Drop in Consumer Spending
on Home Furnishings Signals Cocooning's Demise
Capping a year of anemic performance in the home furnishings industry in 2001, American consumers are sending a clear message that continued heavy spending on their home is no longer a priority.
Following three years of consistently strong growth in the six-to-seven percent range, retail sales of home furnishings, including home durables such as furniture, appliances, china, glassware and tableware, and semi-durables, such as curtains, bedding and linens, grew only .7 percent in 2001 to $360.7 billion. A weak consumer economy is not to blame for the poor showing in home-related sales. In 2001 consumer spending across all categories rose 4.5 percent, from $6,684 billion in 2000 to $6,987 billion.
The reasons why the home furnishings category significantly under performed the overall consumer economy and how home marketers can apply the research findings in better business planning is investigated in this new report from Unity Marketing, Home Report, 2003: The Market, The Competitors, The Future Trends.
Consumer Spending on the Home is Down
"Today's consumer is less interested in buying more things for their home, resulting in diminished spending for home products," said Pam Danziger, president of Unity Marketing and author of Why People Buy Things They Don't Need (Ithaca, NY: Paramount Market Publishing, 2002. "In 2001 the typical American family spent $1,458 on home furnishings, according to the Bureau of Labor Statistics' Consumer Expenditure Survey. That is less than in any year since 1997 in real dollars. In percentage terms the share of all housing spending on home furnishings in 2001 was lower than in any year since 1985. The simple fact is that cocooning, which has dominated our thinking about the consumer market for the past 20 years, is over. Suddenly the home furnishings business for the nation's 640,000 home product manufacturers and 43,000 retailers that focus on home furnishings got that much more competitive."
Demographic shifts are behind the end of the cocooning trend. Today the baby-boom generation, 76 million strong, falls within the ages of 39 to 58 years old, meaning a majority of this generational cohort is already in or shortly will enter the empty-nesting lifestage. While consumers in their empty-nesting years don't completely stop buying for the home, their priority is to reconnect with the outside world and spend more on personal luxuries, including luxury cars, jewelry, cruises and travel.
The lifestage where cocooning is dominant is among first-time homebuyers and families with children. For the last 20 years, this has been the lifestage of boomers, but today the much smaller Generation X cohort, only about 45 million people, is in this lifestage. "Over the next five to 10 years, home marketers will struggle until the new millennial generation, babies of baby boomers born since 1977, and about 71 million strong, start their progression through the family-formation and child-raising lifestage," Danziger says.
The new report, Home Report, 2003: The Market, The Competitors, The Future Trends, is a business planning tool that provides the facts and figures marketers and retailers need to build a vibrant home furnishings business into the future. Written by marketing experts from Unity Marketing, and based on primary research among luxury homebuyers and home furnishings retailers, this 400-page report will help executives understand the dynamics of the home market. A competitive assessment is provided through profiles of 30 home retailers and 65 marketers. Special Feature: Included with this report is an assessment of the future of the home market that includes action-oriented recommendations for home executives.
About Pam Danziger & Unity Marketing
Found in 1992, Unity Marketing (www.unitymarketingonline.com) is a marketing research and consulting firm that helps companies apply the concept of emotional marketing to corporate branding and marketing initiatives. Using its "why people buy" research strategy, Pam Danziger, company founder, president and author of Why People Buy Things They Don't Need (Ithaca, NY: Paramount Market Publishing, 2002), uncovers the motivations, desires and emotional needs that drive consumers to buy. This approach turns consumer insights into actionable marketing and brand strategies and gives executives "future vision" to plan the direction of their business. Unity produces market research studies that are essential business planning tools for executives competing in the luxury market, jewelry, art, home furnishing, gifts and collectibles, toys, personal care/cosmetics industries among others. Unity also publishes the Luxury Business and Gifts & Collectibles Business newsletters. Today Pam is at work on her next book, Let Them Eat Cake: Marketing Luxury to the Masses (as well as the Classes).