Should you be targeting by term of residency?

Trend Observation:  Once upon a time, it was not unusual for an advertiser to target consumers on the basis of an age or gender (i.e., adults 25-54, women 18-49, men 35-64, etc.)  But if you sell home improvements, electronics or furnishings, is that the best method of zooming-in to your target market?

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.

Marketing Implications: 

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.]

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

UPDATE on “Merged Households”

Trend Observation:  Let me revisit the story I published just a few moments ago [see “Merged Households” immediately below].  The Washington Post story I cited goes on to include this observation:  “Economists estimate that there are more than 2 million fewer occupied homes in the country than there would have been had Americans continued forming households at the rate they did before the recession. The slowdown has lowered demand for housing as well as for furnishings and appliances, placing a further drag on the economy.”

Marketing Implications:  Let’s focus on the fact that the story is talking about Census data with a window from 2007 through 2010.  So I’m wondering:  What happens when people living in a merged household decide their financial house is in sufficient order that they are ready to once again move out on their own?

The pent-up demand for home furnishings, home improvement—indeed, homes—could be amazing.

Are you watching the real estate market where you live (sell goods and services)?  If you sell appliances, home furnishings, or almost anything else that might fit into the traditional American home, you should be.  I may be stating the obvious, but jobs and housing will be a harbinger of sales opportunity in a lot of categories.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Number of merged households jumped 11.4% between 2007 and 2010

Trend Observation:  Census data published in a story from the Washington Post last night indicates that more than 1 in 6 households across the U.S. are home to more than one family.  22 million households hold combined families or returned family members, which is 18.7% of U.S. households.  The number could include any kind of merge, including return-to-nesters, left-left-the-nesters, multi-generational households, or simply people sharing a place as a means of coping with economic reality.  And adults 25-34 made up about two thirds of the increase.  Click here to see the whole story.

Marketing Implications:  Among those choosing to retreat from tough economic times by moving in with parents or other friends and family, the strategy seems to be working.  According to the story, fewer than 1 in 10 young adults who live with their parents are living below the poverty line (8.4%), when entire household incomes are taken into consideration.  Among this group (co-habitants), the poverty rate would be more than 45% if calculated by individual income. 

Parents, friends or other hosts have helped create a situation where many young adults who would be otherwise impoverished are creating a situation where the guest can re-group, stash some cash, or afford more discretionary spending like out-of-home dining, entertainment, or asset acquisition (whether that means a car, clothing, home furnishings for the day they move out, etc.)

“I live with my parents” might not be a comfortable statement for the proud young adult to make.  But it’s setting them up to live a little, while they become more financially comfortable to set off on their own.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

How to respond to trends and opportunities

Observation:  This week’s Springwise.com newsletter delivers on their reputation for reliable business ideas.  In this case, there are three examples of business ideas which respond well to emerging or important trends.  The first is a smartphone that detects radiation, which comes out of Japan in response to greater anxiety about that issue in the aftermath of the tsunami and resulting nuclear tragedy of last year.   Capitalizing on peoples need to know now, the Tim Horton chain in the United Arab Emerates prints the most recent headlines on the sleeve that insulates a customer’s coffee cup.   Respecting the more diligent behavior of today’s consumers, a hotel in London working with a furniture partner to facilitate a “try before you buy” campaign.  You can own the furniture in your hotel room.  Click on any headline to see that particular story, or click here to see the most recent Springwise.com newsletter for yourself.

Implications:  It’s not enough to be a trend watcher.  One must ask how emerging trends can be exploited for the happiness of your customers and the profit of your company.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

For rent: The American Dream

Observation:  Once upon a time, the idea of an American dream revolved around owning a home, a yard, and a white picket fence.  But a story in today’s USA Today suggests that the American dream is not purchased, but rented, for more and more American consumers.  Click here to see the story.

Implications:  Beyond impacting the way builders might design and sell their neighborhoods (selling to investors rather than individual owners), this issue could impact a lot of different categories, from home improvement to home furnishings and everything in between. 

But beyond the obvious categories, this phenomenon might even impact things like general retail (groceries and discount stores) and services (banks and dry cleaners).  After all, renters are generally more transient (they move more frequently) than owners… so the long-term relationships that might exist when customers are anchored by ownership could be impacted.  The marketing objective of attracting new customers might become more important than ever in markets where rental housing is significantly higher.

What other consequences can you think of in a world where more people are renting their American dream?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Can’t decide? Furniture store lets you sleep on it.

Observation:  The Springwise.com newsletter that was published this morning features a story about a New York City furniture store that lets you try the bedroom before you buy.  Click here to see the full story.

Implications:   This week, I’ll be in New Orleans speaking to a conference of home furnishings and interior design professionals (known as ART), so this idea was particularly timely.  It might inspire us to ask, “In what ways might I demonstrate my unique value proposition, instead of just making claims about it?” 

Not everyone can invite customers in for a sleepover, but there are other ways to help the customer take a test drive, such as testimonials from past clients, written success stories, and photographs and/or videos of your product or service in action.  

Consumer confidence is not just about the economic outlook.  You can influence the customer’s confidence by the way you help them discover the benefits of your product or service.  Don’t just say, “Believe me.”  Satisfy the customer’s preference of, “Show me.”

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Spring—and trends—give real estate sector reason to be optimistic

Observation:  An Associated Press story suggests that real estate prices have bottomed-out in many areas, started to climb in others, and that a hint of optimism is in the air for the category.  Click here to see the story as it appeared in the Dallas Morning News website.

Implications:   Housing influences so many things… from home furnishings to home improvements and repairs, and much, much more.  Even just some stability in prices could lead to stronger performance in a lot of categories.  Really glad to see this!

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Practically happy: Home improvement trends toward simplicity, effectiveness, togetherness

Observation:  A recent story from USA Today suggests that when people can’t flip their home (at least not with the frequency we saw leading-up to the mortgage meltdown), they’re making their current house their dream home with simple but meaningful home improvements.  Click here to see the story.

Implications:   If you’re in real estate, home building, home improvement or even home furnishings, this story has important implications for you.  This story might suggest that home improvement is being driven less by aesthetics and more by the desire to facilitate the functionality of the home, and the increased time families are spending together.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Furniture sales on the rise (again) in February

Observation:   A story in Crain’s New York yesterday indicated that sales in the home furnishings category are really taking-off nicely.  Click here to see the story.

Implications:   In recent Audience DNA research workshops, I’ve encouraged marketing professionals to stop thinking about “Adults 25-54” or “Women 18-49” as their target audience.   People don’t buy furniture just because they’re a particular age.  Their purchases are often influenced by the length of residence in their current home, and the extent to which they plan to stay there.

The foreclosure crisis created a whole new segment of renters; when someone moves from a house to an apartment, the McMansion-sized furniture often won’t fit.  Families who fall into this group often have up to a year to plan, however, so they sell the old stuff on Craigslist and save up some cash to outfit their new dwelling.

There’s a growing number of folks who are not victims of the real estate meltdown… but beneficiaries of it.  They’re swooping in to upgrade to a new home while there are still lots of great deals on houses out there.  New house = new furniture. 

As much press as was given to foreclosures, there is an even larger number of people who purchased their home at the peak of the real estate bubble are now up-side-down.  They’re not at risk of foreclosure, but they are unlikely to flip their current house and move into a new dream home anytime soon.  So they’re doing things to make this house the home of their dreams.  Alas, new home furnishings and home improvements can be a part of their plan.

Finally, folks who’ve been in their current home for eight to ten years or more are simply eager to do an upgrade.  Their current home furnishings look dated or worn, so they’re likely to welcome any new ideas that give their house a fresh new look and greater functionality.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Consumers showing their age, report says

Observation:   Today’s Research Brief suggests that younger consumers are less likely to satisfy their service and repair needs through the conventional auto dealership service department.  Click here to see the story.

Implications:  I’ve heard similar groans coming from other categories.  Some furniture retailers and manufacturers indicate that younger consumers don’t want “rooms” full of furniture, but are more likely to buy piece-by-piece, and seek utilitarian furniture that serves more than one purpose.  Some banks have noticed a trend toward the automated customer; younger folks who automatically deposit their paychecks and then use a bill-pay system to cover their bills… making it very difficult to grow the number of highly coveted “services per household” that are a bank’s profit point.

How are younger consumers different from those you’ve served for years?  Are you responding?  Are they?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Rents on the rise in many cities across the U.S.

Observation:   Many homeowners are feeling the frustration of the recent real estate meltdown.  But in many markets across the U.S., renters are feeling a bit pinched, too, as demand for apartments—and rent costs—rise.  Click here to see a recent New York Times story on the matter.

Implications:  Could high rents be one of the stimuli that cause renters to make a move toward buying?  How long will it be before the pendulum swings back toward home ownership?  Or will apartment building development resume, therefore creating more supply for this impressive demand for rental units?  As another source of rental housing, many investors have snapped-up single-family houses only to rent them to families who lost their homes through foreclosure.  Is that a long-term trend, or will those homes be sold-off again when housing supply and demand gets back into balance?

If you sell home furnishings, appliances or improvements, this range of possibilities affects you.  If you sell furniture, the goods you sell to an apartment dweller will be smaller that the goods you sold to the big homeowner.  If you sell to a former owner that is now a renter, your transaction is more likely to be in cash rather than credit terms.  Do your goods and offers reflect the current set of realities that your most important customers are facing?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Generational Economics: The Age of Acquisition

Marketing Observation:  Generally speaking, the Age of Acquisition refers to the collection of people are between the ages of 18 and 34.  (Therefore, at this writing, we could loosely refer to this group as The Millennials.)  Acquisition is a great moniker for this life stage, because their appetite for consumer spending seems insatiable.

I realize the term “Acquirers” can sound a little cliché, just like so many other terms the advertising industry has invented for itself.  So to fully appreciate the true significance of this group, think about this line of questioning: 

• Did you own your first NEW car on the day you turned 18?  Did you by the time you turned 34? 
• Did you have a place of your own by the time you were 18?  Did you by the time you were 34? 
• Had you filled that place with furniture when you were 18?  34? 
• Did you have a spouse or significant other by the time you were 18?  But by the time you turned 34? 
• Did you have children when you were 18 years old?  Did you by the time you turned 34? 

This line of questioning helps illustrate just how little you had at age 18, and just how much you had acquired by the time you turned 34.  That’s why we call it the Age of Acquisition:  People in this life stage seem to be consuming everything in their path.

Not everyone will answer these questions precisely the same.  But generally speaking, at age 18 we’re often born into consumer adulthood with virtually nothing, except that which our parents let us take from home.  And by the time we’re 34, many of us owned at least one copy of almost anything it takes to run a typical household.  (And some stuff you don’t need to run a household!)

In addition to those young adults who will leave their parents home, go off to college and then venture off to start their own life, there is a large and growing segment of young adults that are having difficulty with this move, or are purposefully delaying it.  Often, this hesitation is in response to the post-recession labor market.  Often unable to find a full-time job in their chosen field after graduating from college, many twenty-something adults return to their parents’ home until their income can match the cost of striking out on their own.  Think of them as return-to-nesters.  By the way, this can still be a very attractive target group, as they often earn an income that is not going toward a rent or house payment (if they are living in a home that is paid for by someone else).  That leaves a lot of discretionary income for things like entertainment, clothes, electronics, etc.

Marketing Implications:  Serving people that are in the Age of Acquisition is no small challenge.  Yes, with all the spending they do, one might be tempted into believing “this’ll be easy.”  But adults 18-34 are busy building families (although later than ever), climbing their corporate ladders, and still drawn to engaging in a highly active social life. 

Millennials are doing things differently, right down to the homes they live in.  Where there may once have been a living room, there is now a game room (equipped with at least one game console and a plasma flat-screen).  Where there once was a formal dining room, there might now be more of a social center, which can be used for homework (career or college), entertaining, or board games with the family.  They’ve never known a world without very advance personal computing, and they’re driving the break-neck speed of innovation in smartphones, tablet computing, and more. 

The Age of Upgrades is ready… to spend with companies that have upped their game.

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Generational Economics: The Age of Increased Equity

Marketing Observation:  Draw an arbitrary line around that segment of the population that begins at around age 45 and runs up to around age 59.  This is the Age of Increased Equity.  Why do I make that assertion?

In this life stage, there is a very good chance that the careers in a household are very well established.  People in this age group are often earning at a higher level than at any other time in their lives.  (Of course, some households have had to adjust that relative income due to recession-related job loss.)  Still, many people in this life stage are working in professional occupations (doctor, lawyer, engineer), as upper managers and executives, or have been in a blue-collar job long enough that they could be called, “Blue Chip Blues.”   

Meanwhile, this pinnacle income is happening just as the fixed expenses in their lives are beginning to fall.  Think about this combination of events:  By now you have a solid career, lots of experience, and you’re probably earning more money than ever… and it’s happening just about the time you’ve pared-down your consumer debt, kids are leaving home, and you may even be close to paying off your mortgage. 

True, there is probably college tuition to worry about, and helping young adult children get their feet on the ground… and a lot of folks in this life stage are starting to realize they have some catching-up to do with their investments and retirement savings.  But each of these expenditures is nonetheless, “discretionary.”  That’s the best way to describe the Age of Increased Equity.

Marketing Implications:  Life for many people age 45-59 looks a bit different today that it did just five or six years ago.  Their post-recession realities have them revisiting how much equity they have in their home and other hard-earned investments.  (A lot of us have some catching-up to do!)  They’re helping adult children get on their feet under economic circumstances that seem more difficult than when they themselves were that age.  (I don’t mean to speak for all Baby Boomers, but when I reminisce, I’m more inclined to think of things like the moon landing and rock & roll, rather than the oil embargo of the mid-seventies and the stagflation of the late 70s and other woes.) 

Few people age 45-59 were born into technology… they’ve had to adapt.  They’re competing with a younger labor force that has never known a world without the personal computer.  They’re likely to plan on working longer to compensate for shrunken investments and the fear that social security won’t survive their full lifetime.

In spite of all the challenges they face, the Age of Increased Equity has earned the right to indulge.  Nicer cars.  Nicer homes.  And not just travel… but experiences.

Is this a group you are (or should be) selling to?  Have you stopped to think about—or better yet, talk to them about—what their preferences and priorities are?

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Home furnishings industry regains footing... and opportunities

Observation:   A recent story in the High Point Enterprise suggests that 2011 was a year of stabilization for the home furnishings industry.  While it may not be what one could call a robust recovery, 2011 saw increases in orders, shipments and employment, and that trend seems to have momentum going forward.  Click here to see the story.  HPE is a publication serving the home furnishings industry.

Implications:   Just a few years ago, it seemed like many people were buying and selling houses they same way they would trade-in their car every few years.  But that cycle was snapped, for many consumers, by the real estate meltdown.  Upside-down in their property, in terms of equity, a lot of folks have come to accept that they won’t be moving into a new-and-improved McMansion anytime soon. 

So, like many business categories, the home furnishings industry finds its customer base in a state of reconciliation.  In effect, once people accept that a new Dream Home is not in the cards, many begin taking steps to make the house they are in the home of their dreams.  From home improvements to home furnishings and accessories, they’ll be looking for ways to be happy with their current home.  Are you speaking to this new benefit… sought by so many consumers?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Trade-in value: It's not just for cars anymore

Observation:   Back in October, we shared a posting about “Re-commerce,” where more consumers are trying to sell something they own before buying the replacement for that item (i.e., listing a couch on Craig’s List before spending the money for a new sofa).  Click here to see that Elm Street consumer trends story from October 4, which was based on an article from Trendwatching.com.

In today’s Marketing Daily, there is another story of interest to this trend.  It suggests that more women are considering resale value before they buy a product (and we’re talking about everything from clothing to electronics, no just cars).  Click here to see that story.

76% of the women surveyed indicate that they participate in a site where consumers buy or sell from each other.

Implications:   Should your company consider adding a trade-in policy for the products you sell?  Should it at least start thinking about the long-term resale value of the products you offer, and talking about those attributes with customers?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The impact of those who aren’t leaving the nest… on Mom, Dad, and the economy

Observation:   It turns out that when college grads return home instead of striking off on their own, it’s not just Mom and Dad’s bottom line that feels the effect.  Stalled starts are impacting the overall economy, according to this summary from today’s New York Times (click to link).

Implications:   When it comes to college grads who are returning home, or other adult offspring that never left, or boomerangs who’ve returned to the safety net of their parents after a job loss… what kinds of marketing opportunities might surface? 

From apparel that helps provide confidence for the job interview to the furniture store that can provide smaller furnishings for a more crowded house, or even the bank that can provide a plan to stash-away savings for the day when a son or daughter ultimately moves out on their own…

There are still opportunities in a world where folks don’t move away from home as early as they used to.  The opportunities just look different.  One example:  The new "age of acquisition" consumer might not be 18-34, but instead, the baby boomer, as they increasingly fund the needs of their adult children.  An example of those expenditures is found in this story from Engage:  Boomers (click to link).

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Substantially priced homes in Atlanta begin moving

Observation:  Working in the market this morning, I noticed a story in the Atlanta Journal Constitution explaining how homes priced over one million dollars have enjoyed somewhat of a surge in sales recently.  Click here to see the story.

Implications:   This example reminds us how there is a growing chasm between the “haves” and the “have nots,” and that the more upscale market seems to be somewhat insulated from the slow paced recovery that many consumers are feeling. 

It might also be a reminder the recession was not equal for all regions, cities, categories or companies; likewise, the recovery is unlikely to be an equal opportunity event.  How is "the market" where you live?  Is your category recovering differently than other businesses in your area?  Is your company enjoying a recovery that is different from your competitors in the area?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Are banks lending money more freely where you live?

In spite of what we’ve been hearing for years with regard to tight credit markets, a story in today’s DealBook explains that many banks have returned to a more aggressive posture when it comes to lending money (especially where well-qualified consumers and businesses are concerned.)  Click here to see the story.

Implications:   The DealBook story seems to indicate that the recovery is still moving forward.  Are you seeing more big-ticket purchases in your market?  If not “exploding,” have categories like automotive, home furnishings and home improvements at least stabilized?  If you sell big-ticket items, are you seeing more people investigate the purchase… and qualify for financing?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Trend site recognizes increasing tendency to trade-in and trade-up

Trendwatching.com is a consistently reliable source for trends across a wide scope of business categories.  And the October Trendwatching newsletter holds a series of stories having to do with our desire to trade-in.  Click here to see it.

Implications:   Re-commerce is nothing new; you’ve probably traded-in a car to buy a new one, or sold one house to buy another.  But this story does a good job of pointing-out how consumers are more inclined, lately, to trade-in where a variety of new categories are concerned, and using a variety of tools.  Many local pawn shops are well stocked, Craig’s List is quite populated with goods for sale, and companies advertising that they’d like to buy your unwanted gold and silver are plentiful.  

Is there a way that folks are trading-in as a means of trading-up to your product or service?  How might you facilitate that move?  And besides discounting the price of a new purchase, what other benefits does the consumer receive by trading in?  (Are you messaging about those benefits?)

At our house, I recently enrolled in a class I wanted to take.  But before I did it (it has to do with a hobby of mine), I decided to sell some power tools and sports equipment I hadn’t been using.  It wasn’t just that I didn’t want to take the tuition out of our household budget; I built the goal of de-cluttering into the process… not wanting to go further with one interest until I off-loaded some of the things that had to do with other activities.

Also, respect that this isn't just about consumers who want to turn their possessions into cash; they simply recognize that their property now has a value... if not to them, then perhaps someone else.  I've recently seen furniture store ads asking people to trade-in their mattress, which is then donated to a shelter for the homeless.  And I've seen a department store campaign that invites shoppers to trade in their winter coats; their old coat goes to charity, and the consumer receives the reward of a discount toward their new jacket purchase.  Again... can you apply this principle in your company, and do good as you do well?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Is stability the best that U.S. real estate market can hope for?

I dislike this over-used cliché as much as anyone, but there was an important story on CBS News last night, which suggested that the current real estate market might represent “a new normal.”  In the feature—which ran as the lead story in the broadcast—Yale economist Robert Shiller challenges the conventional wisdom of those who are waiting for a real estate recovery.  Click here to see the story, or watch the video immediately below (commercial pre-roll required).

Implications:   Of course, this is not just a story about new housing starts and existing home sales; this issue impacts the home furnishings, home improvement and mortgage industries, directly, and virtually all other retail categories at least indirectly.

Frankly, I liked one of the messages sent by this story:  It’s time to stop waiting to see what happens, and get back to the business of doing business.  If the housing market recovers, great… consider that a bonus.  Meanwhile, the smart money is on regaining a focus on who your ideal consumers are, understanding their needs, and communicating how you can satisfy those needs—at least the most important ones—better than your competitors.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.