MARKET INSIGHT


May 2019 ertonline.co.uk Filipe Oliveira l Market Analyst, Futuresource Consulting


Smart appliances set for global growth


Smart appliances are on the rise and are forecast to grow at 36 per cent CAGR out to 2023, according to a new report from Futuresource Consulting, which identifies smart appliances as the fastest growing category segment in laundry and refrigeration.


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mart appliances are the rising stars, taking a larger share of the laundry and refrigeration market every year. China is at the forefront


of this wave of smart appliance adoption, and our forecasts indicate that 19 per cent of all appliances shipped in China this year will have Wi-Fi connectivity. In comparison, Japan, North America and Western Europe should all end 2019 at between five and seven per cent of sales. In these regions there has been a slower than expected roll out of smart technology due to tariffs and, in some markets, economic slowdown. Prior to 2017, connectivity was the stronghold


of premium devices from Samsung, LG and Miele. As smart laundry and refrigeration models begin to filter down to mid-range brands, this has further reinforced the positive outlook for connected major appliances. Looking to the wider market, overall shipments


of total laundry and refrigeration appliances grew by just under two per cent globally last year, which is the lowest growth rate posted in the past five years. 2019 is expected to be another lacklustre year, with minimal global growth and volume declines in several key markets.


Smart appliances driving value growth The higher price points that smart appliances attract are a welcome addition to the market. They lend their weight to stronger value growth, which reached nearly three per cent last year, also helped along by large capacity washing machines and multiple door fridge-freezers. Despite the current soft market conditions, our


forecasts indicate growth of 3.6 per cent CAGR until 2023 in volume terms, with value expected to achieve 4.4 per cent CAGR. Voice assistants are an important driver of


smart devices throughout the home, finding their way into lighting, climate control, energy and security products. However, voice integration into appliances had a relatively slow start, but began to gain traction last year, with a range of vendors now working with Amazon’s Alexa, Google Assistant or both. This includes the likes of LG, GE, Whirlpool, Candy and Arçelik brands such as Beko. Arguably, the most distinctive visual feature of


a smart fridge is the external embedded display. Yet, recent consumer research carried out by


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Futuresource across the UK, France, Germany and USA shows that information and entertainment is the use case least valued by consumers, and the only feature to receive negative comments in the survey.


From vendor to service provider Longer-term, smart appliances can transform manufacturers into service providers, providing a lucrative additional revenue stream. New business models will generate more value through diagnostics and maintenance, consumables and experiential applications. Opportunities include informing owners if any


parts need repair or replacement. Although this could delay obsolescence, it will align with the sustainability concerns of consumers and have a positive impact on brand loyalty, as well as increasing maintenance revenue. For consumables, it could mean monitoring the automatic detergent dispenser and generating new orders when the machine is running low on laundry detergent and fabric softener. In refrigeration, the possibilities are even wider,


given the number of consumables stored in a fridge. Taking this a step further, smart appliances can provide ideas to enhance their use and create new experiences. Smart refrigerators can suggest recipes that use ingredients available in the fridge, whereas washing machines can match the washing program with fabric type and help with fabric care.


Opportunities are beginning to stretch far


beyond the initial sale. As the upward adoption curve continues, vendors will begin to reap the rewards.


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