Technology or Sustainability Leadership in Appliances: A Strategic Discussion

January 2024

Industry stakeholders are increasingly debating between sustainability and technology leadership strategies in the appliances market. As margins continue to shrink, leadership in either category is critical to maintain continued competitiveness. In this briefing, we will debate the merits of both approaches and find a potential path to sustained growth and profitability for companies.

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Key Findings

Being sustainable is no longer an option

Sustainability is no longer an option for companies if they want continued access to markets. Many countries are mandating that manufacturers comply with carbon mandates. For example, the EU’s Carbon Border Adjustment Mechanism (CBAM), coming into force in 2026, will require importers to the EU to purchase certificates to cover the cost of their emissions at the same level as EU manufacturers.

Servitisation will be key to improved profitability

For appliance manufacturers, typical operating profit margins range from 1-15%. This is typical for hardware companies. Service companies typically have margins ranging from 20-30%. For example, while Apple’s profit margin for its hardware products is an industry leading 35.4%, as announced in the June 2023 quarter, its margin for services was almost double at 70.5%. Clearly, servitisation is the key to improved profitability.

Sustainability makes for great corporate messaging

Consumers love a feel-good story, especially if it alleviates any guilt they have while shopping. Many consumers have a vague understanding of how the purchase and use of appliances affects the environment. It is up to appliance marketers to then position their products as being good for the environment. This messaging is relatable and resonates with consumers.

Market leadership is an opportunity for premiumisation

Manufacturers have been looking at market leadership as a premiumisation opportunity for the longest time. In general, European companies through sustainability leadership and Asian companies through technological leadership. However, the question is, does it need to be so clear-cut? Why not allow technological leadership to enable sustainability outcomes and therefore market leadership?

Personalisation and new experiences will elevate consumer relationships

A consumer’s lifestyle revolves around being the centre of their digital lives. Consumers want everything customised to their requirements. Similarly, for appliances, this will involve personalising diets, grocery shopping, wash loads and new cooking recipes, enhancing the appliance user experience. These new experiences will elevate a manufacturer’s relationship with its customers.


The case for sustainability and technology leadership in appliances
Companies are looking for a differentiating factor as they seek market leadership
What is technology and sustainability leadership?
Key takeaway: A blend of technology and sustainability leadership will be needed
The case for technology leadership
What is driving technology leadership?
Smart devices and appliances will be everywhere
Our smart home dream is closer than we think
The launch of Matter will kickstart the next phase of smart home adoption
For consumers, digital living has become the norm
Smart homes will bring a whole new level of experiences at home
Benefits of technology-led development
Consumers believe technology can elevate their day-to-day personalised experiences
Automated kitchens of the future are being designed to cater to personalised diets
Case study: Haier’s three-winged bird continues to take personalisation to new heights
Case study: The robotic vacuum, a whole new cleaning experience
New business models around servitisation can lift profit margins
Case study: LG wants to lead the era of the “Home as a Service” ( HaaS ) through ThinQ UP 2.0
Case study: Bosch’s move towards a new way of owning appliances, sustainably
Owning the data generated in the smart home will be key to providing new services
Case study: The home energy management system (EMS), a new source of home data
Case study: Samsung and LG pushing the frontier for AI in appliances
The perception of appliance services needs to change
Case study: Samsung Food, a food integration platform using AI
Case study: Haier’s Internet of Food ( IoF ) ecosystem, from farm to table
Technology leadership can be part of a company’s premiumisation strategy
Case study: Samsung’s premiumisation push through technology-led personalisation
Case study: LG’s InstaView Door-in-Door Refrigerator
The case for sustainability leadership
What is driving sustainability leadership?
Consumer demand for sustainability continues, although reduced due to inflation fears
Government regulations provide a framework for manufacturers to follow
For companies, sustainability means reducing their impact on the environment
Investor pressure has led to CEOs leading the sustainability agenda
Lastly, there is a strong link between sustainability and business resilience
Benefits of sustainability-led development
A big part of sustainability comes through decarbonisation
Net zero emissions is an important component of manufacturers’ sustainability targets
Case study: Heat pumps, the low-carbon heating and cooling system of the future
Case study: Home EMS, reducing energy usage and carbon emissions through AI
Sustainability is more than resource efficiency, it now includes conservation
Case study: Electrolux puts the spotlight on resource efficiency with AEG Ecoline
Case study: Beko’s SaveWater technology goes beyond water efficiency
Appliance companies do not do enough to publicize their accomplishments in the ESG space.
Case study: BSH, being a sustainable leader, has the added bonus of embracing great PR
Case study: Beko’s sustainability lineup is dominated by eco messaging
Businesses expect sustainability regulations to have a more immediate impact
Case study: Bosch Green Collection, 33% less carbon produced during production
Case study: Panasonic’s air conditioner in AI ECO mode provides quantifiable savings
Sustainability can be part of a company’s premiumisation strategy
Case study: Miele’s appliances can be priced at a premium due to extreme reliability
Case study: BSH is extending availability of spare parts to increase appliance operational life
Technology leadership is clearly an enabler for sustainability outcomes and leadership
Key takeaway: A blend of technology and sustainability leadership will be needed
Technology or sustainability leadership in appliances - how to win?
Questions we are asking

Consumer Appliances

Consumer Appliances is the aggregation of major appliances and small appliances. Major appliances are an aggregate of the following categories: refrigeration appliances, home laundry appliances, dishwashers, large cooking appliances and microwaves. Small appliances are an aggregation of the following categories: food preparation appliances, small cooking appliances, vacuum cleaners, irons, personal care appliances, heating appliances and air treatment appliances.

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