Global trends that affect the industry - Electrolux Group
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Global trends that
affect the industry
The increasing pace of change in the global market for household appliances stems
from a number of trends such as increased consumer power, digitalization, sustainability,
consolidation and a growing middle class. These changes are placing demands on
investments and economies of scale, but also open up major opportunities.
Consumer
power
Global
growing Digitalization
middleclass
industry
drivers
Consolidation Sustainability
For simplification purposes, the global market for household - Consumer power is growing as increasingly well-
appliances can be split into two parts. In the mature markets informed customers easily can access information about
(Western Europe, North America, Japan and Australia/New prices, offers and product characteristics. This means that
Zealand), population growth is low and sales are dominated Electrolux, as well as other brands, need to offer transparent
by replacement products. However, growth markets (Africa, information about how the products and offers are differenti-
the Middle East, Eastern Europe, Latin America, Southeast ated to meet customer needs.
Asia and China) are characterized by rapidly rising living - Digitalization plays an important role in increasing
standards and a large number of new households being consumer power. Mobile solutions and access to the Internet
able to invest in appliances and other household products. place demands on Electrolux and increase opportunities
During 2016, demand for appliances increased in mature to interact with consumers in new ways. Digitalization also
markets such as North America, Europe and Australia as well provides substantial opportunities to develop increasingly
as in growth markets in Southeast Asia and China. Although advanced products, such as connected products, as well
demand continued to decrease in Latin America a general as making the Group’s operations more efficient.
increase in global demand for appliances was noted. - Sustainability is becoming more important for
Growth markets have increased their global share of customers and consumers as well as authorities, who
demand. In 2016, the demand in growth markets repre- demand that manufacturers develop and offer sustainable
sented about 70% of the total market volume compared products. This trend has been apparent for a number of
with 50% in the year of 2000. Growth markets accounted for years but development is now accelerating at varying paces
about 30% of Electrolux sales for the year, and the objective in the different regions.
is to increase this share. - A global middle class is expanding as a result of
strong economic growth in emerging economies. This trend
Trends has been visible for many years and will continue.
The increasing pace of change in the global market stems - Consolidation in the sector is, to a large extent,
from a number of trends that influence volumes and the driven by the above trends as they result in challenges
types of products that are in demand. that require major investments and economies of scale.
Manufacturers and retailers of household appliances
are becoming fewer, larger and more international.
18 Strategic priorities ELECTROLUX ANNUAL REPORT 2016global population
Million
360 450
4,000
1,500 160
640
13%
Population in
Electrolux core markets
87%
Population in
Electrolux growth markets
Western Europe, Africa, Middle East,
North America, Australia, Eastern Europe, Latin America,
New Zealand, Japan Southeast Asia, China
the pace of digital growth continues to accelerate
Worldwide Digital Indicators
+21% +23% +38% +126%
4.0 2.9
3.3 2.7 4.3
2.2 2.1
1.9
2016 2020 2016 2020 2016 2020 2016 2020
internet users social media users smartphone users b2c sales world wide,
USD
+ 700 million + 500 million + 800 million + 2.4 trillion
Source: Emarketer and Electrolux estimates.
ELECTROLUX ANNUAL REPORT 2016 Strategic priorities 19Market overview
Core markets
Western Europe North America Australia, New Zealand and Japan
The European appliances market is frag- A mature, homogenous market with high Japan is the world’s third-largest single
mented and characterized by widely varying product penetration that is dominated by market and is dominated by major domes-
consumer patterns between countries and a replacement products. Large homes allow tic manufacturers and retailers. Small living
large number of manufacturers, brands and space for many household appliances, spaces have led to consumers demanding
retailers. Structural overcapacity and price including large appliances. The market is compact products, such as hand-held vac-
pressure has led to ongoing industry consol- comprised of several domestic and global uum cleaners. While market penetration is
idation with players aiming to achieve econ- manufacturers. Four major retailers sell 70% high in Australia and New Zealand, demand
omies of scale. During 2016, markets showed of the appliances on the market. The recov- is primarily driven by design and innovations
continued postive demand enabling growth ery in the housing sector generates oppor- as well as water and energy efficiency. Com-
in areas such as compact, energy-efficient tunities for growth in the coming years. In petition between manufacturers from Asia
and built-in kitchen products. 2016, market demand remained positive. and Europe is intense in the region.
Market demand for major appliances Market demand for major appliances Market demand for major appliances
MILLION UNITS MILLION UNITS
MILLION UNITS
80 25
80
24
70
70 23
22
60
60
21
50 20
50
90 92 94 96 98 00 02 04 06 08 10 12 14 16 02 04 06 08 10 12 14 16
02 04 06 08 10 12 14 16
Market value Market value Market value
USD BILLION USD BILLION USD BILLION
50 50 20
40 40 15
30 30
10
20 20
10 5
10
0 0 0
Major Small Major Small Major Small
appliances appliances appliances appliances appliances appliances
Product penetration Product penetration Product penetration
% OF HOUSEHOLDS % OF HOUSEHOLDS % OF HOUSEHOLDS
100 100 100
80 80 80
60 60 60
40 40 40
20 20 20
0 0 0
rs s s ns ers ers rs rs tor
s
ine
s ns ers ers rs rs tor
s
ine
s ns ers ers rs
oke tor ine ove ne oke ove ash Dry
ne oke ove ash Dry
ne
Co era ach ash Dry itio Co era ach ve itio Co era ach ve itio
frig gm ave hw nd frig gm wa Dis
hw
-co
nd frig gm wa Dis
hw
-co
nd
Re shin row Dis -co Re shin icro Air
Re shin icro Air
Wa Mic Air W a M W a M
Electrolux major competitors Electrolux major competitors Electrolux major competitors
Miele • B/S/H • Whirlpool • Samsung Whirlpool • Haier • LG Electronics Haier • Samsung • LG Electronics
• LG Electronics • Arcelik • Samsung • Panasonic
Euro Area North America Australia, New Zealand and Japan
Population: 445 million Population: 360 million Population: 155 million
Average number of Average number of Average number of
persons per household: 2.3 persons per h
ousehold: 2.6 persons per h
ousehold: 2.5
Urban population: 78% Urban population: 83% Urban population: 93%
Estimated GDP Estimated GDP Estimated GDP
growth 2017: 1.5% growth 2017: 2.2% growth 2017: 1.4%
42 Markets and business areas ELECTROLUX ANNUAL REPORT 2016Growth markets
Africa, Middle East and Latin America Southeast Asia and China
Eastern Europe
The level of market development varies sub- Brazil is the largest appliance market in the The region is characterized by emerg-
stantially between countries. The geographic region where the two largest manufactur- ing economies, rapid urbanization, small
spread plays its part in hindering manufac- ers accounts for a large share of the mar- living spaces and an expanding middle
turers and retailers from capturing substan- ket. Despite the economic slowdown in the class. China is the world’s largest market for
tial market shares. Eastern Europe is domi- region, there exists considerable growth household appliances and the domestic
nated by Western manufacturers and a large potential for appliances in the longer term, manufacturers dominate in China. Similar to
market for replacement products is emerging. especially in low-penetrated categories. other emerging markets, consumers prior-
Penetration in Africa is low, but growth is high The growing middle class is expected to itize refrigerators, washing machines and
and in line with increasing household pur- drive demand for basic cookers, refrigera- air-conditioners as prosperity rises. Energy-
chasing power. The Middle East offers a base tors and washing machines. Growing inter- efficient products and foreign premium
for regional manufacturing but is impacted est for energy and water efficiency may also brands are growing in popularity.
by political uncertainty. drive demand.
Market demand for major appliances* Market demand for major appliances Market demand for major appliances
MILLION UNITS * Eastern Europe MILLION UNITS MILLION UNITS
40 80 250
35 70
200
60
30
50 150
25
40
20 100
30
15 20 50
02 04 06 08 10 12 14 16 02 04 06 08 10 12 14 16 02 04 06 08 10 12 14 16
Market value Market value Market value
USD BILLION USD BILLION USD BILLION
20 20 80
15 15 60
10 10 40
5 5 20
0 0 0
Major Small Major Small Major Small
appliances appliances appliances appliances appliances appliances
Product penetration Product penetration Product penetration
% OF HOUSEHOLDS % OF HOUSEHOLDS % OF HOUSEHOLDS
100 100 100
80 80 80
60 60 60
40 40 40
20 20 20
0 0 0
rs tor
s
ine
s ns ers ers rs rs tor
s
ine
s ns ers ers rs ps tor
s
ine
s ns ers ers rs
oke era ach ove ash Dry itio
ne oke era ach ove ash Dry itio
ne okto era ach ove ash Dry itio
ne
Co ve hw nd Co ve hw nd Co ve hw nd
frig gm wa Dis -co frig gm wa Dis -co frig gm wa Dis -co
Re shin icro Re shin icro Re shin icro
W a M Air W a M Air W a M Air
Electrolux major competitors Electrolux major competitors Electrolux major competitors
B/S/H • Whirlpool • Samsung Whirlpool • LG Electronics • Samsung LG Electronics • Panasonic • Haier • B/S/H
• LG Electronics • Arcelik • Daewoo • Whirlpool • Midea • Samsung • Gree
Africa and Middle East Latin America Southeast Asia and China
Population: 1,480 million Population: 640 million Population: 4,050 million
Average number of Average number of Average number of
persons per household: 4.8 persons per household: 2.8 persons per household: 3.8
Urban population: 46% Urban population: 79% Urban population: 44%
Estimated GDP Estimated GDP Estimated GDP
growth 2017: 3.1% growth 2017: 1.2% growth 2017: 6.7%
Sources: World Bank, OECD and Electrolux estimates.
ELECTROLUX ANNUAL REPORT 2016 Markets and business areas 43Electrolux market data
Core markets
Western Europe North America Australia, New Zealand and Japan
Electrolux priorities Electrolux priorities Electrolux priorities
Increased focus on the strongest and most Launch of new innovative premium products Further strengthening of positions in Austra-
profitable product categories and brands, within core appliances. Focus is on streng- lia and New Zealand through the launch of
Electrolux and AEG. Emphasis on innovation, hening and investing in the Frigidaire brand new, innovative products such as the new
often drawing inspiration from the Group’s and growth in new channels such as the Westinghouse cooking range but also prod-
professional expertise but also increased builder-channel and online. Key focus areas ucts with features such as high energy and
focus on smart appliances. Examples of are broadening the range of professional water efficiency. Prioritization of compact,
growing segments are built-in kitchen appli- products as well as the offering for global user-friendly and quiet household appli-
ances and energy-efficient products. Prior- food chains. ances in Japan and South Korea continues.
ity is also given to strengthening the small
domestic appliances offering.
share oF group share oF sales in share oF group share oF sales in share oF group share oF sales in
sales 2016 the region 2016 sales 2016 the region 2016 sales 2016 the region 2016
30% 38% 3%
Major appliances, 80% Major appliances, 95% Major appliances, 85%
Small appliances, 8% Small appliances, 3% Small appliances, 8%
Professional food-service Professional food-service Professional food-service
and laundry equipment, 12% and laundry equipment, 2% and laundry equipment, 7%
Consumer brands Consumer brands Consumer brands
Electrolux market shares Electrolux market shares Electrolux market shares in Australia
16% core appliances 18% core appliances 39% core appliances
11% floor care 5% floor care 7% floor care
Professional: Leadership position with a Professional: Historically strong presence Professional: Historically strong position in
stronger recognition in the institutional/ in laundry equipment and a growing pres- both laundry equipment and food-service
hotel segments for professional products. ence in the food service industry and in the equipment for professional use.
chain business for professional products.
net sales net sales net sales
SEKM SEKM SEKM
40,000 40,000 8,000
30,000 30,000 6,000
20,000 20,000 4,000
10,000 10,000 2,000
0 0 0
12 13 14 15 16 12 13 14 15 16 12 13 14 15 16
Market demand in Western Europe has Net sales in North America have been Australia is the Group’s main market in the
improved during several years, and impacted by growth in the market, region. In Japan, Electrolux is a relatively
Electrolux sales have increased. The Group launches of new products and new distri- small player but has, in recent years, estab-
has strong market positions with a particu- bution channels. lished a growing business in small, compact
larly strong position in kitchen appliances vacuum cleaners.
both for consumers and professional users.
44 MARKETS AND BUSINESS AREAS ELECTROLUX ANNUAL REPORT 2016Growth markets
Africa, Middle East and Latin America Southeast Asia and China
Eastern Europe
Electrolux priorities Electrolux priorities Electrolux priorities
Increased focus on the strongest brands Although parts of the region have experi- By targeting new markets, channels and
and product categories in Eastern Europe. enced tough market conditions recently, segments and marketing a broad range of
The aim is to grow profitably in all prod- there are considerable growth opportunities appliances, the Group aims to increase its
uct categories in parallel with economic in the longer term. By monitoring the devel- presence in Asia. A growing middle class
recovery but also growing prosperity, espe- opment in Brazil and Argentina closely, and means higher demand for premium prod-
cially in Africa. The Electrolux production focusing on cost control and efficiency, the ucts. Focus on products for professional
setup in Egypt will enable growth in the Mid- Group can capitalize on opportunities when users in the laundry and food-service seg-
dle East and North African markets. Prod- the purchasing power of households recov- ments is also prioritized as well as launches
uct launches in the air-conditioner segment ers and consumer demand turns positive of compact vacuum cleaners and small
and small appliances will also yield further again. domestic appliances.
growth opportunities in the region.
share oF group share oF sales in share oF group share oF sales in share oF group share oF sales in
sales 2016 the region 2016 sales 2016 the region 2016 sales 2016 the region 2016
11% 13% 5%
Major appliances, 84% Major appliances, 94% Major appliances, 69%
Small appliances, 9% Small appliances, 6% Small appliances, 22%
Professional food-service Professional food-service
and laundry equipment, 7% and laundry equipment, 9%
Consumer brands Consumer brands Consumer brands
Electrolux market shares Electrolux market shares Electrolux market shares in
15% core appliances, Eastern Europe Leading positions in major appliances in Southeast Asia
3% core appliances, Middle East and Africa Brazil, Chile and Argentina. 5% core appliances
10% floor care, Eastern Europe 38% floor care 24% floor care
Professional: Leadership position with a Professional: Growing presence of Professional: Reference player with
stronger recognition in the institutional/ Professional Products in the region. stronger recognition in the hotel segments.
hotel segments.
net sales net sales net sales
SEKM SEKM SEKM
15,000 25,000 7,500
12,000 20,000 6,000
9,000 15,000 4,500
6,000 10,000 3,000
3,000 5,000 1,500
0 0 0
12 13 14 15 16 12 13 14 15 16 12 13 14 15 16
Electrolux has a potential for growth Weak market conditions primarily in Electrolux sales in Southeast Asia is
in parallell with growing markets in Eastern Brazil impacted sales negatively in 2015 growing. The Group’s strong position in
Europe, the Middle East and Africa. and 2016. Net sales in Latin America have front-load washing machines has been
previously increased organically over the leveraged to also expand the business to
years due to a strong product offering, kitchen appliances.
market growth and acquisitions.
ELECTROLUX ANNUAL REPORT 2016 MARKETS AND BUSINESS AREAS 45You can also read
