Price wars among brands and competition from private labels are the two main factors that affect profitability in the home and kitchen segment.
With net sales of $18.24 billion, Amazon topped the e-commerce sales in the furniture, appliances, and bath & kitchen accessories segment in 2022.
Home Depot, Walmart, and Wayfair followed in the second, third, and fourth positions.
A sudden growth in the home improvement segment happened during the pandemic when the market size grew by over $91 billion. The industry has been positively surging ever since then.
The article looks at the home and kitchen market, its online presence, and the consumer shopping trends leading to the growth of this industry.
Online Presence of Home & Kitchen Category
The home and kitchen segment includes appliances, furniture, furnishings, garden accessories, decor, and more. Discussed below are the three prominent online sub-categories in the segment.
Globally, the US is the largest household appliance market. As a result of the rise of smart home appliances, this market is expected to grow by 6.5% by 2030.
By popularity, Tupperware and KitchenAid topped the list of appliance brands preferred by US shoppers in the third quarter of 2023.
Among the top platforms to shop for home appliances online, USA Today’s Reviewed team voted Abt, Appliances Connection, and AJ Madison. Similarly, Best Buy, Lowe’s, and Home Depot are the best big-box retailers to shop online.
Between 2023 and 2028, kitchenware is predicted to earn a revenue of $25.1 billion. Some of the modern cookware in demand include:
- Compact, space-saving storage solutions
- Collapsible kitchen devices suitable for small living spaces
- Multi-purpose colorful cookware
- Stackable kitchenware
According to the Bureau of Labor Statistics survey, the average consumer expenditure on non-electric kitchenware has reduced from $32.3 in 2021 to $28.3 per consumer unit in 2022.
In the e-commerce penetration by category, furniture and home furnishings accounted for 33.8% of e-commerce sales in the second quarter of 2023.
As part of digital disruption in 2020, many retailers went omnichannel. However, Wayfair, the home furnishings leader, mastered the online business model nearly two decades ago. It is the first home retailer that allowed customers to browse for a product via their smartphone.
In the third quarter of 2023, 61.7% of orders delivered by Wayfair were placed via a mobile device, compared to 58.6% in the third quarter of 2022. Influencer marketing and effective use of user-generated content are some of the other reasons for Wayfair’s success.
The top furniture purchase plan for next year ranges from sofas, and mattresses to lamps and outdoor furniture.
Top Players in the Home & Kitchen Segment
One of the main findings of J.D. Power’s research on home improvement is that 41% of customers research online before going to a home improvement store to purchase.
The four retailers featured here offer both in-store as well as online shopping.
The Home Depot
Home Depot is the industry leader in the home improvement category in the US. Nearly half of the online orders of this retailer are usually fulfilled through stores.
Richard McPhail, the CFO of The Home Depot described 2023 as “a year of moderation” for the home improvement sector after the boom during the pandemic.
Speaking about the trend prevailing in the store, Billy Bastek, Executive VP of merchandising said there is a demand for smaller, less expensive products. And, now that the gap in the supply of appliances is consistent, the sales of appliances are seeing a lift.
With an equally good mix of home improvement solutions, Lowe’s follows Home Depot in the second position among home improvement retailers in the US. Since 2018, the company has been investing extensively in the e-commerce line.
Under the leadership of Marvin Ellison, CEO of Lowe’s, the company is stepping up its merchandising and marketing to focus on offering value to price-sensitive shoppers.
As 2023 ends in a few weeks from now, holiday shoppers expect to save big bucks on patio furniture, appliances, Christmas trees, and decorations. He added, “25% of the sales come from the B2B sector and they continue to contribute to the growing share of the company’s revenue.”
Menards was founded the same year as Walmart and Target. Known by the slogan ‘Save Big Money!,’ it is the third-largest home improvement store in the US. Some of the home improvement private label brands of Menards include:
- Midwest Manufacturing
- Grip Fast
The J.D. Power 2023 survey voted Ace Hardware as the most satisfying home improvement retail store for 12 consecutive years. It is the largest retailer-owned cooperative business.
Ace Hardware rolled out its online store in 2019. Since then, each year the company has seen growth in visits to its online store as well as revenue. In the third quarter of 2023, the omnichannel revenue of Ace Hardware was $298 million. The online store experienced a 24% increase in visits as well as a 24% growth in revenue in this quarter.
According to John Venhuizen, President & CEO of Ace Hardware, the net income of the company in 2023 has risen for both in-store purchases and their digital business in comparison to 2021 and 2022.
5 Motivators That Boost Online Home & Kitchen Shopping
The 2022 E-commerce Relevance Report by Coveo, found that 52% of customers are willing to pay more if they get a relevant item that they seek online. And, 93% of shoppers expect a personalized digital experience.
- Access to a Wider Assortment
- Sustainable Options
- Refurbished Retail
- Personalized Shopping Experiences
- Gifting Ideas and Choices
Access to a Wider Assortment
From kitchenware to outdoor furniture, the ease of shopping online triumphs as the main motivator. For instance, most online marketplaces have a category called “work from home” since 2020.
Even today, footstools, screen stands, lumbar support cushions, and products of multiple purposes are bestsellers in the category. Similarly, big-box retailers offer endless guides on DIY home goods.
In 2023, customers are going for materials such as bamboo, cork flooring, recycled steel sidings, and glass.
During a kitchen remodel, most homeowners fit the homes with sustainable features such as LED lightbulbs (65%), energy-efficient appliances (61%), and water-efficient fixtures (34%).
Another area that is gaining momentum is refurbished retail, especially with online marketplaces like Amazon, Back Market, and eBay offering certified refurbished appliances with a 12-month warranty on their sites at reasonable prices.
For instance, the renewed product category in Amazon has a diverse range of home and kitchen products available at affordable prices.
Personalized Shopping Experiences
In the online marketplace, interactions with products featuring augmented reality (AR) capabilities show a 61% higher conversion rate than products without it, finds a Deloitte study. Wayfair’s ‘View in Room’, Amazon’s ‘Room Decorator’, Ikea’s Place, and Lowe’s Innovation Labs are a few examples.
Gifting Ideas and Choices
Utilitarian and aesthetically pleasing items like appliances, furnishings, or decor make great gifting options. Most retailers feature gifting suggestions to their customers.
Staying on top of these trends helps brands stand out in this segment’s e-commerce game.
A Deloitte survey shows that 61% of consumers choose online stores with AR over the ones without it.
Assessing Amazon Bestsellers for Competitive Advantage
On Amazon, the home and kitchen category exists under the following departments:
- Kitchen and Dining
- Tools and Improvement
- Patio, Lawn, and Garden
With the sheer number of products out there, it is a tough call to price the products to fight competitors.
Tracking the best-selling products in all these segments across online marketplaces has several benefits.
- To monitor a brand’s selling price on all marketplaces at various locations
- To take note of categories where competitor products are selling well with fewer competitors
- To check if the products featured in the appropriate category match the product detail page
In November 2023, 1066 brands were featured as bestsellers in the home and kitchen segment on Amazon. ‘Amazon Basics’ – the private label takes the lead in sales with 69 bestseller products. This fact implies price wars among brands and competition from private labels are the two main factors that affect profitability in this segment.
Among the private brands, with 32 products in the bestseller list, National Tree Company the importer and wholesaler of holiday decorations ranks first with 32 bestseller products. Household cleaning brand Bissell follows next with 30 bestseller products.
Demand for energy optimization, smart homes, sales of small household appliances, rising internet penetration, easy payment options, and target marketing done by companies to reach all customer touchpoints are likely to fuel the growth of the online home and kitchen segment in the coming years.