What She Wants

November 12, 2013  by in Business Strategy, Industry   

Despite political fireworks and personal financial concerns that weigh on consumers’ minds showing no signs of retreating any time soon, a recovering housing market and gradual return to economic normalcy are creating opportunity for home furnishings retailers.

The following examines potential furniture buyers and what motivates their decisions to purchase— or not purchase—based on Home Furnishings Business research.

 Furniture and bedding sales for this year’s second quarter totaled $17.84 billion, off a half percent from the same period in 2012. Excluding bedding, first-quarter 2013 sales were down 2.8 percent from last year’s first quarter; and the second quarter was off 1.4 percent compared with last year.

(For a breakdown of who’s doing that business— the U.S. population in 2012 segmented by age and income—see accompanying story “Who’s Out There.”) Following are some insights on consumer behaviors and attitudes behind those numbers.

What’s driving consumers?

When consumers start the process of shopping for home furnishings, the most important business intelligence for both vendors and retailer is the following:

·         Who did the consumer consider purchasing from?

·         Who did the consumer consider, but not shop?

·         Who did the consumer shop, but not purchase from?

·         Who did the consumer purchase from?

·          

It’s worth noting that the research found that consumers nationwide are well aware of alternative retail channels for furniture, in addition to traditional channels such as department stores, independent furniture retailers and regional home furnishings chains

Vertical retail models such as Crate & Barrel, Ethan Allen and Ashley had the highest awareness among consumers, 62.7 percent. The second highest— get ready—Internet sites at 60 percent. In third place, with 57.4 percent awareness among furniture shoppers, are mass merchants, which also should give traditional retailers pause. Independent retailers showed up third from last in the channel-awareness rating among consumers at 52.5 percent, followed by department stores, 50.8 percent; and lifestyle stores at 44.7 percent.

The good news is that consumers are interested in furniture. When asked, “Do you believe your home needs some redecorating that would include new furniture?,” the response was overwhelmingly positive: 87.4 percent said “yes.” Those consumers’ high awareness of other channels from which to find that furniture, though, should concern traditional home furnishings stores.

Also, while consumers recognize the need for furniture, getting them to act on that need remains a problem (see “Shopping Stages” graphic).

 

Getting a Sense

Our research posed several questions concerning the furniture buying process to consumers. When asked, on a scale of 1 (very likely) to 5 (not at all likely), “If you had a free afternoon, what is the likelihood that you would spend it in a furniture store?,” the average response was 2.9. We don’t rate highly on the “entertainment value” scale—retailers need to think about what they can do to raise excitement for new designs; and how they can make their store a place where people want to be. Note that when we asked “Please rate the degree to which store environment, décor, furniture display, atmosphere, and ease of navigating the store adds to your perception of the value of the product. Rate on a scale of 1 to 5, with 1 being ‘No additional value’ and 5 being ‘Much value,’” the average of all responses was 3.7.

Not surprisingly, most consumers are cost-conscious even if they have money to spend. When asked to rate their current style of living on a scale of 1 to 10 with 1 being “I have to be very conscious of what things cost and must live within a strict budget” and 10 being “If I want something, I buy it. Cost is not my first consideration,” the average of all responses was 4.5.

Women lead the way

When it comes to visiting a store, women still rule. We asked: “In your household who is usually the person who makes the initial visits to look at the furniture that is in the stores?” The top response “Self-Female” accounted for 79.7 percent of responses; “self-male” 10.5 percent; and “spouse/ partner-female,” 9.7 percent. “Spouse/partnermale”? Zero.

And, women are far and away the primary motivators to considering a new furniture purchase. We asked, “In your household who is usually the first to mention the need or desire for new furniture?” “Self-female” was the answer for 70.4 percent of responses; “spouse/partner-female,” 12.3 percent. The male spouse? You guessed it: nada, nothing, zero percent. While women inspire initiation of the buying process in most instances, the final decision in male/female households remains a joint decision, with 58.5 percent of respondents saying both partners make the call. And men apparently still command the pocket book, with 26.8 percent saying he has the final decision, while 14.7 percent of respondents said women decide on a furniture purchase. Once they’ve decided to buy home furnishings, what are the steps consumers take? According to our research, the first thing most consumers do is Internet research. That’s followed, in order, with visiting a store to see product on display; save newspaper and magazine articles and ads; do research in magazines; get recommendations from friends and relatives; respond to television or radio ads; and consult with or hire a design professional for advice.

Internet research and store visits were close; but it’s worth noting that responding to an ad was near the bottom of the list of steps.

The rubber meets the road

Once shoppers are in the store, are your salespeople focused just selling a sofa or bed? If they are, you are missing an opportunity. We asked consumers to choose from two sentences which one most nearly explains how they shop for furniture: “When I shop for furniture, I think about the total room plan before purchasing”; and “When I shop for furniture, I am only interested in purchasing a specific item.” A large majority, 68.5 percent, said they think about the entire room when shopping. What first impression does your store make? We found that the first thing shoppers look for are product displays, even before sales and promotions, which are followed by price tags, latest designs, and then—pretty far behind—a salesperson or service from sales personnel. When they do interact with your sales team, the most important thing consumers want them to provide is product knowledge (36.7 percent of respondents). Order writing was next at 26.3 percent.

Another indication that shoppers have done their research is that those first two items they said are most important for salespeople are far ahead of other things they want your sales staff to provide: help with color combinations (14.6 percent); style advice (13.3 percent); and assistance in developing a room layout (9.1 percent). Let’s consider those responses against the next question, which asked, “From your experience, what does the sales person in a furniture store/ department actually provide to you?”

Order writing was first (35.6 percent); followed by product knowledge (35.1 percent); help with color combinations (12.5 percent); style advice (9.9 percent); and assistance in developing a room layout (6.8 percent).

While they feel salespeople are very strong in those top two services, consumers indicated room for improvement in the other three. Our research also found that shoppers are fairly quick to pull the trigger. We asked, “How long did you shop for the product before you made your most recent furniture purchase?” A third of respondents said less than a week; and another 43.8 percent bought within a month, almost half of those one to two weeks into the shopping process. The lesson: Keep working those close rates, or they might buy somewhere else. HFB

 

Who’s Out There

The first part of reaching consumers is a basic understanding of who they are. Here’s a look at U.S. consumer households in 2012 by age and income percentages.

First, let’s look at the age groups.

No surprise here, but Baby Boomers (45 to 64 years of age) remain the largest age demographic, comprising 38.53 percent of U.S. households. Not far behind, though, is Generation X (25 to 44), with 35.17 percent of the population.
Pre-boomers, those consumers age 65 and older still represent more than a fifth, 21.22 percent of U.S. households; and Generation Y, consumers under 25 years of age, 5.08 percent. (Let’s hope that last group has some kids.)

The good news for furniture retailers is that older Gen Xers—those 35 or older—and “second wave” boomers, age 45 to 54, are in their prime income producing years. Together, they represent 40.52 percent of U.S. households. This cross-generational segment has the largest percentage of families with incomes more than $50,000—25.41 percent—than any other segment. As a comparison, older boomers represent 9.79 percent of such households; Gen X’ers 25 to 34, 7.94 percent; those over 65, 6.86 percent; and Gen Y (under 25), 1.14 percent. (51.14 percent of total U.S. households have income more than $50,000.)
Also, the second wave of Gen X (25 to 34) is catching up to its older siblings in terms of income. Their households represent 7.94 percent of those earning than $50,000 a year, compared with older Gen Xers at 11.56 percent.
Moving it up a notch, the younger Boomer/older Gen X combination stacks up pretty well in the $100,000-plus household category—10.52 percent of their age group. (Total U.S. households with income at that level comes to 19.3 percent.)
For older boomers, 4.2 percent of that group’s households earns $100,000-plus. They’re followed by pre-boomers (2.25 percent); younger Gen Xers (2.16 percent); and Generation Y (0.19 percent).

 

Attitudes and Behaviors

Furniture isn’t a frequent purchase, but consumers view it as central to their self-image, and its facilitation of sharing togetherness with family and friends makes buying it an emotional decision.
That’s among key findings from “Consumer Attitudes and Buying Behavior for Home Furniture,” a study this year from the Franklin Furniture Institute’s Furniture Outreach Program at Mississippi State University.
The results are based on a national survey of 2,007 adults who participated in an online consumer panel.

Other takeaways: The survey found that quality is the most important criterion consumers use to evaluate furniture for purchase. Made-in-the-U.S.A. is stronger than environmental friendliness overall, but the latter is increasingly important among younger, Generation Y consumers.

They aren’t in their prime buying years yet, but “green” will grow in importance for furniture as that group’s incomes increase.
The study identified five stages of the consumer decision process regarding attitudes and buying behavior for home furnishings: problem or need recognition; information search; alternative evaluation; outlet selection and purchase; and post-purchase evaluation.

WHERE THEY BUY

The Mississippi State project found that most consumers have little brand or store loyalty; and since most have already done their research online, they come to a store or e-commerce site with a good idea of what they want. The good news here is that their prior exploration means less buyer remorse after the sale.
For furniture retailers, the study suggests they must be on target with display, selection and price all the time. Only 26.3 percent of respondents said they are loyal to a specific furniture store; and 76.7 look at numerous stores before choosing where to buy.
The good news: Quality is important. Almost three quarters of survey participants disagreed with the statement: “I prefer to shop for furniture at discount stores like Target or Walmart.” (That still leaves a significant share of overall respondents who would, though.)
Do you think consumers won’t buy your product online? The study found 21.6 percent of surveyed consumers had made a furniture purchase on the Internet, almost double the figure from a similar 2008 research project.
Plus, more than a third of respondents say they will shop furniture online over the next few years, compared with 25 percent last time around; an more than half, 52 percent said they are willing to buy furniture online.

Regarding attitudes toward online furniture purchases, the study found significant variation among different age groups. When asked if they would shop for furniture online in the next few years, 46.9 percent of Gen Y respondents said “yes”; 36.7 percent of Gen X; 28 percent of Baby Boomers; and 3.9 percent from the Depression/Pre-Depression age group.

The full study can be found here: http://bit.ly/1aOd3Z8