Against the backdrop of declining headline inflation, new normal interest rates, and a buoyant jobs market, 2024 still looks like it’s going to be challenging for companies looking to open the wallets and win the hearts and minds of the Great British consumer.

The drop in retail inflation over 2023 really is some good news for the economy. With household incomes boosted by record wage growth, lower price rises could help increase consumer spending and boost business and retail activity across the board.

However, many households are still feeling the pinch from the cost-of-living crisis as inflation and having enough money to ‘live right and pay the bills’ remain the top concerns among UK consumers.

Highs and lows

House prices have been on a downward trajectory since they peaked in 2022, price affordability is improving – good news for some – although the market will remain sluggish with a decline of first-time buyers in the face of higher monthly mortgage repayments.

MDA sales trends tend to follow housing market movements as buyers look to replace their kitchens following a house purchase. However, MDA sales couldn’t keep up with the strong housing transactions seen in mid-2021.

The Covid years altered this pattern as consumers were forced to spend time at home. Many had larger disposable incomes as money could not be spent on socialising and travel. MDAs recorded 8% volume growth in 2020 and 9% value growth. The best performers were freezers (+63.5%), refrigeration (+15.5%) and tumble-dryers (+13%).

However, this growth could not be sustained and the market dropped 7% in value and 14% in volume in 2022, with declines seen in all MDA markets.

However, if we compare the value of the market in 2022 with a pre-pandemic 2019, MDA value is up 5.5% while volume drops to a level not seen since 2013.

Consumer behaviour

The good news is that consumer confidence – a key driver of future economic activity – has improved during 2023. We have recorded some strong growth rates in the prospects for our personal financial situation for the coming year, important when households think about their future spending priorities.

Growing consumer confidence and willingness to make major purchases could see a boost to the major domestic appliance market. The decline in the MDA markets in 2023 has slowed somewhat, with growth from washing machines fuelled by large-capacity 10kg+ models growing 12%. The average price paid for a 10kg+ model is £445, £63 more than smaller machines.

Demand for heat-pump tumble-dryers has grown by 8%, driving product value as these products have a price tag over £200 more than ‘total tumble-dryers’.

Hobs with integrated hoods, which are nearly £1,600 more expensive than the ‘total hob’ price, have seen growth of 21% for 2023. Sales of freezers, the appliance that was the standout performer during the lockdowns, continues to fall in double-digits.

Staying power

The trend of value over volume, will continue to drive revenues with shoppers looking to replace and upgrade. The desire to trade up to premium models continues to be strong. All brands, whatever the category, are facing increased scrutiny from shoppers.

Today they want more than good looking functionality and better and improving energy efficiency – especially with the introduction of new labelling. They also want the best price and reassurance that products will last – plus be reassured that they will live up to corporate credentials.

Washing machines for example have seen a shift from energy efficiency band C and D to A and B, driving up the average price from £367 to £392. Refrigeration has always been less energy efficient with 62% of models rated F.

The new legislation that comes into force at the end of 2023 means a push towards an E rating. The introduction of new labelling has helped manufacturers launch new products with higher price tags, further injecting value into the market.

The latter months of 2023, leading into 2024 will be tough. GfK’s Demand Forecast Overview predicts a value growth of 1% in the major appliance market for the full year 2023, and 1% growth in 2024.

The biggest opportunity for growth in 2024 is...

Going premium

Despite the challenging economic situation and recent declines within the MDA market, there have been signs of growth within premium segments such as large-capacity washing machines, heat pump tumble-dryers and hobs with integrated hoods