- Consumer electronics: audio and video equipment, computers, mobile phones etc. with an estimated USD2,450bn in turnover. Product markets are now largely mature and driven by replacement sales. A handful of companies generally dominates their markets and focus on design, R&D, marketing etc. while outsourcing manufacturing to contract manufacturers. Asia Pacific concentrates more than 85% of global turnover. Mexico is the only significant manufacturer outside of the region.
- Domestic appliances: small appliances (home care, personal care, cooking aids…) and large appliances (refrigerators, ovens, dishwashers, washing machines…) with an estimated USD530bn in turnover. Much like consumer electronics, product markets are largely mature and dominated by a few large global players and smaller niche, regional competitors. Asia Pacific’s share of global turnover stands at about 80%. Other manufacturing countries include Germany, Italy, Turkey and the U.S.
- Furniture and furnishings (USD520bn in turnover) is, on the contrary, a highly fragmented industry dominated by small- and medium-sized companies working closely with designers and retailers. A few mature economies, including Germany, Italy and the U.S., still have a significant presence in the industry.

Key players

Swipe to view more

Country		Role	Sector risk
	China	#1 manufacturing country	Medium risk
	United States	#2 manufacturing country	Medium risk
	India	#3 manufacturing country	Medium risk
	Germany	#4 manufacturing country	Medium risk
	Italy	#5 manufacturing country	Sensitive risk