During the COVID-19 pandemic, consumers across the globe have been forced indoors, vastly increasing the amount of time spent at home. Indeed, the home has become the new headquarters, facilitating everything from work to workouts. As a result, consumers are bringing the concept of luxury into the post-pandemic home, upgrading their domestic space with sophisticated home gadgets and appliances ranging from smart fridges to Nespresso machines. This consumer move towards higher quality in tandem with value for money has been visible for some years – you can see the data in our earlier report “Is premiumization the future for Black Friday” – but COVID-19 has focused it on inside the home.
“With people spending more time at home and using their appliances more than ever in the last 12 months, it’s made them look at what they do and use in their homes very differently,” says John Davies, Head of Marketing at appliance company Smeg UK. “This is driving a need for easy-to-use, high-functioning and design-led appliances.”
In a recent study conducted by Xiaomi, a global leader in smart home devices, 70% of consumers reported making changes to their living environment since March 2020, and 51% reported purchasing at least one smart device during the same period. What’s more, according to GfK figures, 18% of consumers purchased technical consumer goods (TCGs) sooner than originally planned as a result of the pandemic.
Bringing the outside world into the post-pandemic home
The growing popularity of home gadgets can also be attributed to reduced opportunities to splurge on out-of-home experiences. “Disposable income for many has increased, alongside limitations as to where this can be spent. This has been of benefit to the appliance industry and appliances across all price points and specifications,” explains Paul Hide, Chief Executive of AMDEA, the UK trade association for appliance manufacturers.
Consumers have sought to replicate numerous out-of-home leisure experiences from the comfort of their own homes during the past year. For instance, as opportunities for dining out have been limited during the pandemic, consumers are now cooking and eating more at home – even post-lockdown. According to April 2021 GfK research, 70% of global consumers cook for fun at least weekly, up 10 percentage points from 2019.3 Correspondingly, many consumers are revamping their kitchens – for instance, by splurging on luxury home gadgets – in a bid to hone their culinary skills. Indeed, sales of kitchen appliances have increased from $13.5 billion in 2019 to $16.3 billion in 2020.
“During the pandemic, consumers [who previously did not cook frequently] relied on known brands and quality products,” shares Nevin Francis, Strategic Insights at GfK. “In terms of luxury categories, we saw multi-functional kitchen machines and food processors with cooking functions grow.” For instance, Francis notes that sales for multi-functional kitchen machines rose by 53% in 2020 compared with 2019. Additionally, interest in smart home products such as smart cooking devices and smart built-in hobs has soared, with sales rising by 71.5% and 48.2% respectively in 2020 across EU-7 markets.
And in the face of gym closures, many consumers have turned to at-home fitness during the pandemic. To upgrade their workouts, some are investing in smart home gadgets such as connected bikes, which enable them to recreate aspects of a luxury gym at home. For example, Peloton’s quarterly sales grew 232% year-over-year to $757.9 million in 2020. And with many cinemas still shuttered, interest in home entertainment equipment is growing. Smart home products with advanced features are in especially high demand, as consumers seek to enjoy a premium viewing experience at home. For instance, according to GfK research, sales of QLED TVs – which use technology to supercharge its brightness and color – grew by 44% in 2020, while sales of regular TVs remained stagnant.
Gaining control of health and happiness in the post-pandemic home
In light of COVID-19, consumers are also more concerned about their personal well-being, leading to increased sales of smart home devices geared towards health. “Within the EU-5 region, we see a huge uptake of smart devices that allow for better monitoring of health – such as blood pressure monitors, digital thermometers, personal scales and of course wearables,” says Francis. This is true of other regions as well, such as APAC. According to our GfK Health, Hygiene & Wellbeing report, sales of personal scales in Japan grew by 19% from January to August 2020.
Consumers are also looking to safeguard their wellbeing while indoors – a need that has translated into a growing interest in appliances that boost hygiene. This is evident in the rising sales of washing machines, vacuum cleaners and air purifiers. According to GfK figures, sales of vacuum cleaners registered a 43% increase in 2020 across EU-7 markets. Additionally, consumers are willing to invest in high-tech products – for instance, a steam cleaner rather than a regular mop – to further enhance safety and hygiene in the post-pandemic home. “Steam cleaning is a small niche within the vacuum cleaning segment, but we saw it growing phenomenally,” says Francis.
Of course, housekeeping can be a chore, leading consumers to splurge on luxury smart home gadgets that help simplify recurrent domestic tasks. According to GfK research, sales of smart products performed above average in 2020 compared with 2019, generating a 24% increase in sales across EU-7 markets. Voice assistants, which bring next-level connectivity and convenience, are proving especially popular – sales of voice-controlled products increased by 61% in 2020, making them the best-selling tech goods of the year.
Giving everyday products a premium twist
COVID-19 has polarized spending in that while there has been a decline in discretionary spending, luxury products still appeal, especially to pandemic-weary consumers seeking to pamper themselves at home. According to GfK research, 44% of global consumers agree “it is important to indulge or pamper myself on a regular basis”. In fact, the average prices of TCGs have increased during COVID-19 in part due to strong consumer demand, supply shortages and rising costs of raw materials. As of March 2021, the average price growth of TCGs was +22% compared with 2020. Watch our video here where we discuss whether premiumization is the future of Black Friday.
Brands can tap into the growing consumer demand for both experiential luxury and enhanced well-being by presenting their products as essential items for the post-pandemic home. Stress the health and hygiene benefits of your product, and consider adopting premiumization strategies, which can be achieved by reinforcing the quality of your offering – be it its artisanal production, luxe design aesthetic or cutting-edge tech features.
Brands should also consider tapping into the sustainable luxury movement and flexing the eco-credentials of their appliances and smart home products (latest data on consumers’ eco-trends across Europe are available in our Sustainability Concern and Action Report).
“Increasingly, consumers are considering energy efficiency, water consumption and other environmental factors when purchasing,” observes Hide. “As such, appliances that perform closer to the top of the energy rating bands and can demonstrate a low overall carbon footprint and recyclability at end of life are likely to be favored by consumers.” For instance, brands seeking to benefit from the green halo effect can work with third-party accreditation companies to certify the sustainability credentials of their home gadgets. Additionally, consider minimizing packaging waste by opting for eco-friendly materials where possible. Need support planning your Black Friday retail sales strategy? Watch our video here.
Clearly, while the concept of luxury was once synonymous with out-of-home experiences such as five-star hotels and Michelin-starred meals, it has now percolated into the domestic environment, especially in light of COVID-19. Brands would do well to cater to these changing perceptions and help consumers bring experiential luxury into the post-pandemic home.
How is luxury defined?
While the concept of luxury differs from one individual to the next, luxury goods are generally defined as products that are not essential but are desired by consumers. In addition, consumers are typically willing to pay high prices for them.
What is luxury in economics?
Luxury goods have a high-income elasticity of demand – meaning that demand for such products fluctuates directly with the level of consumer income. As consumers become wealthier, they will spend proportionately more on luxury goods; conversely, should there be a decline in income, demand for such goods will decrease more than proportionately.
What is the concept of luxury brands?
Luxury brands are essentially those that purvey high-quality, expensive and non-essential products and services. They are associated with prestige, authenticity and even rarity. Such brands are especially prominent in lifestyle sectors such as fashion, watches and homes.
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