Over the past decade, Electrolux has made the transformation into an innovative, consumer-focused company. Now growth is becoming more important. From previously having been heavily exposed to mature markets, the share of sales in growth markets, such as Africa, the Middle East, Asia and Latin America, is to increase rapidly. The acquisition of appliances manufacturers CTI in Chile and Olympic Group in Egypt combined with strong organic growth has boosted the share of Electrolux pro forma sales in growth markets from 25% in 2009 to 35% in 2011.
A slowdown in demand in Western Europe and North America, combined with the rapid emergence of an affluent middle class in densely populated growth markets, has led to a gradual transformation of the market for household appliances. Adapting the business and offering to this new environment is necessary to continue growing profitably. In 2011, Electrolux expanded its presence in growth markets and launched a long line of products and solutions adapted to global and regional demands. Furthermore, the Electrolux business is being increasingly impacted by such strong global trends as population growth, an expanding global middle class, higher life expectancy and rapid urbanization. These developments mean that there is increasingly limited supply of resources to satisfy the needs of a growing number of people, and more and more consumers have higher disposable incomes. Electrolux focuses on solutions based on lower consumption of these resources and on identifying new alternatives. Other factors also accentuate the fact that Electrolux operates in a global industry. There are fewer, larger and more international manufacturers and retailers, which means that global brands and products are ever-more important. The five largest manufacturers of major appliances in the world – Whirlpool, Electrolux, Haier, Bosch-Siemens and LG Electronics – accounted for approximately 45% of the market in 2010. To maintain competitiveness in relation to rapidly expanding manufacturers from low-cost areas, it is important to leverage both global and regional economies of scale.
Growing demand for core appliances
Between 2005 and 2010, the global demand for core appliances significantly increased, particularly due to strong growth in Asia. Demand for core appliances in mature markets has simultaneously decreased. In 2010, the demand in growth markets constituted 60% of the total market volume compared to 50% in 2005. Electrolux strategy is to capture this increased demand in growth markets. Read more about Electrolux strategy.
Source: Electrolux estimates.