2014-02-03 00:37:01 - Home and Garden in Canada - a new market research report on companiesandmarkets.com
In 2012, home and garden in Canada experienced slower growth as a result of a downturn in the Canadian housing market. High Canadian debt, coupled with the federal tightening of mortgage rates, also weakened consumer confidence to invest in big-ticket household items. Warmer winters and a trend towards property downsizing negatively affected sales of large outdoor lawn equipment over the latter part of the review period. Despite these downward pressures, opportunities in home and garden still exist. The trend towards condo lifestyles is creating growth in small, space efficient furnishing, especially of the kind used for storage. A busier lifestyle is also driving demand for cooking utensils that help cut down on preparation time.
In 2012, the effects of government regulation
on consumer demand for home and garden products became increasingly evident. In the home paint category, all products are now more water soluble to meet volatile organic compound (VOC) regulations. The government ban on harsh chemicals in Ontario and Quebec, coupled with public health awareness, increased development of corn-based herbicides. Light sources, in particular, are witnessing revitalisations similar to the first introduction of compact fluorescent lamps (CFL). The same combination of government awareness and strong marketing that was witnessed for CFL is now taking place for LED light sources. In addition, by 2014, Canada as a whole is set to mostly phase out traditional incandescent lamps. This movement is expected to spur growth in the category over the forecast period.
Overall, retail sales remain highly fragmented, with branded and private label products competing for share, further complicated by the strong presence and marketing by vertically-integrated retailers, such as IKEA. The latter, in fact, remained somewhat ahead of the competition in 2012, with a 5% share of retail value sales within home and garden. The retailer, with 12 outlets in Canada, as well as an online presence and homeshopping options (the latter, however, gradually losing in favour of the internet), gained traction over the review period and its outlets are popular shopping destinations, especially for categories, such as home furnishings and indoor furniture, as well as homewares. The combination of affordable pricing, a wide range of products and services, including free extended warranties on its range of products, is highly valued by customers.
The degree of retail concentration varies between categories, from the highly-consolidated home improvement and gardening categories, with four major retail chains accounting for lion share of value sales in 2012, to the far more fragmented home furnishings and furniture and homewares categories. Across all categories, however, the tendency towards mergers and acquisitions was quite notable in 2012, with opportunities for organic growth/expansion becoming limited. Examples included a bid (although failed) by Lowes for Rona Inc in home improvement retail and the acquisition of Bric by Leon´s Furniture Ltd (completed in early 2013). Additionally, new entrants continue to put further pressure on existing retailers, such as the continuing expansion of Crate & Barrel into Canada in furniture retail, and the entry of Target Corp into Canada, with its first stores in operation as of spring 2013.
Growth over the forecast period is expected to be slow due to the tightening of Canada´s mortgage regulations, as well as a downturn in the housing market. While opportunities exist, the consumer switch towards more economical options will prevent retail value sales from growing at the high rates enjoyed prior to the economic downturn. Growth is expected to pick up somewhat towards the end of the forecast period, in part driven by the end of lifecycle in many categories and consumers seeking to replace existing models with new, which many were reluctant to do in the years immediately following the recession.
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