HOME IMPROVEMENT IN ASIA PACIFIC

August 2017
INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
INTRODUCTION

Scope

Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader
discretion is advised.

Asia Pacific has surpassed

North America to become the
largest region by home
improvement sales globally.
Asia Pacifics stellar
performance in home
improvement is due to strong
fundamentals, economic
resilience and robust private
residential construction
activities. At a micro level,
growth was largely driven by
product innovation,
segmentation and digital
strategies. Going forward,
consumer centricity will be the
deciding factor shaping the
home improvement industry in
the coming years.

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INTRODUCTION

Key findings

Asia Pacific drives global Asia Pacifics strong fundamentals, including large population, rising middle
growth classes and rapid urbanisation, spurred housing market growth, subsequently
boosting demand for home improvement products.
DIY failed to move from Novel concepts such as makerspaces and self-interior nurtured the
niche to mainstream development of the DIY community in developed countries. However, DIY
remained a niche segment outside the mainstream, with local preferences still
weighing in favour of do-it-for-me.
Manufacturers pursue Pursuing innovation strategies was a major method used by manufacturers to
innovation strategies to overcome competition and develop brand identity.
boost margins
Retailers embrace Internet retailing sales grew in 2016, however, store-based home improvement
omnichannel strategy and gardening stores continued to dominate home improvement in Asia Pacific.
Consequently, retailers adopted an omnichannel strategy, providing showrooms
to allow consumers to touch and see products, as well as the functionality of
online shopping.
Customer centricity is the Adapting to the prevalent do-it-for-me culture will be key to fully realising market
key to success in the potential in Asia Pacific over the forecast period. Retailers should consider
future offering one-stop solutions, including installation services and in-house design
services to attract consumers to visit stores.

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INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
REGIONAL OVERVIEW

Economic resilience and strong fundamentals propel growth

North America was once the

largest region by home
improvement sales, propped up
by a broad DIY consumer base.
However, in the aftermath of
property crash and economic
downturn, North America lost its
crown to Asia Pacific in 2012.
Since then, Asia Pacific has
continued to show healthy
growth in home improvement.
The main factor is heightened
residential construction activities
in emerging markets, resulting
from rapid urbanisation and
strong economic growth. A
robust secondary market for
second-hand houses and
attractive financing schemes for
house renovation also play an
important role in stimulating
growth of home improvement in
the region.

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REGIONAL OVERVIEW

DIYs failure to move from niche to mainstream

Although Asia Pacific tops the

world in both size and growth of
home improvement, its year-on-
year performance showed signs of
a slowdown in 2016. This could be
attributed to the fact DIY remains a
niche segment in Asia Pacific.
Even as labour costs in the
developing countries of Asia rise,
DIY need not necessarily be
cheaper than hiring professional
services. However, the emergence
of online marketplaces that connect
homeowners directly with interior
designers and construction
companies, such as Tubatu in
China and Qanvast in Singapore,
are expected to increase price
transparency and promote
competition among house
renovation service providers, which
may potentially lower the costs of
hiring professional services.

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REGIONAL OVERVIEW

Japan bucks the trend with high proportion of sales in tools

Unlike the rest of the countries in

Asia, home improvement sales in
Japan were driven by hardware,
power tools, hand tools and
decorating sundries. Impact drivers,
more compact and powerful than
standard cordless drills also gained
popularity among DIYers who
looked for user-friendly tools for
around-the-house jobs.
In China, floor covering accounted
for the largest proportion of sales,
driven by floor tiles and wooden
flooring (86% of floor covering retail
value sales in 2016). Consumers
tend to use floor tiles in living rooms,
balconies, kitchens and bathrooms,
and wooden flooring in bedrooms.
Interior designers are likely to
recommend tiles over wooden
flooring (obtain higher commissions
from selling tiles due to the low price
transparency of tiles).

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REGIONAL OVERVIEW

Strong demand for surface finishing and ceramic sanitaryware

Robust private residential building

activities boosted demand for floor
covering, wall covering, home
paint, bathroom and sanitaryware
and kitchen sinks.
Among these staples, floor
covering demonstrated the fastest
growth. Innovations such as
Nabels porcelain polished tiles
featuring a harder-wearing surface
and a 3-dimensional
embossed pattern, played an
important role in driving growth.
Bathroom and sanitaryware was
also at the forefront of innovation.
Manufacturers have been investing
in developing smart toilet products
to meet consumers rising hygiene
awareness. Technological
developments include automatic
opening and rinsing, as well as the
use of ultraviolet light to break
down bacteria after usage.

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REGIONAL OVERVIEW

Developed markets register negative period growth

China continues to represent a

major engine of growth for home
improvement in Asia Pacific,
accounting for 71.1% of the
regions sales in 2016.
Growth in China has been
dramatic, with home
improvement retail value sales
increasing by USD22.9 billion
between 2011 and 2016.
Indonesia is also expected to
represent a promising opportunity
in Asia Pacific over the forecast
period, with home improvement
retail value sales climbing by
USD1.2 billion between 2011 and
2016. When compared with other
Asia Pacific countries (eg
Singapore, Taiwan and Japan),
Indonesia registered largely
positive period growth across all
home improvement countries
over 2011-2016.

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REGIONAL OVERVIEW

China and Japan sit at opposite ends of the growth scale

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REGIONAL OVERVIEW

Stepping up production in emerging markets

With strong GDP growth, large population size, rapid urbanisation and technological development, China is
clearly the most promising market for home improvement in Asia. The country is on the growth agenda for
many leading home improvement manufacturers. In 2016, Nippon Paint Holdings announced a JPY30
billion investment plan to increase production capacity in China. The company noted that its sales network
is expected to increase to 65,000 stores in 2018, up 50% from 2015.
For kitchen and bathroom fittings manufacturers, India and developing countries in Southeast Asia offer
equally attractive growth opportunities. By the end of 2016, Kohler Co invested USD200 million in India to
transform its Jhagadia plant into the manufacturing and distribution hub for the Asia Pacific market. As part
of its FY2017 plan, Toto Ltd will set up a second plant in Thailand, which will increase production capacity
of sanitaryware to 420,000 units per year to meet the rising demand in Southeast Asias frontier markets.
In Japan, declining sales in home improvement essentials were offset by the growth in tools. However,
Taiwan saw a major slump in home improvement sales as the deteriorating economic climate during 2015-
2016 slowed house renovation and construction activities. As GDP growth is not expected to return to the
pre-downturn level in the near future, hope for industry growth will mainly rest on the need to remodel old
housing units, particularly among single households and young families.
In other developed markets such as South Korea, Hong Kong, and Singapore, the home improvement
industry showed more encouraging results thanks to continuing demand for home paint and wall covering.
In South Korea, growing demand for home improvement is partly attributed to the emerging self-interior
trend, which took off in 2016 as the house renovation TV show Jipbang went viral online. Self-interior is an
affordable solution for newlyweds and young professionals who cannot afford to hire professional interior
designers, and yet long for a beautiful personalised living space.

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REGIONAL OVERVIEW

Home improvement and gardening stores dominate distribution

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REGIONAL OVERVIEW

Omnichannel as the future of commerce

A young population, growing connectivity and payment flexibility made Asia Pacific an internet retailing
hotbed. Between 2011 and 2016, online sales saw a fivefold increase to USD622 billion, led by developed
markets. In home improvement, the share of internet retailing hit over 10% in South Korea. Japan also saw
substantial sales of home improvement products via online channels. In China, the success of Hangzhou
Nabel Group Co Ltd, a floor covering manufacturer, during the 11.11 Global Shopping Festival in 2016 also
painted an optimistic picture of e-commerce in home improvement in Asia Pacific.
However, the fact that brick-and-mortar retailers dominated distribution in most Asian countries
underscored the importance of the in-store experience. At physical outlets and showrooms, consumers are
not only able to see, smell and touch products, but also receive expert advice from interior designers and
sales consultants. Such tangible benefits cannot be gained by visiting online shopping websites. The
relevance of physical stores also explains why manufacturers and retailers such as HomePro and
Boonthavorn Ceramics in Thailand are still expanding their physical presence despite their forays into e-
commerce.
In the near future, virtural reality that involves all five senses or smart stores featuring robots and interactive
shelves is not likely to enter the mainstream, even in developed countries. What is more likely to prevail is
omnichannel, the retailing approach that not only allows companies to stay relevant in the e-commerce
boom but also lets retailers provide a seamless experience for customers.

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INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
LEADING COMPANIES AND BRANDS

Paint manufacturers hold a strong lead in home improvement

In most Asian countries, home paint

accounts for more than one third of
home improvement sales. Hence,
manufacturers with a strong foothold in
home paint such as Asian Paints,
Nipsea Group, etc easily seize top
positions in the overall home
improvement competitive landscape.
Additionally, paint manufacturers work
hard to build strong brand equity
through aggressive marketing activities,
celebrity endorsement and eco-
innovations such as odourless paint.
Challenging the norm in its home
market of India, Asian Paints Ltd APL
has stayed ahead by pioneering
consumer-centric, technology-based
initiatives, such as AP Homes, a multi-
category store with 3D visualisation,
and the expansion of Ezycolour
Solutions, which offers product-service
bundles for various customer segments
including females.

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LEADING COMPANIES AND BRANDS

Local players in populous markets seize top regional spots

Asias home improvement market

proves that international players
are not always the winners. Asia
Pacifics top two spots belong to
domestic manufacturers - Asian
Paints Ltd in India and Hangzhou
Nabel Group in China. Another
three companies in these two
populous markets (Dare Power
Dekor Home, Guangdong Marco
Polo Ceramic and Berger Paints
India) were also positioned within
the top 10 in 2016.
While their success could be
attributed to the enormous
demand in home countries, their
ability to scale up business in a
highly fragmented retail landscape
without compromising product and
service quality played a vital role
in securing competitive position in
the regions home improvement
industry.

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LEADING COMPANIES AND BRANDS

Pursuing innovations to boost margins in a highly fragmented industry

The strength of the top five

companies varies from country
to country, with Thailand and
Indonesia demonstrating the
highest level of concentration for
the top five players in home
improvement.
In a highly fragmented industry,
players compete heavily to
improve profit margins. Pursuing
innovation is one of the major
methods used by manufacturers
to overcome this challenge and
develop brand identity.
Capitalising on environmental
concerns, manufacturers have
been launching a multitude of
innovative home improvement
products. In Thailand, TOA
Group rolled out TOA
Extrashield Semi-Gloss, a new
line of water-resistant paint that
prevents flood damage.

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LEADING COMPANIES AND BRANDS

Premiumisation not one size fits all

Competitors in the same category

showed vastly differing performances
over 2009-2016.
In floor covering, Nabel climbed two
spots to become the second largest
player in the region, but Power Dekor
slipped to seventh. This is because
Power Dekor chose to focus on corporate
customers, eventually facing more
challenges in building consumer brand
awareness and battling price wars in
wooden flooring than Nabel did in
ceramic flooring and tiles. Their opposite
growth trajectories highlight the
importance of industry-specific factors
and sales structures in boosting brand
performance.
Similarly, in home paint, the fact that
Nippon Paint made significant progress
while Dulux stagnated underscores the
importance of factors such as distribution
channels, marketing communications,
and digital strategies for growth.

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INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
FORECAST PROJECTIONS

Indias home improvement growth to rise, while Japan stagnates

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FORECAST PROJECTIONS

Emerging markets resilience is critical to future growth

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FORECAST PROJECTIONS

Customer centricity will shape the future of home improvement

Home improvement in Asia Pacific is set to grow by 4% per annum at constant 2016 prices over 2016-
2021. India, Indonesia, and frontier markets, propelled by economic growth and robust construction activity,
are expected to be rising stars in the region with period growth exceeding 25%. At category level, home
paint is expected to see the fastest growth as consumption shifts towards premium, non-toxic paint ranges.
The ageing population in certain Asian countries is becoming problematic. In Japan, 8% of the population
was aged 80 years or over in 2015, compared with a global average of 2%. In China and India, the number
of people aged 60+ surpassed 300 million in 2015. To capitalise on this demographic shift, product
innovation and affordability will be key to winning over senior consumers. Manufacturers should also
explore potential partnerships with government bodies to tap into new sources of revenue. For example, the
Housing Development Board in Singapore offers a subsidy programme for households with elderly
members to install elderly-friendly home improvement products in their flats/apartments.
During the review period, home improvement manufacturers and retailers in some countries such as
Japan, India and Indonesia have started to turn their attention to female customers. They launched
marketing communication programmes on channels that are popular among women and offered home
improvement services exclusively for female customers. Going forward, as gender stereotypes are de-
emphasised, such activities are likely to continue as part of an integrated segmentation approach, rather
than as novelties.
The long-standing attitude towards DIY is not likely to be changed over the foreseeable future.
Makerspaces represent an interesting experiential strategy but such initiatives might not work for time-poor
consumers who long for convenience and ease. Thus, adapting to local do-it-for-me preferences will be the
deciding factor for success. Offering one-stop solutions and providing installation services for homeowners
are only considered the first step. Manufacturers and retailers should also embrace new e-commerce
models such as social commerce and omnichannel, as well as advancements in technology to build
engagement throughout the path to purchase.

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INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
COUNTRY SNAPSHOTS

China: Market context

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COUNTRY SNAPSHOTS

China: Competitive and retail landscape

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COUNTRY SNAPSHOTS

India: Market context

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COUNTRY SNAPSHOTS

India: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Japan: Market context

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COUNTRY SNAPSHOTS

Japan: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Indonesia: Market context

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COUNTRY SNAPSHOTS

Indonesia: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Thailand: Market context

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COUNTRY SNAPSHOTS

Thailand: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Malaysia: Market context

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COUNTRY SNAPSHOTS

Malaysia: Competitive and retail landscape

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COUNTRY SNAPSHOTS

South Korea: Market context

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COUNTRY SNAPSHOTS

South Korea: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Philippines: Market context

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COUNTRY SNAPSHOTS

Philippines: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Taiwan: Market context

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COUNTRY SNAPSHOTS

Taiwan: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Hong Kong, China: Market context

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COUNTRY SNAPSHOTS

Hong Kong, China: Competitive and retail landscape

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COUNTRY SNAPSHOTS

Singapore: Market context

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COUNTRY SNAPSHOTS

Singapore: Competitive and retail landscape

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FOR FURTHER INSIGHT PLEASE CONTACT
Jane Nguyen
Senior Analyst - Home & Tech
jane.nguyen@euromonitor.com
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