The Regional Consumer

June 30, 2008  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on July 2008 In this issue of Home Furnishings Business, we take our final look at our Consumer Survey. Due to the rapidly changing economy, we re-questioned our original consumer panel about what is happening in their region of the economy and what is most affecting them and their ability to purchase home furnishings.

The first thing to note is that consumer responses don’t vary that much by region, but if you’re planning on selling to people in your area, you need to understand what motivates them and what leaves them cold.

Of all the consumers surveyed, those in the Northeast may be the toughest sell and the hardest to get back in home furnishings stores. Fully 45 percent of those surveyed said they hadn’t shopped for home furnishings in at least two years, with more than half of them saying it had been more than five years since they shopped for home goods.

Of course, this may mean that their inner decorator is about to burst out of her shell and good furniture and great buying terms will entice her to shop like never before.

Just 3 percent of Northeasterners had shopped for home furnishings in the past six months, compared with 9 percent in the South and 7 percent in the Midwest and West regions. But in all four regions, more than two-fifths of respondents said it had been between one and two years since they had shopped for home furnishings.

These are the consumers who may provide the best opportunity to increase sales or sell enough to match last year’s total store sales. It hasn’t been that long since they shopped that they aren’t aware of what styles and trends are fashionable and, hopefully, they have pleasant memories of their last purchase.

Designing a marketing program around these recent shoppers, including product, delivery and financing, may get those shoppers back in the store, along with their more reluctant neighbors.

And this plan also recognizes the two things that consumers say are most likely to get them back shopping—good quality furniture and a great sale. Savvy shopkeepers know that the best way to get buyers to buy is to first get them in the store. Then let your trained, expert salespeople do what they do best—match customer needs and wants with what your store offers.

HUNGRY FOR PRODUCT

Across the board in all regions, consumers plan to buy home entertainment furnishings next. Spurred by the U.S. switch to all-digital TV broadcasts in February next year, consumers are setting their sights on televisions that can receive the government-mandated signals and want furniture to put those televisions in and on.

About two-thirds of consumers in each region said home entertainment furniture was next on their shopping lists, followed by a sofa, upholstered chair and then bedding.

Not surprisingly, each of the next products on the want-list can be used to watch that new digital television, a clear indication, if one was needed, that consumers are responding to the digital age and designing their homes around what’s new, hot and works.

In terms of home accessories, lamps/lighting and wall art top the list of consumer wish lists, with about 60 percent of customers naming these products as need-to-buys. Next come home textiles, including such items as bedding (the sheets and pillowcases, not the mattress and bedsprings), bathroom textiles, window treatments and kitchen/dining textiles.

Pretty far down the consumer wish-list are accent furniture, tabletop products and candles. But this is a list of planned purchases, not the impulse buys that are so attractive to customers once they actually enter a store. These “add-ons” can frequently add up to sizable tickets and according to one Westerner, they “make” her house. Look for store managers and owners to keep her and her wise sisters in mind when it comes to stocking their stores.

AND THE MONEY COMES FROM?

A quick check of consumers done in May showed that survey respondents think the same way as last year about how they will pay for their home furnishings purchases—they’ll finance them.

Despite the drastically tightened credit market, just 6 percent of Northeasterners and Southerners plan to pay by cash or check for their new home furnishings purchases, with 8 percent of Midwesterners and 7 percent of Westerners making the same choice.

Overall, about seven out of 10 consumers plan to use store credit to finance that new entertainment center or sofa, so it’s past time for store managers and owners to make sure that they have access to finance companies with consumer-friendly financing plans. The question is not whether or not consumers want to finance their new product; it’s whether they can qualify for financing at all!

STEPPING OUT AND STEPPING ON

Just as you see on those home-decorating shows on television, home-dwellers love hardwood floors, with more than 40 percent of consumers in the survey preferring them to carpets, tile/slate, rugs, linoleum and other floor coverings. In the West and Northeast, 44 percent of consumers wanted hardwood floors in the homes, with the South coming in at 43 percent and the Midwest at 40 percent.

But wanting hardwood floors and having them in the home are two different things. If consumers can’t afford hardwood floors, they are likely to want to dress up their homes with other less-expensive flooring products. Another opportunity for store managers and owners is offering rugs to those who already have hardwood floors.

Hardwood floors can easily be scratched or damaged, and consumers may be looking for ways to protect their floors and also give the room another design element—a rug.

IT’S A TOUGH, TOUGH WORLD OUT THERE

Six months ago, when Home Furnishings Business first surveyed consumers, people were more optimistic about the economy than they appear to be at present. To verify, Home Furnishings Business went back to those original consumers and re-surveyed them on a number of economic questions.

In the original survey, just 29 percent of consumers said that gas was either already at $4 a gallon in their area or would reach that level. In May, a whopping 90 percent said $4 gas was a reality or would be in their area in the near future. Regionally, the most expensive fuel region in the U.S. appears to be the West, where 93 percent of those surveyed said $4 gas was there or was coming soon.

A similar response was received on the question of a recession. Six months ago, on average, just 13 percent of consumers said the country was in a recession. Now, an average of 69 percent says it’s in a recession, with consumers in the Midwest most pessimistic (or realistic!), coming in at 83 percent, followed by the West at 79 percent.

Just over half—51 percent—of consumers in the South say the country is in a recession, but a nearly equal number, 47 percent, say a recession is probably coming later this year.

Car-buying plans for this year have been pretty much shelved, according to consumers. Just 4 percent said six months ago they planned to buy a car; now, the number is 3 percent.

The number of consumers planning a vacation this year increased from 20 percent six months ago to 30 percent in May. However, the number planning on staying home for that vacation and not traveling doubled. The most-often cited reason for not traveling? The cost of gas, of course.

At 33 percent, Midwesterners are most likely to take a vacation this year, followed by the Northeast and South at 29 percent and the West at 26 percent.

A trip to the grocery store has become a sore subject with many consumers, as prices continue to rise. Milk, eggs, flour, meat and other products have seen double-digit percentage increases in recent months.

Six months ago, 52 percent of consumers said groceries bills were either higher or a lot higher compared to a year earlier. In May, that number jumped to 71 percent of consumers. Nearly eight out of 10 of Midwesterners said prices had skyrocketed, compared with 66 percent in the West.

THE SOLUTION?

There are no easy solutions for how to get consumers into home furnishings stores and how to get them to buy. But consumer spending numbers on home furnishings are going up from month to month, showing that consumers are buying.

In April, consumers bought $418.4 billion of home furnishings, up 1 percent from March. Compared with April of 2007, spending increased 1.5 percent.

If store managers and owners haven’t done it yet, now is the time to hone that marketing plan, make sure salespeople know their jobs and products, and go after customers.

From October 2007 until February 2008, Home Furnishings Business conducted an exclusive survey of consumers on the furnishings industry, including what products they purchased, where they shopped, their shopping experience and their future shopping plans. More than 400 consumers were surveyed on a wide range of questions.

In May of 2008, consumers that responded to the original survey were re-questioned about the economy in their area and how it is affecting them.

The survey was originated, conducted and compiled by Research Editor Janice Chamberlain under the guidance of Editor in Chief Sheila Long O’Mara.