The home furnishings market was hit, and hit hard, by the recession. Not until 2014 did the home furnishings market claw its way back to its pre-recession peak, reaching $288 billion as measured by consumer expenditures.
But while the size of the home furnishings market may have recovered, the way American’s shop for home furnishings, the brands they buy and their lifestyles have transformed since 2007. Disruption may not be strong enough to describe the marketplace home marketers face today.
Home-hungry customers have new ways of shopping and new brands, like Wayfair.com, RH and Pirch, that offer access to innovative design ideas faster, more conveniently and cost-effectively that ever before. These brands are skimming the cream off the best potential market for home – the affluent customers with money to spend today – and on the cutting edge with designs and selling styles that fit the next generation customers, the Millennials .
Home-market visionary Warren Shoulberg shares strategies to attract young affluents to home furnishings brands
To help understand the challenges in today’s and tomorrow’s high-end home furnishings market, I sat down with Warren Shoulberg, editorial director for Progressive Business Media’s Home & Textiles Today and HFN magazines and previously editor of Home Furnishings News for 10 years, Warren brings a long-term perspective to understanding the ways consumers relate to their homes, and the marketplace that has evolved to serve them.
Warren sees a bright future for marketers that can understand and tap the next generation of home owners – the Millennial generation, the leading edge of which turns 36 this year. While he recognizes marketers face unique challenges capturing the potential of these consumers – “fewer households being started, an increasing number of renters with less need for some home products, and demographics pointing to an emerging less-home-conscious consumer” he explains in his article for The Robin Report “Homeless in America” – he is skeptical that Millennials will not be as home hungry as their Boomer generation parents.
“A lot is being said about Millennials, like they don’t respond to brands or can’t be coerced through marketing,” Warren says. “ But I am skeptical that they will stay that way for their entire consuming lives. I hear so many things said about Millennials that were also said about Boomers when they were in their 20s and 30s, like we [Warren and I are Boomers] weren’t going to be conspicuous consumers. But we became the most self-indulgent conspicuous consumers the world has ever seen. I am not convinced that the Millennials won’t follow suit.”
While marketers wait for Millennials incomes and appetites for home goods to grow, opportunities abound for brands that capture the attention and spending power of today’s affluent home customers, as well as the next generation’s.
- Home is where luxury lives
Luxury is a mindset, not a price point or a brand. Millennials will still crave luxury for their homes, but ‘luxury home’ will be defined differently and more experientially. “What they are doing is defining high-end products differently from other generations. To them a luxury product may not be a Louis Vuitton bag, but a Beats by Dr. Dre headphone. So instead of buying the $9.99 Sanyo head phones, they are buying the $200 Beats one. That is how we are going to see their values expressed – premium products in different categories.”
But we don’t have to wait for these changes to occur, as today’s affluent home consumers are already making tradeoffs in their home spending, as tracked by Unity Marketing’s Affluent Consumer Tracking Study (ACTS).
- High-end home brands need to tell a new story
Not only do Millennials want authentic brands (who knows more about how today’s music should sound than music producer, rapper and entrepreneur Dr. Dre, aka Andre Romelle Young), but they want brands that connect with their values. High-end brands must explain what values are delivered along with their high-end price tag.
“In so many products, there is little perception of quality; soft home products particularly aren’t differentiated,” Warren says. “The consumers don’t know what they are getting for the price. So if nobody is telling them why this $300 toaster is better than the $99 toaster, then they will buy the $99 toaster. They are willing to spend money, but the price has to be explained in a meaningful way.”
This requires marketers to find new stories to inspire customers to buy their products. It’s no longer enough to communicate just features and benefits, but to show how acquiring the brand will enhance the quality of the customers’ lives, today and tomorrow.
- Product overload results in customer complacency
People want what they can’t have; that’s human nature. But in today’s consumer marketplace, home goods are ubiquitous. “Going to wholesale trade shows, you see 10 times as much product that ever ends up in a store. There is too much product, too few customers,” Warren says.
With goods so readily available, aspiration to acquire good quality things is lost. He explains, “It’s everywhere, so if I don’t do it now, I can do it later,” is the consumer mindset. With the motivation to buy now missing, customers are encouraged, even rewarded, to put off purchases, since procrastinating customers can find lower prices if they wait for the inevitable sale that will come.
Warren calls on home marketers to up their marketing and branding game. They must differentiate their products and make the difference crystal clear through effective story telling. They must avoid cutting corners on quality and not be afraid to price their goods at a premium, but be sure to communicate the value. They must be authentic and trustworthy in order to give customers the confidence to invest.
Find Your Best New Customers for Home Goods
For 2017 home brands’ chief concern is to find new customers willing to spend hard-earned money on the beautiful, stylish high-end designs they bring to market. Affluents with the money to spend represent a narrow, but highly profitable, market. Finding the affluents with both money and the willingness to pay is even more challenging. And future success in the home market means understanding and meeting the specific needs of young HENRYs (high-earners-not-rich-yet) customers.
This new book, Home for HENRYs: Meet the New Customers Home Decor Marketers Are Searching For, explores not only the attitudes and buying power of young HENRYs, but also how top online and brick-and-mortar retailers and marketers are responding to the needs and desires of this new home consumer, across a wide range of home categories including RH/Restoration Hardware, West Elm, Noritake, Miele, CordaRoy’s, La-Z-Boy, Ekornes, Sensulalite carpets, Lovesac, Jonathan Adler, Wayfair, One Kings Lane, PIRCH, OXO, Interior Define, and others.Order your copy today and start to hook the most profitable home-hungry customers.