C+R recently attended the Home Improvement Research Institute Conference in Oak Brook, IL. While attending this conference, we heard some things about the home improvement industry and the economy in general that got us thinking. This is one industry where consumers are also producers, and the evolving consumer journey must rise to this juxtaposition.
As market researchers, our jobs have evolved a lot over the past several decades. From paper surveys in the mail to floppy disks, then eventually online surveys and now mobile-friendly and agile methods. Likewise, it should come as no surprise that the home improvement industry, and the way consumers are shopping in the category, is also changing rapidly.
We learned from being at the conference that there are a couple of different forces at play here, and we’d like to discuss two of them – the economy and technology.
First, there are several economic impacts that are shifting patterns in the home improvement market:
- Can we talk about the housing shortage? Believe it or not, the demand for housing is even higher now than it was right before the housing market crash. In January 2018, the housing demand was higher than the supply by 2.5 million.
- This trend is leading to overvaluation that is not income-supported (our incomes are not rising as much as real estate prices). Economists forecast that this disparity will be corrected by 2021.
- But, for now, not enough new homes and overvaluation of the current stock of homes mean that homeowners are staying put and choosing to remodel instead.
- And, to add to the housing shortage, the current stock of homes is older; averaging 38 years old and in need of repair; it’s likely time to start making home improvements.
- Then, there’s the Millennials who are buying and remodeling homes at an alarming rate. They are taking advantage of HELOCs (which are easy to get) to pay for their remodeling projects.
- Also interesting is that the biggest cohort of Millennials were born in 1990, and the average age of getting married is 28. This means the bulk of Millennials are just now aging into married life, going into homeownership, and making their homes feel like their own.
- What this all means is that due to the low housing inventory, we would expect to see the remodeling trend continue, and the Millennials who are just starting out may have to wait a bit longer to buy their dream home.
Secondly, we cannot underestimate the role of technology. It is now easier than ever before to visualize a space and essentially “create it yourself” using entirely online tools.
- Millennials, the so-called “YouTube generation,” feel empowered by YouTube videos to create their own spaces themselves, rather than hiring a professional like their moms and dads used to.
- They also tackle their purchases differently than mom and dad did.
- They are more likely to be an omnichannel shopper (online and in-store) who is more involved in purchases, relying on online reviews and referrals from their networks rather than ads.
- They have been brought up in the Amazon era -- they want it instantly, i.e., Amazon Prime Now.
- They are less brand loyal; instead, they are more interested in technology and in-home integration (think Alexa and Sonos).
- They are more likely to be over-inspired by social media among other things, and more likely to suffer from choice overload which is leading them to search for innovative and curated purchasing channels. For example, Clare offers 33 shades of paint carefully curated and shipped directly through its eCommerce site.
While home improvement is still done the “old school” way with a hammer, nails, paint brush and good old-fashioned problem solving, the consumer shopping journey within this space is vastly different and still rapidly changing. As consumers continue cultivating and producing their space, the industry must rise to meet the new consumer in digital, customizable, and instantaneous ways. This is accomplished by constantly evolving to meet consumer needs with connected devices, for example, virtual reality to allow consumers to “see” what they’re creating and tools to help them in the planning process to keep them from choice overload while providing value at each step so they can produce a space they aren’t just satisfied with, but one that delights them.