The second episode of our podcast " But in concrete terms, how do you make the transition? "explores the household appliance sector with Michaël Rogué, former head of ecological transformation at Boulanger and co-founder of Chapter-2a collective of committed entrepreneurs who support managers and shareholders in the sustainable transformation of their companies.
How is the household appliance sector adapting to ecological challenges?
Michaël Rogué spent three years as Director of Ecological Transition at Boulanger. In this episode, he shares his vision of the future of this sector and explains how managers need to take charge of the transformation today.
Two major forces are set to shake up the market:
- stricter regulations demanding traceable and repairable products,
- and the scarcity of raw materials which will drive up the price of new products.
These changes will profoundly transform the shopping experience, and therefore the value proposition: tomorrow's stores will be smaller, focused on repair and second-life products, rather than on displaying new products.
An essential episode for understanding how traditional household appliance players must reinvent themselves.
"I'd like to stress the importance of dancing on two feet. One foot in today's reality, where CSR issues are still a "nice-to-have" and the sale of new products remains the core business. And a second foot in the future, where we need to prepare now for rental, repair and purchase/resale services for second-hand products, without having too many illusions about the revenues generated. These new models are not yet mainstream. We need to pursue our historical model to have the necessary investment capacity to transform and create the services and businesses of tomorrow." Michael Rogué
We hope you enjoy listening!
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Written transcript of episode 2 of the "Non mais concrètement" podcast with Michael Rogué, ex-Leader Planet at Boulanger and co-founder of Chapter-2
Jonathan Loriaux
Hello Michaël. I'm delighted to have you on "Non mais concrètement". With you, we're going to try to make some aspects of the ecological and social transition a little more concrete in the corporate world. Can you start by introducing yourself in a few words?
Michaël Rogué
With pleasure, Jonathan. So my name is Michaël, I'm 41 years old, and I'm an engineer with a background in new technologies. After spending some fifteen years in the digital sector, in IT services and software publishing, I decided to devote my professional career to the challenges of ecological transition, which I did at Boulanger as Director of Ecological Transition, before setting up my own ecological transition consulting business, Chapter-2.
Jonathan Loriaux
Perfect! If it's all right with you, we'll try to focus on the household appliances sector that you met at Boulanger. How do you see this sector in 2035 and then possibly in 2050? What are the major elements that will have been transformed if we really want to make the ecological transition?
Michaël Rogué
There are two things that are impacting the household electrical appliance sector, and which will become more pronounced over the next few years. The first is the regulatory context, which requires that products placed on the market be increasingly traceable and repairable, with strong regulations, as I said, on traceability, where it will be absolutely necessary to indicate where products come from, what materials they are made from, what proportion of recycled materials are included in product materials, etc. And also how they are repairable by the consumer. And also how they can be repaired by the end consumer, with the expectation that spare parts will be available. So, in the past, nobody worried about this. Tomorrow, we'll absolutely have to pay attention to this, and bring products to market that are both repairable and durable.
Michaël Rogué
Secondly, there's the question of raw materials. These electronic products and household appliances require a huge amount of metal resources: copper, cobalt, lithium, rare earths. For your information, a smartphone contains between 40 and 60 different metals. So it's huge. And the point is that these are materials that are increasingly in demand as a result of our lifestyles, and in particular electrification. And today, the production of these raw materials is in decline, with relatively few new deposits. If we take the example of copper, which is the most critical, studies have been published and others are on the way, showing that there is a risk of an explosion in demand in the next few years in relation to lower production.
Jonathan Loriaux
These two elements, regulation and raw materials, are the point of view of the company and the business world. But ultimately, for the consumer, what are the habits we're going to transform with these new data?
Michaël Rogué
Mechanically, we're going to find it harder to manufacture these products, and we're going to end up with products that are going to be more expensive. Obviously, as resources become scarcer, it will be more difficult for retailers to source the products they need to stock their stores, and therefore fewer new products will be available in-store. This means that stores will have fewer new products to sell, and will also have to speed up services to repair and extend the lifespan of products already on the market, as well as stocking up on second-life products to make up for the shortage of new products that will be available.
Jonathan Loriaux
As a result, there's less variety of new products in stores.
Michaël Rogué
Yes, certainly.
Jonathan Loriaux
Imagine walking into one of these stores ten or twenty years from now. What would it look like?
Michaël Rogué
Time will tell. But I have the feeling that what consumers will be looking for in a world where resources are becoming increasingly scarce, where there are fewer new products to buy, is how this store can help me extend the life of the products I already have, or even buy back my old products, which will have a value because it will be harder to manufacture new products. And so for me, the store of tomorrow I enter and I don't come straight across shelves with new products to sell, but I first come across a workshop that will help me repair my products, offer to diagnose them, buy spare parts, we'd have products to rent rather than buy. And yes, of course, there will still be some product goodwill, but it won't just be new products. There will also be second-hand products. So I can imagine a good mix between a workshop and a business that will be less traditional but will offer different types of products, certainly less new products and more second-hand products.
Jonathan Loriaux
Okay, here's something that interests me. It's that today we have this model of very large electrical goods stores with lots of different departments, which basically resemble an electronics supermarket. Won't we end up with a specialization of people who are there to do repairs, with dedicated workshops, and other people who are there for second-hand goods? Does this model of electronics supermarkets still have much of a future?
Michaël Rogué
For me, it doesn't. It still does. We shouldn't be too hasty either, because what we're projecting is potentially five or ten years away. Even if it's tomorrow on a human scale. This is what we're beginning to see in the food sector. These very, very, very large surfaces no longer make sense. Reducing surface areas in the electronics sector is also bound to happen, because we won't need such large surfaces for a repair shop, we won't need to display all these new products from many different brands with many different ranges in a world where resources are becoming increasingly scarce.
Jonathan Loriaux
What are the sparks that need to fly in the brains of the heads of the traditional chains in this sector for things to really get moving? Because regulations are changing, and that puts pressure on them. The fact that there are fewer raw materials is another pressure. And then there's consumer pressure. But I always have the impression that there are very, very different levels of maturity, and that the reality of some is not necessarily that of others. What are the beginnings of a real reflection towards a real transition in this sector? At what point do managers need to be shaken up before they really decide to change their model?
Michaël Rogué
The spark I see is to look these risks in the face with honesty, to look at them and take an interest. There are some weak signals today that resources are becoming scarcer, but it's not all concrete yet. On the other hand, if we look ten or fifteen years ahead, everything points to the fact that we'll be moving towards fewer resources, and towards regulatory constraints that will be imposed on us. So we have to face the facts. And then, at some point, we have to acknowledge that the company is going to change, and explain this to our employees, and why not to our customers? To say that the company is indeed going to change, and that tomorrow's stores will potentially be smaller. They will no longer be just brands or surfaces where things are sold, but also a place where there is service and exchange.
Michaël Rogué
But what I always tell managers is to succeed in having both legs. That means taking one step into today's reality, where CSR issues are still nice-to-haves, and where the sale of new products remains the core business. And this second step into the future, where we know we'll need to build new models, these new services we expect, these buy-back-resale mechanisms for second-hand products, and start preparing for them now, without getting our hopes up. As you say, today's consumers don't really expect a retailer to buy back their products or help them with repairs.
Jonathan Loriaux
He's waiting for the latest iPhone.
Michaël Rogué
Exactly. However, as a company, we need to prepare now for these new models, which are going to be ultra-transformational. The company has never experienced this before. Digital transformation was a turtle somewhere in the past model of classic retailers. These new models are going to be ultra-transformational. The time to prepare is now.
Jonathan Loriaux
When you say "now is the time to prepare", what does that mean in concrete terms? Knowing that employees and consumers are likely to put up huge resistance. At the end of the day, the first company to really get moving is the one that's going to fall by the wayside, and those that follow may fare better thanks to the feedback of others.
Michaël Rogué
You have to get your employees on board and make sure that everyone is on board with this vision. You have to write a transformation plan, and it's not going to happen overnight, because it's ultra-transformational. It's going to change the company's businesses, it's going to change the vision of performance, it's going to change supply chain management. The good thing is that we've got ten years ahead of us. All this while maintaining today's business, because it's today's business that will enable us to finance the future.
Jonathan Loriaux
As an observer who has come out of this sector and is looking at it from the outside, what are the clues that we can detect, which can show us that a company is actually working on the subject, even if the discourse is perhaps not yet elaborate and well marketed so that it shows.
Michaël Rogué
Several things. The first is the arrival of new players in this segment, which either didn't exist before or was just getting by. I'm thinking, for example, of carter-cash or easycash, which have been around for years, but were seen as the household appliances market for people with no money. Today, however, they're really becoming real marketplaces and exchanges with brand names. Just take a look at the marketing positioning of Easy Cash, which is in the midst of a new acceleration in its activity, or at players like Back Market, which has become a unicorn in a very short space of time, or Murphy's, which has accelerated its focus on facilitating access to product repair. In short, a whole host of new entrants are arriving, emerging as market leaders and creating economic activity where there was none some time ago.
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Jonathan Loriaux
In the end, it's the players on the periphery of this market who are putting pressure on the traditional players.
Michaël Rogué
And the traditional players are just getting started. It's taking a long time, because it's a transformation for them. For 70 years, they have been traditional retailers. They "only" bought products and put them on the shelves. But now, we're seeing Fnac, Darty and Boulanger stepping up the pace on repair issues, now offering unlimited repair services and in-store rentals, starting to buy back second-hand products and, in this way, diversifying their activities and beginning to take the first steps towards transforming their business.
Jonathan Loriaux
Do you feel that their approach to consumers and the general public is starting to make its mark, or do you think it's a little too timid, or that it's normal for it to be timid?
Michaël Rogué
It's still too timid for me, Michaël, the committed person who wants his subjects to move faster. But if I put myself in their shoes, as I did when I was at Boulanger, it's always hard to get the balance right. Between continuing to push the old model, because it must enable me to create wealth to finance the transformation, and pushing the transformation and the challenges of tomorrow at the right speed. It's a balancing act that's not easy to pull off. They have more to lose than those new entrants I was talking about, who were born of this new activity and who in any case will push, want to push and have everything to gain from pushing the new model.
Jonathan Loriaux
In the end, their marketing and communication is much simpler. They have a precise niche, and they want to push it to the limit. While traditional players have to educate their consumers on new subjects, with new narratives that are not easy to grasp, they may find it difficult to reposition themselves.
Michaël Rogué
The future will tell. Will we end up like Apple, which succeeded in supplanting its presence by releasing the iPhone, the touch phone, while all the traditional players in telephony like BlackBerry and Nokia didn't believe in it and therefore hadn't taken their place in the market, and they were supplanted. Or, on the contrary, will these major leaders, who have an indisputable place in today's home appliances market, succeed in establishing a strong presence in these new models? They do, however, have one strong asset to their credit: their presence in the field and their ability to provide this local response through their network of stores. These new players don't have this advantage, and never will.
Jonathan Loriaux
There's another subject I find interesting to bring to a close with the new stories. It's that today, in these stores, you find purchases of desires, including everything from telephony to television, and so on. You can really say, "I want the latest 4K TV". There are other purchases that are a little less appealing. When you buy a vacuum cleaner, it's not necessarily with as much emotion. Although maybe in some cases. My question is: how can we make the idea of extending product life and repairing products sexy, where today we don't necessarily want to bother? With emotional products, we want to have the latest model because it makes us happy. But getting your vacuum cleaner repaired isn't necessarily something you want to spend time on. You don't think I'll be a super winner if I keep my vacuum cleaner for 25 years.
Michaël Rogué
That's a good question. For me, I get this satisfaction. I repair all my products, and my children look at me and say "Wow, Dad, you've managed to repair the vacuum cleaner". I'm proud of the fact that I don't have to go to the store and I can repair my vacuum cleaner at home. After that, I think there's something beyond pride that's going to happen. When we start talking about resource depletion and the fact that products are going to become more expensive, knowing how to repair your product rather than spending X hundreds of euros to buy a new one will become something normal and acceptable.
Michaël Rogué
I always compare it to a car. When you have a problem with your car, you don't take it to the scrapyard and buy another one. And we don't do that for ecological reasons, we do it for economic reasons, because they're expensive. The point today is that repairing can sometimes cost almost as much, or even more, than buying a new product. But this is something that should never have happened, and soon will not. Once again, when I say soon, I'm maybe talking about ten years from now, but on the scale of Humanity, it's soon.
Jonathan Loriaux
In fact, we've had a golden period for everyone except the planet. Earlier, you mentioned Murphy. They have an interesting approach to repair. They have a real gradation in the way they accompany their audience, telling them: first try to repair yourself, then we can accompany you remotely to guide you. Then, we'll send a technician to your home to help you make the repair if it's too complex. Then, we'll offer to collect your old appliance and replace it with a new or used one. I don't know if they've had any buy-back offers yet, but they're likely to be pretty busy over the next few years. And it's really an approach that allows you to offer something for free but also the whole range of very progressive services that go behind it. I don't know if you've already called on them.
Michaël Rogué
I know them very, very well. I didn't call on them because I do my own repairs. But it's a very fine company indeed. What they've also managed to do is to recreate repair skills, which wasn't easy. Repairing household electrical appliances was a very fashionable and popular profession just a few years ago. Well, when I say a few years ago, in the 50s, 60s or 70s, but with the acceleration of cheaper products manufactured in Asia, when it became more expensive to repair than to buy a new product, this trade disappeared considerably. Today, it's a very, very scarce resource, and even the training courses have become rarer. And today, finding good appliance repairers on the market is extremely complicated.
Michaël Rogué
So they ended up setting up their own training school. And every year, they train several hundred people from all walks of life to become domestic appliance repairers.
Jonathan Loriaux
Which also means that over the next ten years, we're going to have to go through a retraining phase. Because those who today are mainly seen as salespeople or advisors will have to retrain and be able to provide a technical response at the very least when a customer comes to say hello, and eventually get down to work. How do you go about retraining? Because today, a salesperson earns a commission every time they sell a new product. Tomorrow, we're going to say to them, you can't just sell, you've got to repair, it's not your job, but you've got to get on with it.
Michaël Rogué
That's a key point. Because, if we look ahead to the target vision I've given for the store, in about ten years' time we'll need fewer sales skills to sell products, and more technical skills to support, repair, etc. We could say that these aren't the same profiles, but at the same time we could say that it's a question of skills and the natural evolution of skills. You could say that it's not the same profiles, but at the same time you could say that it's a question of skills and the natural evolution of skills. We could talk about many other sectors. But I'm convinced that these manual trades are going to become necessary again in the next few years, because that's what consumers are going to expect. And what's more, these are jobs that can't be replaced by artificial intelligence. And so, yes, we're going to have to help everyone to "re-technicize". You wouldn't say that, but I feel like saying it.
Michaël Rogué
There, I've coined a new term. Go back to manual jobs and relearn how to do things with your hands. Some sales clerks may be reluctant. But I'd say it's a natural evolution of their jobs, and who better to repair products than the sales clerk, who knows the products inside out? Of course, they'll need support to learn the technical aspects of repairs.
Jonathan Loriaux
This means that the new stories about these new models have to be both applied and proposed to the consumer-customer. In fact, we're going to have to revise the term "consumer" too. But we also need to appeal to employees, to tell them: your job is going to change, but it's a good thing, and to value it. Because the value for the company will be even greater. In the end, you can create more value on a repair than on a new product: a product that passes from hand to hand on which you take a small margin.
Jonathan Loriaux
Maybe it will exist tomorrow, who knows?
Michaël Rogué
Completely. And even more so for those retailers who have created this physical network and have a physical presence in the country. These will be services that today's major leaders in this sector, such as Amazon, will never be able to provide. If, as a physical retailer, I can provide the right added value, the right technical expertise and the right service quickly enough, I think they can regain the leadership they had a few years ago, before the arrival of these web giants.
Jonathan Loriaux
There's something you said several times in this interview that reminds me of the car industry. Today, we realize that the people who are able to buy a new car are those who have the most money, and that all the others have been buying second-hand cars for a long, long time. This means that, on the one hand, citizens rather than consumers have the impression that some will never be able to afford a new car, and on the other, that new cars are tailor-made for those with the greatest means on the market. Is the fact that household appliances are becoming more expensive not going to be confronted with the same problem, which is that the people with the highest salaries are the ones who buy new products, leaving only second-hand products for the rest of the population? Is this a conscious issue in this sector, or is it being swept under the carpet?
Michaël Rogué
I make exactly the same analogy. No, today it's not an issue that's shared by the industry. We were talking about 4K and big-screen TVs earlier, but today, these aren't very, very expensive products. Especially since, with consumer credit, anyone can afford them. But I think these are things that could happen in the next few years. Yes, I think the analogy is a good one.
Jonathan Loriaux
I was thinking in particular of the washing machine, which is still an essential tool for most households, even if it can be shared in apartment blocks and that sort of thing. And we'll no doubt come to this type of model too. But today, washing machines have extremely long service lives when they're well-designed, relatively simple, and so on. But by the time they come back on the second-hand market, most people will only be using the first-price washing machines from ten years ago, which are constantly being tinkered with. So, unfortunately, quality won't be available to everyone just yet. In the bicycle sector, too, there are two trends. There's the trend towards ultra-simplicity to make things ultra-repairable, and there are other brands trying to turn bikes into cars with ultra-complex gizmos and electronics all over the place. We'll see how things progress.
Jonathan Loriaux
I don't know if you want to add anything. Maybe there's something we didn't talk about in this interview that you think is important to bring up?
Michaël Rogué
I'd like to emphasize what I said at the beginning, or in the middle, I don't know. It's the importance of dancing on two feet. Unfortunately, a lot of players, and not just in the electronics and household appliance sectors, were perhaps a little too headlong into these new models a few years ago. And even if a certain segment of the population is very keen on this, the majority isn't any more than that. Especially since we still live in a world where, in most cases, it's cheaper to buy a new product than to repair and extend your own.
Michaël Rogué
And so, with certain players moving too quickly in this direction, we take stock three years later and say: in fact, it's useless, it's not working, there are no customers, I can't get the same margin as with new products, it's extremely complicated for my supply chain, it's breaking my store in two because I don't even know how it was stocked, etc. And so, today, they're backtracking on these issues. As a result, they're now going backwards on these issues. And I share these observations, because these models are not very popular with the public. I use the term citizen rather than consumer. At the same time, it's obvious that these are the models of tomorrow. Hence the need to keep one foot firmly planted in reality. These new models are not today's mainstream models. So there's no point in over-investing in them, or over-promoting them in stores. We still need to address the part of the population that is interested in these subjects and believes in them today, more out of conviction and commitment than out of necessity. But we must continue to work and pursue our historical model. Because, once again, to go too fast would be to burn our wings, and would not allow us to have the investment capacity we need to truly transform and create the businesses and new businesses of tomorrow.
Michaël Rogué
So it's about preparing for the future while remaining firmly rooted in reality.
Jonathan Loriaux
So the gradual but sure transformation rather than the too-quick break-up that could crack your wings. Well listen, thank you very much for this exchange. I wish you a lot of fun with all these new models and I'll see you soon.
Michaël Rogué
Thanks Jonathan, see you soon.
