Study: Home prices climb in most major cities

Trend Observation:  Today’s edition of the Atlanta Journal-Constitution features the S&P/Case Shiller report about rising home prices in many U.S. cities.  19 of the 20 markets measured reported an increase in home prices from March to April, and a national index of home prices also rose 1.3%.  Click here to see the story.

Marketing Implications:  We have a lot of ground to recover, but this story suggests that home prices are now, on average, at the level they were in 2003.  A healthy housing market, of course, improves a lot of directly related categories, such as mortgage lending, home furnishings and home improvement.  But there are many indirect beneficiaries too… so this is very good news.

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

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.  

McKinsey: A progress report about the deleveraging process

Trend Observation:  Today’s newsletter from McKinsey takes a look at consumers’ progress in pairing-down their debt, a process widely known as deleveraging.  Click here to see the story.

Marketing Implications:  According to this analysis, consumers in the U.S. are getting a handle on their debt faster than some other parts of the world.  However, the study indicates that roughly 70% of mortgage debt and 80% of this deleveraging has come from default.  In other words, much of this “progress” has come from lenders writing-off the amount, rather than debtor’s paying-down the balance.  Further, up to 35% of defaults could be described as “strategic decisions,” where the debtor elected to walk away from a financial obligation.

The McKinsey paper seems to suggest that our deleveraging process will continue into the middle of 2013, but it might be over-simplifying the situation to suggest that means our storm of credit issues will be over.  Just because a consumer has little or no outstanding debt on their personal balance sheet does not necessarily make him or her a good risk; it could mean that someone else had to write-off an obligation that consumer once held.  If you sell big-ticket items where some form of credit often facilitates the purchase, this matters to you… and it makes qualifying your customers more important than ever.  (A process that can begin with the marketing message you create.)

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.

Real estate recovery depends on: Location, location, location

Trend Observation:  A report from today’s Wall Street Journal reminds us of the old real estate adage that location is everything.  And not just in terms of the city or region where your home is located; the value of property might come right down to the neighborhood where it sits.  Evidence is mounting that the chasm between upscale areas and those facing economic challenge is only widening, as buyers are likely to pass on the most distressed neighborhoods until inventory in more desirable areas is sold out.  Click here to see the story (subscription may be required).

Marketing Implications:  Understanding the landscape around your place of business might influence your strategy for the near term, or perhaps even an extended period of time.  Are you seeing home prices rebound in your area (the trade territory in which you do business)?  Like a good dance partner, your marketing should mirror the steps of the consumers you serve.  And let them lead.

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.

In select cities, real estate turns a corner

Observation:  According to a story from today’s Dallas Morning News, housing prices have shown a year-over-year increase in seven cities, including Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix.  Click here to see the full story.

Implications:   The number of cities listed is not long… but the importance of this segment is huge.  Confidence in home prices is a strong anchor for consumer sentiment.  It’s good to see that, even if only in several major markets, prices are starting to find their way back up.  Here’s to more cities following soon.

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.

UPDATE: Emerging adults

Observation:   For quite some time now, we’ve been following a trend that could be classified as multi-generational households, or if you prefer, emerging adulthood (links to some of those stories appear at the bottom of this post).   

Today, another story on the topic was published by Research Brief, and it sheds more light on both the benefits and frustrations associated with adult children who return to their parents’ home, or never left.  Click here to see the story.

Implications:   In a conversation with one of our clients this week, we were talking about the potential that could exist among consumers in this category.  People who have returned home—or never left—might be benefiting from housing at very low rental cost, or at no cost at all.  That means any income they generate is much more discretionary than the money held by someone who rents or owns their own place.

Think about it:  What would you do if you could skip your next five or six mortgage or rental payments?  There would be more money for travel/vacations, restaurants and nightclubs, cars, home and personal electronics (from cell phones to tablets to gaming), and more.  Further, it is likely that this group of twenty-somethings (and some thirty-somethings) will be a part of any future real estate market recovery.

Think twice before you ignore or overlook this potential pool of discretionary income.

[For more on this topic, see “Return-to-nesters” from 11/4/11, “More people under one roof” from 5/5/11, “Multi-generational households” from 4/15/10, and “Emerging adulthood” from 1/5/12.

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.

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.

A new life stage term: Emerging adulthood

Observation:   During years of both advertiser analysis and in-field workshops for media companies and marketers, I’ve referred to a set of fluid life stages which help organizations anticipate consumer behaviors of the people in those groups.  Life stages make you think beyond simple age-based demographics, and focus more on the experiences that are shaping behavior during those years.  Generally speaking, the main life stages we cover are Teens (12-17), Age of Acquisition (18-34), Age of Upgrades (35-49), Age of Increased Equity (45-59), New Age Seniors (60-69), and Matures (70+).

But in the newsletter I received yesterday, Iconoculture has a new, thought-provoking life stage for all of us to consider.  It is a subset of the Age of Acquisition that they call “Emerging Adulthood” (18-25).  Click here to see the story.

Implications:   The economy, the labor market, and willing Boomer parents have colluded to create a population of young adults who are more likely to live with mom and dad for a longer period of time, rather than striking out to create their own household. 

Does that make this an unattractive market to reach for?  On the contrary, this life stage is often composed of people who are stashing-away cash until they can do it big.  In the meantime, they’re living in a place with low or no rent, so more of their income could be considered discretionary.  To be sure, some folks in this life stage and living arrangement could be examples of a “failure to launch.”  But this group also includes people who are fueling-up… so that when they leave, they can reach for the sky.

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

Changes to the family landscape (or “grand scape”)

Observation:  Neighborhoods for seniors that feature playgrounds intended for young children?  Computer labs and study areas where kids can do their homework?  Today’s Iconoculture newsletter included a link to some interesting thoughts about grandparent-led (or grandparent-assisted) households.  Click here to see it.

Implications:    Boomers have re-defined almost every life stage they’ve passed through… and it looks like their grand-parenting years will be just as different. 

Consider whether your company, products or services should adapt to changes in the way boomers interact with their adult offspring and grandchildren.  This could be a consumer group—and a set of behaviors and preferences—with tremendous potential.

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

UPDATE: Boomerang kids

Observation:  Earlier today, I posted a story about adult children living with their parents (see the posting immediately below).  Well, I happened across another CNN-Money story that suggests as many as 85% of college seniors planned to move back home after graduation.  Click here to see it.

Implications:   Smart companies will watch for ways to serve a multi-generational household, and the increasing number of consumers who are living in a non-traditional family environment.

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

Return-to-nesters (and never-left-er’s)

Observation:  Long-time friend and associate Rusty Winter in Jacksonville shared this story from CNN-Money, which explains that the trend of adult children moving back home to live with their parents is continuing.   Click here to see the story.

Implications:   The big take-away from this story, for me, was the thought that 150,000 fewer households are being formed in a year compared to the 1.2 million households that might form in a normally functioning economy.

But note that it’s not just kids moving in with parents.  In some cases, we’re hearing of parents moving in with their adult children, too.  Whether you sell groceries, home furnishings, home improvements or home electronics—or almost any other product or service—you would be wise to consider the challenges and opportunities presented by this emerging multi-generational household.    Is it possible that a “guest” is helping with the supermarket shopping?  Should home furnishings be smaller, in order to accommodate more seating per room?  Will home improvement projects be intended to help convert a family room into a bedroom, or a multi-function area? 

If an adult child lives there… are they paying rent or helping out in other ways, financially?  Do the economic efficiencies created by this living situation leave more money for the co-habitant to spend on things like automobiles, entertainment, or other indulgences?

More homes are occupied by more people;  ask yourself whether this trend presents an evolving sales opportunity for your company, products and services.

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