The home furnishings market was hit, and hit hard, by the recession. Not until 2014 did the home furnishings market claw its way back to pre-recession levels.
But while the size of the home furnishings market may have recovered, the way affluent American’s shop for home furnishings, the brands they buy and their lifestyles have transformed since 2007. Disruption may not be strong enough to describe the marketplace home marketers face today.
Home-hungry customers have new ways of shopping and new brands, like Wayfair.com and RH, that offer access to innovative design ideas faster, more conveniently and cost-effectively than ever before. These brands are skimming the cream off the best potential market for home – the affluent customers with money to spend today – and on the cutting edge with designs and selling styles that fit the next generation customers, the Millennials.
How are traditional high-end brands and home furnishings retailers going to compete? Too many focus on tactics, like more social media or website redesign, but the real competitive edge will come when brands take aim at the best customer prospects and develop new marketing and branding strategies that square perfectly with their needs.
Demographics help marketers zero in on the best potential customers, specifically young, high-earners at a life stage when home furnishings needs and purchases reach their peak. That is the young HENRYs (high-earners-not-rich-yet) aged 35 - 44 years and with incomes from $100k - $250k. While Ultra-affluents, those at the top 2-3% with incomes over $250k+, have more money to spend on home furnishings, their sheer numbers relative to HENRYs (3 million Ultras compared with 25 million HENRY households), make them a harder, more niched market to target. Most home brands will find their best prospects now and over the next decade in the young HENRY demographic.
The next question is what do young HENRYs want for their homes and how do they want to shop? Here are some ideas we have identified in research with young HENRYs:
Luxury is a mindset, not a price point or a brand. Young HENRYs still crave luxury for their homes, but ‘luxury home’ is defined differently and more experientially. For example, young HENRYs are busy people, juggling dual careers, child care, and hobbies. They simply don’t have time to spend shopping and buying furniture in the old-fashioned way.
Enter a marketer like Wayfair.com, where busy customers can point-and-click their way to a fully realized home design selected across a wide range of reasonably priced furnishings, which are then delivered free to their door in two days. The luxury is in the efficiency and ease with which the customer can turn a space into a home so they can get on with living.
Contrast that with the traditional way high-end furniture is sold. Customers go to the store, spend hours browsing through fabric books, and if they can envision a look they like (which isn’t easy), they have to wait 6 - 12 weeks or more to get their sofa delivered.
Young HENRY customers are looking for an understated expression of luxury, that focuses more on good quality at a price that respects the customer’s intelligence. They reject the traditional image of luxury which is grounded in elitism and social class.
Young HENRYs favor a casual but elegant style. That is where RH (the old Restoration Hardware) has found traction. RH curates classic designs and authentic reproductions that offer both meaning and value, not like traditional luxury brands, but luxury in a brand new style for young people with a taste for simple elegance.
Home furnishings brands need to abandon traditional luxury ‘posturing’ and bring their marketing and branding messages in line with the new sensibility and lifestyle of young HENRYs. These are value-oriented consumers, looking to maximize their investment in furnishings as measured in enhanced quality of life. And they want it now, not tomorrow, so they can get on living their new luxury lifestyles.