Product

Solutions

Customers

Resources

Company

Solutions

Learn

Customers

Product

Company

Solutions

Learn

Customers

Product

Company

Key takeaways

In this piece we will dive into the home and garden industry, an industry which has received a significant tailwind in recent years. The COVID-19 pandemic triggered a cocooning trend, which created tremendous momentum for the home and garden industry. Some players experienced growth rates of >100% in 2020 as people allocated a greater share of their income towards home and garden equipment (rheingold institut, March 2021). Retailers also benefitted from cross-selling opportunities as customers were lured in with home office equipment. Purchases of residential hot tubs, saunas and garden sheds were made as a substitute for missed vacations, driving sales in the more capital-intensive product groups as well. A higher willingness to spend on home and garden furniture is expected to prevail after the pandemic, although equilibrium is expected to be below the spike seen in 2020 (industry expert interview).


The market’s structure shows a diverse picture, with a lower degree of consolidation in the furniture and outdoor retail sector than in the remaining segments. In the specialised area of hot tubs and saunas, the market is consolidated due to the relatively small end market. The majority of home and garden products are designed and assembled domestically to reduce distribution routes and logistics costs of these bulky products. In terms of the manufacturing function, players differ, with some engaging in in-house production while others outsource. Location-wise, manufacturing also varies from local manufacturing, near-shore (Europe) to off-shore (Asia). With internationally established brands, export rates of ~50-80% are the norm, with distribution mainly focusing on the European market.


Strategic acquisitions are few due to a rather consolidated market and limited cost synergies due to product-specific manufacturing requirements. However, high growth rates across verticals with momentum from the pandemic and further e-commerce catch-up potential has generated high investor interest, with >50% of identified players being PE-backed.


ESG considerations mainly revolve around the resource-intensive manufacturing process and general criticism around ‘fast furniture’. Players active in the industry engage in sustainability programmes and collaborate with agencies to offset their ecological footprints. Social issues take the form of safety and health concerns due to hazardous chemicals involved in the manufacturing process.

Company benchmarking

Market growth

The European indoor and outdoor furniture and lighting market grew by ~2.7% CAGR in 2015-2020 to reach ~€99bn in 2020 (Statista, 2022)

In 2020-2026, the European indoor and outdoor furniture and lighting industries are expected to grow at ~5% CAGR, reaching ~€134bn (Statista, 2022)

Particular growth is expected in the home & garden online retail industry, with an estimated CAGR of ~9.6% in 2020-2025 globally (Technavio, August 2021). Invested PEs reportedly estimate growth rates of up to ~13% (3i, March 2022). The global hot tubs market is projected to grow at 9% CAGR, reaching €3.5bn in 2025 (Technavio, August 2021)

Positive drivers

Increased adoption of working-from-home activity, beyond the COVID-19 pandemic, has altered the status of peoples’ home environment. People are spending more time at home and want to feel comfortable, which increases their willingness to invest in home interiors, accessories and garden equipment. The trend is expected to continue post-COVID-19 although at a slower pace (interview by Gain.pro)

De- and sub-urbanisation with a higher demand for gardens and outdoor spaces drives affluent people out of the city centres and increases the total addressable market for home and garden equipment across all price segments

“Fast furniture” trend shortens the replacement cycle of furniture (~10-15 years at present) and yields higher sales potential for replacement sales (Architectural Digest, April 2021)

Negative drivers

Rising and highly fluctuating raw material prices (e.g. wood and timber: ~20% CAGR 2017-2022; ~132% CAGR 2020-2022), hamper cost visibility and might squeeze margins to the degree that costs can no longer be passed on to customers (Trading Economics, April 2022)

Growing competition from manufacturers in Asia with superior procurement costs and better adaptability to frequently changing trends in the industry transforming similarly to the fashion industry (Brightly, January 2022)

Increasing e-commerce adoption eases the entrance of D2C business models, able to undercut prices of traditional manufacturers and brick-and-mortar retailers (Code and Theory, April 2022)

Read the full report on Gain.pro

Home & garden industry.

With the full report, you have access to…

Detailed assessments of the market outlook

Insights from c-suite industry executives

A clear overview of all active investors in the industry

An in-depth look into 72 private companies, incl. financials, ownership details and more.

A view on all 154 deals in the industry

ESG assessments with highlighted ESG outperformers

And much more!

Industry research

Industry research

Industry research

Home & garden

Home & garden

Home & garden

In

In

In

Europe

Europe

Europe

Join the digital revolution in private market intelligence

Find, understand and track companies that matter to you.

Subscribe and stay in the loop

© 2023 Gain.pro, all rights reserved

Find, understand and track companies that matter to you.

Subscribe and stay in the loop

© 2023 Gain.pro, all rights reserved

Find, understand and track companies that matter to you.

Subscribe and stay in the loop

© 2023 Gain.pro, all rights reserved