This document discusses trends and opportunities in the home improvement industry in Western Europe and beyond. It provides an overview of the global home improvement market, key socio-economic drivers influencing the industry, and future challenges and opportunities. The home improvement market is valued at $271 billion globally in 2014 and is growing at an annual average rate of 24%. However, currency fluctuations have weighed on the industry's global performance. Emerging markets are expected to see stronger growth while developed markets face challenges such as aging populations. Adapting to changing consumer demographics like millennials and women will be important for future success.

1. M. CRUZ DEL BARRIO
HEAD OF HOME AND GARDEN RESEARCH
12 June 2015
HOME IMPROVEMENT:
TRENDS AND OPPORTUNITIES IN WESTERN EUROPE AND BEYOND

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INTRODUCTION

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Euromonitor International‟s Network and Coverage
INTRODUCTION

4. HOME IMPROVEMENT: MARKET OVERVIEW
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
FUTURE CHALLENGES AND OPPORTUNITIES
KEY TAKEAWAYS

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The Building Blocks of the Global Home Improvement Industry
Home ImprovementFloor
Covering
HandTools
PowerTools
HomePaint
WallCovering
OtherHome
Improvement
Introduction
HOME IMPROVEMENT: MARKET OVERVIEW

6. US$271bn
GLOBAL RETAIL SALES OF
HOME IMPROVEMENT (2014)
24%
GLOBAL GROWTH
(ANNUAL AVERAGE
2009-2014)
4.3%
OF TOTAL SALES
COME FROM THE US (2014)

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-40
-30
-20
-10
0
10
20
30
40
Currentvalue%Growth
Home Improvement Value Growth 2014 in Key Countries in
Local Currency vs US$
Current Prices – Y-o-Y Exchange Rates
Local Currency US$
Category overview: Currency fluctuations weighs on global performance
HOME IMPROVEMENT: MARKET OVERVIEW

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Western Europe (25%)
Australasia (1%)MEA (4%)
Asia Pacific (32%)
Eastern Europe (5%)
North America (26%)
Latin America (6%)
Category overview: Home Improvement value sales by region in 2014
HOME IMPROVEMENT: MARKET OVERVIEW
Half total world sales
Per household expenditure
high vs emerging markets

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DIY culture versus Do-It-For-Me culture
HOME IMPROVEMENT MARKET OVERVIEW
DIY popularity related to
labour costs
Self-employment high in
emerging markets
Higher expenditure per
household in developed
markets

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Market drivers: Housing market recovery in largest economies
HOME IMPROVEMENT: MARKET OVERVIEW
60
70
80
90
100
110
120
2006 2007 2008 2009 2010 2011 2012 2013 2014
Index2010=100
House Price Index in the Four Largest
Home Improvement Markets (2006-14)
China US Germany France

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-30 -25 -20 -15 -10 -5 0 5 10 15 20
Spain
Mexico
US
France
Brazil
Turkey
S. Korea
Russia
China
New Housing Completions Growth:
Top and Bottom Countries, 2012-2014 % CAGR
2012-2014 % CAGR
Market drivers: Homes = Home Improvement
HOME IMPROVEMENT: MARKET OVERVIEW
Housing
construction
growing
fastest
Housing
construction yet
to recover to
pre-recession
levels

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Environmental issues (VOC levels)
Energy efficiency
Battery recycling
Legislation Socio-demographics
Mobile apps
Online tutorials
Growth of Millennials
Online media
Market drivers: Legislation, new media, socio-demographics
HOME IMPROVEMENT MARKET OVERVIEW
Household size
Household types
Grey tide
„Digital natives‟
Rising female consumers

13. HOME IMPROVEMENT: MARKET OVERVIEW
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
FUTURE CHALLENGES AND OPPORTUNITIES
KEY TAKEAWAYS

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Rising female empowerment: From Old Maids to „Singlelistas‟
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
>50% of households
in US, Russia, Ukraine are
headed by women
US$9k average
global female disposable
income (compared to
US$14k for men)
23.2 years
average age of woman at
first childbirth (global)

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The female dynamic: “DIY joshi” - Japanese women get into DIY
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
500Y (US$4)
X
6-hour workshops

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The Millennials – Their squeezed new world
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
67% of millenials
agree they can find a
YouTube video on anything
they want to learn*
64% US rate of home-
ownership in 2014, lowest
rate in 20 years
28sqm living spaces,
spawning the “Tiny Housing”
movement - making a virtue
out of necessity
*Source: Google Consumer Survey, April 2015,
U.S. Online population aged 18-34

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Mobile access: Leads the way for connected consumers
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
2004 2014 2004 2014
Broadband
Enabled Computer
4% 36% 37% 78%
Mobile Phone 41% 89% 76% 97%
Satellite TV 3% 19% 21% 29%
Latin America North America
Possession of Selected Durables in Households 2004 vs 2014

18. HOME IMPROVEMENT: MARKET OVERVIEW
HOME IMPROVEMENT: SOCIO-ECONOMIC DRIVERS
FUTURE CHALLENGES AND OPPORTUNITIES
KEY TAKEAWAYS

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Looking to the future: Attracting the digital natives
FUTURE CHALLENGES AND OPPORTUNITIES
1.2 billion youth
population (15-24 year
olds) globally by 2030
US$13k average
gross income for 15-24 year
olds in 2030
<15% of the world‟s
total population will be 15-
24 year olds by 2030

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Looking to the future: The rising grey tide
FUTURE CHALLENGES AND OPPORTUNITIES
1.5 billionglobal
population of 60+ year olds
by 2030
“Grey pound”
accounts for almost 50% of
consumer spending in UK”
54.3% old age
dependency ratio in
Japan in 2030

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0
2
4
6
0
50
100
150
200
Western
Europe
Australasia North America Eastern Europe Latin America Asia Pacific Middle East
and Africa
2014-19CAGR%
US$percapita(2014)
Home Improvement:
2014 US$ per capita expenditure 2014-19 CAGR%
Looking to the future: Growth will come from (some) emerging economies
FUTURE CHALLENGES AND OPPORTUNITIES

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Retailers
Sharing
economy
Consumers
Market
economy
New alternatives emerge in the power tools universe
FUTURE CHALLENGES AND OPPORTUNITIES
Retail service:
tutorials, forums,
personal accounts
C-to-C platforms:
where owners of
unused power tools
can resell them..
Tool-sharing libraries:
free or through membership
fees; trialled in NA cities:
Toronto, Vancouver, Seattle.
Inspired by sharing
economy: Leroy Merlin
(FR) in partnership with
Techshop (US) = FabLabs

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Strong growth forecast
Buoyant housing market
Strong social mobility
Young population
Strong growth in
multiple retailers
Contrasting Factors Shaping the Future of the Regions
Weak growth forecast
Struggling property
market
Uncertain economic
situation
Ageing population
Distribution networks
saturated but good
growth in online sales• Asia Pacific
• Latin America
• Middle East and Africa
• North America
• Australasia
• Western
Europe
FUTURE CHALLENGES AND OPPORTUNITIES

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Key Takeaways
Markets
• Emerging vs
Developed
Retailing
Landscape
• Omni-channel
Consumers
• Attracting:
• Young
• Women
Industry
• From DIY to
Home
Improvement
FUTURE CHALLENGES AND OPPORTUNITIES

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THANK YOU FOR LISTENING
M. Cruz del Barrio
Head of Home and Garden Research
cruz.delbarrio@euromonitor.com
Euromonitor International
60-61 Britton Street
London EC1M 5UX
www.euromonitor.com