Which trends offer opportunities or pose threats on the European home decoration and home textiles market?

Millennials and Gen Z people are quickly becoming the main consumers and professional buyers in Europe. As such, they are strongly influencing home decoration and home textile (HDHT) brands and strategies in the market. Their key buying motive concerns how products for the home can improve their mental and physical wellness. Sustainability is one important aspect in this regard. These consumers want brands that are actively trying to make the world a better place through social and environmental responsibility.

1. Sector transformation:Millennials and Gen Z consumers focus on well-being

In the coming decade, the European HDHT market will progress in a largely organic manner from its existing main directions:

• Sustainability will become a more mainstream value.
• Distribution chains will become shorter.
• Digitalisation in marketing and services will become even more important.

The most disruptive transformation in HDHT, however, will take place with regard to the buying motives of consumers. In the 2030s, a new generation of consumers will be in charge: a mix of millennials (who will be in their forties or fifties by then) and Gen Z people (who will be in their thirties). Professional buyers are also increasingly from these generations. Their values will shape the products that are produced and sold, as well as how.

The market will need to offer these consumers products that can help them achieve their personal goals. Their key buying motive is based on how products for their homes can improve their mental and physical wellness. Simply stated, these new consumers want to feel good about their buying. They are likely to prefer offers that improve their well-being and that provide meaningful social and/or environmental benefits. These topics are closely related. For example, 6 in 10 millennials and Gen Z people feel guilty about their negative impact on the environment. Sustainability is thus another core buying motive.

European HDHT companies must adjust

In many ways, European HDHT importers, retailers and brands need to move closer to this new group of consumers in order to fulfil their many personal wellness needs. Marketers need to know what triggers them. They must study which buying behaviours determine the various market segments, how these consumers live and work, and what the disposable income of each group is. This will call for in-depth market intelligence and a more outward-oriented approach to marketing.

Millennial and Gen Z consumers care about social and environmental sustainability. European businesses need to take a stand, actively embracing sustainable values and practices, and allowing complete transparency about their buying and staffing policies. This will trigger more loyalty from the new consumers than traditional branding practices will. In line with this, consumer buying behaviour will be driven by the relative acceptability of certain countries of origin and political systems.

At the same time, the new generations of consumers are more open to new cultures and origins, bringing new design influences and stories. Storytelling creates a way for consumers to satisfy their need to learn about new techniques, materials and cultures, as well as to start developing similar skills themselves. Once consumers have been engaged through storytelling, companies will build loyalty.

To tell these stories, European HDHT businesses also need to use their communications to bring them closer to the new consumers. They should move more of their sales and marketing online and use social media more effectively. They should also be more open to consumer reviews and influencers, as millennial and Gen Z consumers are more likely to trust their peers than they are to trust formal marketing messages. Closeness in communication also relates to content, which should be brief and to-the-point, visual and transparent. More than any previous consumer groups, these consumers believe in proof rather than trust.

Co-creation in design is another form of closeness. Consumers want to be involved in the design process, whether through feedback loops, by having brand champions/influencers from their own group involved in the design of products, or simply by being able to modify products at home.

European HDHT businesses are facing a generation of consumers who demand complete convenience in buying (digital, 24/7, delivered and easily returned). Because they are increasingly urban and living in small spaces, product offerings should be clever and practical to suit a variety of purposes. Shared living  will also demand specific efforts in terms of design and marketing.

Finally, closeness relates to the more fragmented, impulse-based and personal buying behaviour of the new consumer group. This requires shorter selling cycles, which are also less dependent on traditional ideas of seasonality. It also requires shorter production cycles, with less volume and yet with competitive prices.

Business models are evolving

The business models that can deliver the wellness benefits that the new consumers are seeking will be:

• Sustainable – Value-driven concepts with social and environmental values and practices at their core. Companies that innovate from sustainability principles, stand for something and are proactive in engaging the market in their approach to a better world. Companies that live their values, including in terms of human resource management.
• Connected – Marketing concepts or outward-looking companies that have created a central place for market intelligence (gradually including big data and artificial intelligence), customer-relationship management (from design to feedback loops from users) and active sales.
• Creative – In a world and market that will become increasingly complex and unpredictable, winning companies are those who create changes, rather than continuously adjusting to them. For these companies, design plays the leading role in terms of product, production, service, staff policy and marketing.

2. Sustainability: social and environmental responsibility

Sustainability is quickly becoming part of the core needs of consumers, including in HDHT. An impressive 86% of all European consumers consider sustainability either important or very important, and 29% buy sustainable products deliberately and consciously. Rather than consuming less, people want to consume better. The emerging consumer groups — millennials and Gen Z — are committed to creating a better world, and baby boomers are increasingly wanting to contribute. This creates a sense of urgency and consumer power that will reshape the HDHT industry.

Solutions are expected first and foremost from the industry, in terms of improving both their environmental footprint and their social norms and practices. Companies today are expected to take a stand, to engage in important political discussions and to embrace diversity and inclusivity. In addition, they should practise what they preach in terms of the fairness of their own internal human resource and supplier policies. Corporate businesses should no longer be simply ‘businesses’; they are expected to play a visible and leading role in creating a fairer and more ethical society.

True sustainability is a combination of:

• People: social aspects
• Planet: environmental aspects
• Profit: aspects like the affordability, marketability, productivity and up-scalability of sustainable product offerings

Figure 1: CBI webinar on sustainability in the European market for HDHT

Source: Deloitte

European legislation is also moving towards increased sustainability, thus making it a requirement rather than an option. With the European Green Deal, the European Union (EU) strives to become climate-neutral by 2050. New and updated legislation that will be implemented in the coming years will make sustainability a requirement.

Impending EU sustainability legislation

The European Commission has started to develop a variety of proposals for new and updated green and social legislation. Particularly relevant proposals for the HDHT sector include:

• Directive on corporate sustainability due diligence
• Regulation on forced labour
• Strategy for sustainable and circular textiles
• Ecodesign for Sustainable Products Regulation
• Directive on Green Claims
• Regulation on packaging and packaging waste

The new Regulation on deforestation came into force in June 2023, and it will apply starting in December 2024. 

One main building block of the Green Deal is the circular economy action plan. In a circular economy, waste is eliminated through such concepts as repair, reuse and recycling.

Figure 3: European Parliament – Repair, reuse and recycle!

Source: European Parliament @ YouTube

A typical product lifecycle consists of five aspects or stages. To move towards a circular economy, the end of a product’s life should start a new cycle. This ensures that waste no longer ends up in landfill, but can be regenerated into new materials, thereby starting a new lifecycle. 

Figure 4: Five stages of a circular product lifecycle

Source: CBI Sustainable Design training material

It is possible to introduce more environmentally friendly and socially responsible practices in each of the five stages. As a producer, you have the most control over sustainable practices in the first three stages: material, production and distribution.

Table 1: Examples of environmentally and socially sustainable practices in each stage of the product lifecycle

One topical trend related to environmental sustainability is material innovation, which involves developing alternative sustainable materials and end products for the HDHT market.

Material innovations can be divided into three categories:

• Recycling post-industrial or pre-consumer/post-consumer waste: well-established practices, including re-using off-cuts from the garment industry in home textiles, or using ocean plastics in furniture or curtains
• Engineering ‘from the lab’: especially on the part of big industry, using technology or chemical processes to reduce the use of polluting or scarce resources and create (e.g. dyes or faux leather) from bacteria or molecular engineering
• Applying agricultural side products or excess harvests: possibly the latest in material innovations in HDHT, including the creation of new textiles from pineapple-leaf fibres or orange peels

Figure 5: CBI webinar on sustainable innovations for your HDHT business

Source: YouTube

Figure 6: Malai — Circular material based on coconut waste

Source: Malai @ YouTube

In another interesting development, colour trends in HDHT are slowing down. The designer and trend forecasting communities are questioning the endless and fast-moving cycles of colour innovation. Many colours have the potential to last much longer, across more than one season. Mix Magazine by Colour Hive refers to such longer-lasting colours as ‘continuity colours’. Viewpoint Colour also supports this approach: ‘We believe that colour trends must slow down [...] and this forecast aims to promote slowly evolving cycles that consider colour longevity and endurance’.

If colour trends slow down, product life cycles will become longer, as products will become unfashionable less quickly. Instead, consumers will appreciate certain colours longer, making products more timeless. This will reduce ‘throwawayism’ by the same consumers, as well as in retail and manufacturing — thereby creating less waste and helping to slow down the use of the earth’s resources.

Forecast

Millennial and Gen Z consumers will be the main force in the market for the coming decades. They have a sense of urgency and activism, and they believe that they can influence things through their buying behaviour. More specifically, they wish to buy from companies that contribute to a better world. In addition, sustainability is a central and integrated part of their wellness needs. The COVID-19 pandemic increased the importance of sustainability for millennials and Gen Z people even more than it did for older generations. This trend is likely to continue growing, given that these generations will become the dominant consumers and professional buyers in the coming decade.

Figure 7: Kave Circular

Source: Kave Home @ YouTube

According to a 2022 Deloitte survey, 34% of British adult respondents had stopped buying certain brands or products due to ethical or sustainability-related concerns — a 21% increase since 2021. Although cost is generally a major barrier — 72% of the respondents in a 2022 survey conducted by GlobeScan thought environmentally friendly home furnishings were more expensive — there is demand. Despite the current cost-of-living crisis, 55% were still willing to pay more for products or brands that work to improve society and the environment.

The growing importance of sustainability in HDHT is also reflected in a 2021 survey by Maison & Objet, in which 62% of responding HDHT retailers had noticed that their customers were increasingly interested in ethical products:

• 92% of their customers considered natural materials either important or very important.
• 77% valued socially responsible production methods.
• 71% cared about recyclable/recycled materials.

Figure 8: The popularity of ethical products amongst clients of HDHT retailers

Source: Maison & Objet Barometer – Issue 1

In 2023, 80% of responding HDHT professionals had noticed a growing interest on the part of their clients in recycled products, with 72% expressing increasing interest in upcycled products and 63% expressing increasing interest in pre-owned items.

The EU Green Deal will rapidly grow in force and significance, which will also provide a legal aspect to social and environmental sustainability. This will help transform sustainable corporate behaviour into a ‘must do’ issue. Well-known sustainable initiatives (e.g. BSCI, ETI, Sedex and the WFTO Guaranteed system) and certifications (e.g. FSC, GOTS and OEKO-TEX Made in Green) can help you prove your sustainability to buyers and consumers.

Opportunities

• Recycling/upcycling materials from local consumption/production can be a major opportunity. Waste or offcut materials from industry are often readily available and relatively inexpensive. The market is ready for such concepts.
• Consumers are very interested in the story of your value chain — not just to make sure that materials are really recycled, but because it is fun to know that an item used to be part of something else (e.g. a billboard, office furniture or second-hand clothing). This makes good storytelling very important.
• Being well-prepared for the new EU legislation can give you a competitive advantage.
• Social/environmental certification can add value and credibility to your concept.
• Positive gender values can make you stand out in the market.
• Use your cultural heritage to introduce new patterns and colours to buyers and consumers and make your products unique. You can mix these designs with elements of Western or global culture.

Threats

• Western designers are also creating concepts based on recycling and upcycling. This means that design expectations are quite high, and that competition is coming from European designers as well.
• Although taking a stand can create a following, it can also be annoying to others. Non-confrontational communication is important in order to avoid irritation in the market.
• In the long term, the European trend of buying local (‘Made in Europe’) to reduce environmental impact may become a threat to you. Read also about the trend of changing global supply chains.
• Sustainable products do not automatically bring a higher price. Consumers regard saving the planet as a primary responsibility of the industry. Design value is what has a positive influence on price.

Forecast

Wellness will be the most prominent trend in HDHT in the coming decade. For this reason, all developments described above will start, continue, grow stronger and demand a more central place in the marketing of both European HDHT companies and exporters from developing countries. Millennial and Gen Z consumers are becoming dominant, and they are seeking to fulfil their personal well-being goals through their shopping. These generations will also increasingly come to dominate the population of professional buyers, basing their purchasing strategies on wellness benefits as well. The trend is thus likely to persist.

Sustainability is becoming a primary concern for a consumer group for whom benefits to people and the planet have become part of their journey towards greater personal wellness. When sustainability becomes personal, it is enduring.

Opportunities

This trend offers opportunities for products/product groups that:

• Are related to the various aspects of wellness, including garden furniture, spa and yoga items (soap, hammam towels), easy chairs, luxury bed textiles and travel accessories
• Include natural raw materials/fibres or natural colours
• Are related to leisure, hobbies, sports, toys and games
• Appeal to the new ‘young old’ consumer, as the relatively wealthy older generation is fitter than ever
• Offer attractive stories of making and makers
• Are socially and environmentally sustainable and transparent

Threats

• For Millennial and Gen Z consumers, sustainability is personal and directly linked to their well-being. Moreover, because products without clear social and environmental benefits do not help these new consumers improve their well-being, they will be ignored.

Figure 10: CBI webinar on wellness in HDHT

 Source: YouTube

4. New circular business models

5. Changing global supply chains: Spreading risks

In marketing, distribution channels are becoming shorter. For example, wholesalers are creating business-to-consumer (B2C) e-commerce marketplaces, and manufacturers are skipping wholesale and selling straight to retail. Physical distribution is concerned with the actual, logistical supply chains of materials, semi-products and end-products. In this regard, various forces are making the supply chain more complex and, in some cases, longer. 

Global supply chains have been under pressure for quite some time, due to various disruptions, including the trade war between the United States and China, the COVID-19 pandemic, natural disasters linked to climate change, and Russia’s invasion of Ukraine. European importers have realised that political shocks can severely disrupt distribution. In addition, markets and governments have imposed bans and tariffs on some trade routes and goods. Moreover, consumers want to know where products come from and whether it is consistent with their moral values to buy products from certain origins.

The following are several ways in which importers have been trying to make their supply chains less vulnerable:   

• Second sourcing – Businesses are contracting multiple suppliers for the same (or a similar) product to spread the risk of non-delivery or political trouble.
• Vertical integration – Importers are taking more control over their supply chain in two ways: by building the capacity of their existing suppliers and by actually taking over suppliers. They also expect this to have a positive effect on their margins. This expectation is based partly on a more inclusive attitude on the part of manufacturers, service providers and importers. All members of the supply chain need to understand the reality of their partners. They must support them in making the chain stronger, so that it will remain intact during disruptions. 
• Pre-stocking – Companies are building inventories of finished and semi-finished goods, which can be sold in case of new disruptions. In many cases, manufacturers are asked to keep such stocks (which are unpaid) until needed.   
• Reshoring – European manufacturers are contracted to produce at least part of existing collections that were previously imported from outside of the EU, again in order to reduce risk. 
• Longer lifecycles – When supply chains are fragile, extending the lifecycle of products could be a fruitful strategy. This can be done by recycling, using more sustainable materials, offering repairs or creating more timeless (i.e. less trend-driven) collections.

According to McKinsey, value chains that shifting away from their current top producers (as in the case of second sourcing) could represent a real opportunity for some developing economies in sectors like HDHT. Despite the current popularity of the concept of reshoring, it is often not easy in practice. Redesigning supply chains takes time, and its effects may not be visible until the longer term. In addition, reshored HDHT products often do not offer as much value for money. As reported in the June 2022 Maison & Objet Barometer, 26% of HDHT stakeholders were planning to localise part of their production or sourcing, and 22% were not.

Figure 13: Obstacles to reshoring for HDHT stakeholders

Source: Maison & Objet Barometer – Issue 4

The changes in supply chains will create a more secure distribution system for supplying Western European businesses. At the same time, however, the changes will make the supply chain more fragmented, less efficient and more costly. These costs will be passed on to companies and consumers. Although the benefits should be shared as well, they may be less clear to the average consumer.

The first consequences of the new way of thinking are now becoming clear, especially with regard to redirecting imports from China. Even if Western importers are starting to second-source end products from neighbouring Eastern Asian countries, many manufacturers there are still sourcing vital components or accessories from China (e.g. silk yarns for the home-textiles industry). This is making the chain more tangled, less transparent and, possibly, more costly.

Forecast

Governments will increase their direct involvement in trade through tariffs and other instruments, as well as by encouraging and facilitating sourcing from closer to home. This is for political reasons (i.e. to increase security in the delivery of goods), as well as to reduce footprint and stimulate social compliance in distribution chains.   

Consumers will become accustomed to the occasional unavailability of some items, as well as to longer lead times and higher prices. They may choose to buy more quality than quantity (i.e. choosing timeless rather than trendy), learn to like products longer and/or start sharing and exchanging items with other consumers. This is in line with the trend of new circular business models. If supply chains are fragile, extending the life of products can be a good idea. Consider recycling and repairing.

Millennial and Gen Z consumers are also likely to ask more questions about the origins of products and whether they are compatible with their outlook on life. These questions could include who benefitted in making and selling a product and what the brand stands for in terms of social and environmental values. According to the June 2022 Maison & Objet survey, 88% of responding HDHT professionals confirmed that their clients were becoming increasingly concerned about the origins of products and raw materials.

Opportunities

• Importers will look for second sources — especially in East Asia — as a means of becoming less dependent on single sources.
• This may also lead to a more favourable financial context for East Asian exporters, including government subsidies and improved terms for working capital and investment capital from banks.   
• Businesses with verifiable sustainable practices can build a competitive advantage.

Threats

• The increasing dependence of East Asia on China for its inputs may make this region’s bargaining position less favourable relative to its key supplier of materials and intermediate products.
• Some production may be reshored to suppliers in Europe.
• Chinese direct investment may replace the original ownership of East Asian manufacturers and exporters. 

6. Home sweet home

In times of mass migration and war, consumers react with a deep appreciation of the comfort and safety of their own homes, their family units and their circle of friends — a revival of ‘cocooning’. The ‘home sweet home’ trend involves people (across generations) enjoying each other’s company, entertaining each other, cooking and dining, or simply relaxing. This aspect of the trend relates to items that create a cosy atmosphere, as well as cookware and dinnerware for ‘slow dining’.

At the same time, however, the ‘home sweet home’ trend contains an element of disconnecting from the troublesome outside world. For older consumers with relatively high disposable income, the home forms a retreat — a place of luxury, with high-quality furniture and decoration, often in styles that refer back to bygone periods (e.g. art deco, neoclassical). Popular materials include comfortable, heavy textiles, dark wood and lots of metal. Patterns are bold, but colours are cosy and warm, including darker, rich reds and purples, sophisticated blues and browns.

Figure 14: John Lewis – Retro revival

Source: John Lewis @ YouTube

Forecast

As millennials and Gen Z people start new families, cocooning will take flight and become a mainstream lifestyle trend. Although older consumer groups will last a while, they will gradually decrease. Their preferred luxurious retro styles will therefore fade or need to attract a new and younger group of affluent consumers.

During the pandemic, people spent more time cooking and socialising as a family/household. This development was particularly prominent amongst younger generations, as older consumers had probably already been spending more time on these activities before the pandemic. Many expect this change to be permanent. For example, of those who started cooking more at the beginning of the pandemic, 65% were still doing so a year on. According to GWI, 44% of all consumers plan to cook at home more, due to the current cost-of-living crisis.

Opportunities

• Part of this trend represents a premium segment, which may offer good margins. 
• The style is not trendy, but is based on supreme artisanry and a stable colour palette. With the proper marketing mix, you will be able to find a steady position in this segment.
• Interior decorators carrying this style are found at all major HDHT trade fairs in Europe.
• The cocooning aspect of ‘home sweet home’ has growth potential and will move along with the lifestyle and buying preferences of younger generations. Following these patterns will be essential in order to make inroads in this trend, which will become mainstream in the coming years.     
• The cocooning aspect of ‘home sweet home’ is particularly promising for specialists in home textiles, home accessories and Christmas, as well as in the cooking and dining categories. 

Threats

• The luxury trend is nearing the end of its lifecycle. Although the margins may be good, volumes tend to be relatively small, with low turnaround. 
• The cocooning trend will move into the mainstream and mid-market segments, thereby attracting suppliers capable of producing good volumes at accessible prices. 

Globally Cool B.V. in collaboration with GO! GoodOpportunity and Remco Kemper carried out this study on behalf of CBI.

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