Home Is Where the Money Is Going
By Britt Beemer
--Chain Store Age Executive Column for May, 2002
In the days and weeks after September 11th, restaurants, malls and movie theaters were often nearly deserted as Americans rediscovered the importance of family and home life. That readjustment of priorities has taken hold, according to Americaís Research Groupís latest Consumer Mind Reader ô survey.
Once consumers began spending more time at home, they looked around and decided they needed to spend their disposable income on upgrading their living space, which has translated into a dramatic turnaround for those retailers specializing in home-based products.
Our latest Consumer Mind Reader findings show that the discount store juggernaut continued to roll on as the retail outlet of choice for the vast majority of shoppers. Itís clear that shoppersí thirst for saving money has not yet been satisfied, with 82.4 percent of shoppers frequenting discount stores. But the quest to save money doesnít end there. Discount-driven membership warehouse clubs saw a 24.6 percent increase in their shopping traffic, and consumers spent an average of 14.8 percent more in membership warehouse clubs than in the spring of 2001.
But specialty stores offering home products have rebounded strongly in recent months, with furniture, bed and bath, and home accessories stores leading the way.
The reversal of the downward spiral these categories have been experiencing is most dramatic and impressive in home furnishings. Earlier this year, average spending in furniture stores dipped 8.5 percent when compared with 2001 levels. But our latest survey showed consumers spending 19.6 percent more than the year before, an incredible swing.
Gains have also been experienced in the bed and bath and home accessories categories. Bed and bath stores showed an 22.5 percent growth over 2001 spending levels, while home accessories stores showed a 9.5 percent jump in consumer spending in those stores.
This is a major increase for home products retailers who struggled throughout 2001 just to match their 2000 sales levels.
In addition to specialty home stores, most retailers offering home-related products are benefiting from the upsurge. Consumers reported spending an average of almost $6 more on purchases in major department stores. Of equal importance, the number of
consumers shopping major department stores grew nearly two percent over the same time last year.
It is not clear from this survey where the surge in department store sales resulted in furniture purchases from those stores with furniture departments or department store mark-downs in apparel products. Nevertheless it was a major turnaround time for major department stores after lackluster sales in 2001.
No doubt the windfall for home product retailers has been boosted by low interest rates which continue to drive new home sales and a record number of mortgages being refinanced. With 2001 being the biggest refinancing year on record, many Americans have more money to spend because of lower mortgage payments, and itís clear a significant portion of that money is being spent on the home.
Itís too early to tell if this new-found emphasis on home products is simply a release of pent-up needs to improve the home or the beginnings of a new trend toward more money going into the home on a continuing basis. But either way, itís good news for some retailers badly in need of a shot in the arm.
The latest Consumer Mind Reader survey also showed:
GOING HOME AGAIN
- Discount stores continue to rule over all categories, with significant growth in both average purchases and percentage of shoppers. The average ticket in discount stores was $93.33, up more than $14 from a year ago. The number of shoppers frequenting discount stores rose to 82.4 percent of the shopping population as compared to 79.4 percent in 2001.
- Home improvement stores, which hit their all-time highs in 2000, did not have experience huge shopping levels in this survey. However, home improvement store sales are traditionally weather related, and this may explain the dip in shopping.
- The Internet is growing, with a slight increase in number of consumers surfing the web for bargains.
Retailers offering products for the home have been the beneficiaries of Americaís newly-discovered emphasis on improving their home environment. (All American Households)
|Retail Category ||Avg. Spending, Spring 2001 ||Avg. Spending, Spring 2002 || % Increase |
|Furniture Stores ||$32.11 ||$38.40 ||19.6
|Home Accessories Stores ||$5.04 ||$5.52 || 9.5|
|Bed & Bath Stores ||$6.57 ||$8.05 ||22.5|
|Major Department Stores ||$19.05 ||$24.93 ||30.9|
Britt Beemer, founder and chairman of Americaís Research Group, is author of
two best-selling business books, Predatory Marketing and It Takes a Prophet
to Make a Profit.