US demand to rise 3.7% annually through 2017

US demand for home organization products will increase 3.7 percent annually to $9.3 billion in 2017. The economic recovery -- particularly the rebound in residential construction and consumer spending -- will support demand going forward. Gains will also benefit from the introduction of decorative and specialty home organization products as well as by the strong growth in larger, more expensive closet and garage systems. Demographic trends such as baby boomers becoming empty nesters and moving into smaller homes and their children moving into college housing and first apartments will also provide opportunities given that small spaces benefit from organization products.

Preventing even more rapid growth will be the commoditization of many home organization products, competition from producers in low manufacturing cost countries, and the expected moderation in prices for many raw materials. In addition, large retailers, especially mass merchandisers and big box home improvement stores, will exert pricing pressure on home organization product manufacturers, partly through their use of lower-cost private label lines.

Modular units to be fastest growing product segment

Bins, baskets, and totes accounted for the largest share of home organization product sales in 2012, with 37 percent of the total market. These products, which can be decorative or purely functional, are widely used in most households to store and organize belongings of all sizes. Demand for modular units is expected to post the fastest annual gains among home organization products, rising 5.5 percent annually through 2017. Advances will be supported by the flexibility provided by modular units, which allow consumers to seamlessly add on to or redesign existing organization systems. The interest in organizing closets and garages also benefits demand for modular units since these areas account for the majority of modular unit sales.

Best opportunities to be in garage organization

Sales of home organization products for use in garages are expected to post the fastest gains, rising 5.6 percent per year through 2017. In part, this reflects the relative immaturity of the garage storage market. However, advances will also be aided by increases both in the share of homes with garages and in the average size of garages, along with consumer desires to make the garage space suitable for hobbies or other activities. Sales of home organization products for use in closets will also achieve above-average growth, supported by the increasing availability of these items in a variety of retail outlets. Gains will be boosted by high-end closet systems made from solid wood or laminated panels and by rising consumer demand for closet systems outside of the master bedroom.

Wood-, laminate-based products to lead gains

Metal and wire home organization products accounted for the largest share of sales by material type, with 30 percent of the total in 2012. These products are also expected to post above-average gains through 2017, benefiting from strong growth in sales of modular units and cabinetry organization accessories. However, demand for wood- and laminate-based products is expected to post the fastest gains over the forecast period, driven by strong increases in modular units and shelving, including higher-end closet systems that resemble furniture and fine cabinetry.

Source: The Freedonia Group

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