IADS Press Release: Home & Decor

“There is no place like home,” and customers are well aware of this. Despite challenging inflation levels and the difficulty of growing the share of sustainable products, the Home & Decor category proves remarkably resilient and successful for department stores. 

In a difficult inflationary worldwide context, the Home and Decor business has deftly navigated a shift in consumer focus after three years of post-COVID enthusiasm for design and furniture in department stores. The astute introduction of new segments, such as kitchen appliances and tableware, and the perseverance on popular ones like home scents and private labels, have allowed department stores to adapt, instilling confidence in their strategic agility.  

On average, the Home & Decor category's relative share of total turnover for IADS members decreased from 16% in 2022 to 14% in 2023. This correction comes after three years of growth as customers sought to equip their homes in difficult times of remote work and difficulty going outside. However, this trajectory is healthy as, while the numbers show the impact of inflation in many markets, they do not reflect the change in the nature of what is being sold: fewer expensive, bulky items, and many more affordable, smaller ones. In times when logistic costs are increasing, the positive impact on the overall company's margin is clear.  

Home Accessories are, on average, the strongest segment with 48% of the category business, followed by Household Appliances at 22%, Electronics at 15%, Furniture at 10% and other products (gifting, art, stationery, and pet-related products) at 4%. E-commerce represents 27% of the total category business, a stable number that does not show the significant market shifts at work: while online has remained stable or decreased in Europe, it has significantly increased in other regions (Middle East, Asia, South America). 

The 2023 winning combo: home scents, kitchen appliances, tableware and private labels  

In terms of sales dynamics, three trends stood out last year. 

Most IADS members achieved remarkable success with home scents. Aromatherapy, scented candles, and all forms of home scents have been remarkably growing at El Palacio de Hierro, Tanagra (from Chalhoub Group) and Breuninger. For many department stores, the scented candle business was driven by well-established and recognized best-selling brands, such as Baobab, a great performer in every market considered.  

The second trend noted was the success of home appliances. That category ranges from coffee machines, a very successful category at Boyner and Magasin du Nord, to personal care appliances that performed extremely well at Sogo thanks to Chinese customers returning to Hong Kong, or water purifiers and carbonators (with Aarke standing out as a noteworthy brand in many northern European markets). In France, Galeries Lafayette saw great results with affordable tableware brands such as Tokyo Design Studio, Popolo and Serax: their constantly updated offer allows the display of new products to customers on a very regular basis. Tanagra and Sogo saw a great increase in high-end tableware. 

The third trend noted was the renewed focus on private labels. In most IADS members' brand ranking, private labels score high. New products, new categories and even new brands were developed, and marketing investments were made to match the brands’ positioning and quality with their perception by customers. Much is at stake: the private label business can represent up to 35% of the total sales in the category, and the few IADS members not already operating such private labels are planning to do so in the next 3 years. 

What’s cooking for 2024: new product categories and brands to watch 

Through its many events ranging from mid-segment to luxury brands, the Milan Design Week showed that interesting developments are in the pipeline to grow the Home & Decor business. Tanagra continues developing fashion brand home collections such as Dolce & Gabbana, Versace and Missoni and works with Assouline to push coffee table books.  

In Europe, the focus is on kitchen appliances and tableware, with brands such as Graef, a German high-end coffee grinder label, and the Portuguese ceramics Bordallo Pinheiro. In the rest of the world, Boyner plans on opening tech and electronics areas in each of their stores, which are all being currently upgraded as per the retailer’s new concept. On its side, Sogo will develop bonsai trees, a category appealing to middle-aged customers.  

To support IADS members in their brand scouting, NellyRodi, a partner of the IADS, presented its exclusive selection of up-and-coming brands made specifically for the Association’s members:  

• Furniture: Frama, Ruda Studio, Dooq, Situer Milano, Potiron. 

• Tableware: R+D.Lab, Amabro, Pinoli, Kinindustrie, Aya & Ida. 

• Decoration: Maison Deux, WL Ceramics, Schneid Studio, Warren & Laetitia, Design By Us, Oblure, Deya, Henry Dean, Y.S.M. Products, Courant Sauvage, Taith. 

• Household appliances: Create, Aarke, Beautiful. 

• Tech: Gingko. 

Department stores adapt to inflation, one of the many obstacles to growing sustainable products 

Consumers spent a lot on their homes during COVID-19. With so much time spent at home, they indulged and renewed high-price products such as furniture, sofas and bedding, categories that are currently struggling overall. Then, due to inflation, consumers experienced a strong purchasing power decrease and reduced discretionary spending. To date, they remain more cautious and have cut back on impulse buying. This is why some IADS members have developed more entry-level products while also ensuring not to list high-price items that would only sell with a discount. What makes things difficult is that when consumers consider it a long-term investment, they continue buying expensive products such as coffee machines. 

For that reason, while there is no universal recipe for maintaining full-price sales as the Home & Decor category’s nature is diverse for every member, to focus on full-price sales, IADS members balance their offer construction between uplifts from promotion-driven products and categories or brands which are never discounted. 

When it comes to sustainability, even though customers are becoming more accustomed to the topic, acceptance grows slowly as they are not ready to pay the real price of responsible products. As such, retailers find a compromise by reducing margins on sustainable products to maintain acceptable prices and having higher margins on other products. On the other hand, retailers face issues when it comes to increasing the share of responsible products. Some categories are more advanced than others: thanks to multiple labels and certifications, sustainable home textiles could soon reach 80% to 90% of the product offer. On the contrary, other categories have issues with offering more than 10% of sustainable products: lighting is a difficult category as there is no certificate for recycled metal. The situation is the same with wooden items: the only label, the FSC, is not considered relevant anymore. As a result, it’s difficult to convey a unified message about sustainability to customers.  

The past year has presented both challenges and opportunities for the Home & Decor categories, reflecting broader economic trends and shifting consumer behaviours. Despite a slight decrease in turnover share, department stores have demonstrated resilience in the face of inflationary pressures. Successful strategies have centred around private labels, specific product categories and onboarding new brands to meet evolving consumer preferences and drive growth. Challenges persist, particularly in navigating inflationary pressures and increasing the share of sustainable products. 

Read the full press release below: