In the realm of appliances, the discussion surrounding sustainability and technology supremacy is intensifying. With shrinking profit margins, companies are now compelled to make a choice between these two paths in order to maintain competitiveness in the market.
Sustainability is no longer merely a discretionary consideration for companies. In fact, numerous nations now mandate that manufacturers adhere to carbon regulations in order to prevent the outsourcing of their carbon footprint. The EU, for instance, is poised to introduce the Carbon Border Adjustment Mechanism (CBAM) in 2026, which will necessitate importers to acquire certificates to offset the cost of their emissions to the same standard as EU manufacturers.
Furthermore, there exists a profound link between sustainability and business resilience. As per Euromonitor International’s sustainability survey, nearly 90% of professionals deem sustainability to be extremely or very important in reducing vulnerability and bolstering response to risks.
Regarding profitability, the future lies in servitization. Instead of simply marketing hardware, the focus must shift towards offering specific services that consumers genuinely desire, such as personalized health and enhanced experiences. This necessitates a different approach and business model, involving an entire ecosystem of partners, enhanced payment systems, and recurring payment subscriptions for services.
As exemplified by LG’s introduction of ThinQ UP 2.0, as part of its shift towards servitization and transition to “Home as a Service” (HaaS), this strategic pivot towards services not only yields high profitability but also presents consumers with a distinctive value proposition.
From a marketing standpoint, sustainability serves as an excellent corporate message. Consumers are increasingly attracted to products that they perceive as beneficial for the environment. This communication on sustainability needs to be complemented by a focus on ESG credentials, an area in which the consumer electronics and appliances industry currently lags behind, according to Euromonitor International’s survey.
As prices for appliances continue to decline, manufacturers view market leadership as an avenue for premiumization. This can be accomplished through sustainability leadership by highlighting aspects such as energy and water conservation, or through technology leadership by emphasizing time-saving features and personalized experiences.
In conclusion, the dichotomy between sustainability and technology is evolving into an essential component of companies’ strategies for premiumization in the rapidly changing appliance industry.
For a comprehensive analysis of this industry debate, please refer to our detailed report on “Technology or Sustainability Leadership in Appliances – A Strategic Discussion”.
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