Recently, I spoke at a conference of respected home furnishings professionals at the annual ART conference in New Orleans. I was able to obtain some interesting research in advance of that talk, courtesy of Scarborough Research in New York. Specifically, I was provided some data from Scarborough USA+ 2011 Release 2, and here is the information I was looking for:
New to the neighborhood: 28% of adults are living in a home they’ve been in for less than four years. This is an attractive target group, wouldn’t you agree? After all, they’ve just moved into a new place, and they’re doing all the things one does to make a new house their home. Of this “new to the neighborhood” group, 40% are owners. That means they didn’t just buy a new home… they got a great bargain on it! After all, they purchased after the real estate bubble burst and home prices fell. You’ll find a lot of first-time homeowners in this group; folks who likely moved from an apartment with sparse furnishings, who need a lot of goods to fill up their relatively spacious new home. 56% of the people in this group are renters. While the foreclosure crisis has received a lot of press over the past few years, there is also a tremendous share of this group that could be called habitual renters… people who move around a lot and therefore prefer to rent, rather than own. This transient lifestyle is also a frequent behavior of young adults who haven’t decided where they want to settle down, or haven’t the financial means to buy just yet. (By the way, 4% of “New to the Neighborhood” residents could be classified as “other,” neither renters nor owners.)
Burned by the bubble. 20% of adults are living in a home they’ve been in for more than four years but less than eight years. That means they bought near the peak of the real estate bubble. But don’t write them off as a marketing target (see the marketing implications below)! Think about it this way: While the number of foreclosures got a lot of press over the past few years, there are far more people who may have negative equity in their property but are not at risk of losing it because they remain gainfully employed. When the bottom fell out of the market and their home equity vanished, it is likely these folks went through a period of outright anger. But at the national level, the recession has been over for more than three years (at this writing). After what might be called a financial grieving period, many of the folks in this group have decided they can’t stay angry with their home forever; they’re talking about what kinds of improvements might make this a place they can love again.
Long-term homeowners. More than half of U.S. adults—52 percent—have been living in their current home for eight years or more. That means original equipment is starting to require repair or replacement, and original furnishings and features are beginning to look dated. For the purveyor of home furnishings or home improvement, it’s the perfect storm… and it comes with a target consumer that is more likely than most to still have some equity in their home.
New to the Neighborhood. If someone has been living in their home less than four years, they’re doing a lot of home improvements that could be classified as cosmetic and aesthetic. Think paint, wallpaper, window coverings, rugs; anything that, in terms of décor, makes their new house their home. If they were previously renters but are now homeowners, they are likely to have a lot of needs, along with plenty of money to spend on those new home furnishings and improvements. If they were previously homeowners but are now renters, it is likely they had to shed larger furnishings, but are now in a position to re-furnish their new rental with smaller, more mobile goods. If you’re talking to renters, position home furnishings as “home improvements you can take with you,” because renters seem to re-locate more frequently.
Burned by the Bubble. If they can’t afford to sell (because they likely owe more than the home is worth) and move into their next dream home, they’re talking about the kinds of things they can do to make this house the home of their dreams. So this group is an attractive target for what we refer to as experiential home improvements and home furnishings. Think granite countertops, outdoor kitchens and patio fireplaces, hardwood floors, and home theatres. Having gone through a financial reconciliation, these folks are living within their means… but that more pragmatic spending style is likely to include investing in a home they know they’ll be spending more time in, enjoying family and entertaining friends. They now recognize their house as a place to… live. Can you help them with that?
Long-term Homeowners. The headline for this group: Infrastructural Home Improvements. When you’ve been living in your home for eight years or more, home improvement is more than a new throw rug from Pier One. Think windows, siding, roofing, HVAC and more; the stuff that stings. The good news: These folks are likely to be among your most qualified buyers when it comes to credit-driven, big-ticket purchases. They might not have as much home equity as they did five years ago, but they still have some value in their home. If you sell home furnishings or décor, this is a group that is often tired of the overall look, and might still consider buying rooms of furniture at a time.
Summary: Does your marketing message (from advertising to the way you talk on the sales floor) still target people based on age, gender or income? It might be smart to talk with your biggest customers, and determine whether term of residency plays a role in the way they set purchase priorities for home furnishings and improvements.
[Editor’s note: Our thanks to Deirdre McFarland, Haley Dercher, and Scarborough Research for providing the statistics that inform this perspective. For more information, visit Scarborough.com, or contact them at info@Scarborough.com.]