Consumer demand for home furnishings is as great as it has ever been. That appetite has been consistent across the spectrum of quality levels, including higher end furniture, home décor, accessories, lighting, rugs and more.
In a presentation for The American Marketing Group, market researcher, author and founder of Unity Marketing, Pam Danziger noted that Americans spent $380.7 billion on their homes in 2020 with the largest category being furniture and furnishings, which was a jump of 6.5% from 2019.
Among those consumers, Danziger reported that there are 7.8 million “Ultra-Affluent” households (income at or above $250,000) and 36 million HENRYs (“high earner, not rich yet”) with incomes ranging between $100,000 and $249,999, meaning there is plenty of opportunity for retailers to cater to these different segments.
Danziger told Home Accents Today that much like every other consumer segment, affluent consumers had to re-evaluate many of their purchases during 2020 but as the economy opened back up, home played an outsized role in many of their spending choices.
“As they adjusted to life under COVID, they slowly started to emerge and as the year ended, affluent consumers were returning almost to pre-pandemic spending levels, most especially shifting from their normal experiential spending (e.g. hotels, travel, restaurants) to luxury consumer goods,” Danziger said. “However, the months on end that they spent at home and in seclusion caused the affluent consumers to reassess what was important and valuable in their lives. They were forced to halt their conspicuous consumption lifestyles, creating long-term challenges for luxury brands that haven’t caught up to their changing priorities and bringing new opportunities for home furnishings brands that helped them create home environments that lifted their spirits.”
But, she noted, now that many in this cohort have updated their homes, the opportunity might be dwindling.
“After being virtually imprisoned in their homes, home is about the last place they will want to be as the world begins to open up,” Danziger said. “The investments they made in their home environments will carry them through for a long time. I expect the home business to become much more competitive in the near future with competition coming not from other home brands and retailers, but from the experiential providers that they have missed for so long. Time is the ultimate luxury and affluent consumers will want to spend their time outside their own four walls.”
So what can retailers do to make themselves attractive to the affluent consumers? Danziger said it’s all about being clear and differentiating where they can.
“For retailers, they need to clearly and precisely define what they mean to their customers. It will take research to find out what their store means to them because a retailer can’t impose their idea to the customer,” she said. “They need to understand it from the customers’ point of view. With those insights, they can lean more into that meaning and leave other meanings behind. Retailers need to narrow-cast rather than broadcast to truly connect with their customers. Trying to be all things to all people is the root to retail failure, not success.”
The retail perspective
So how are retailers that cater to affluent consumers faring? Anecdotally, they say things are going rather well.
“Consumer demand for home furnishings products and services are as high as I’ve ever seen them,” said Jeff Harris, president, CEO and co-owner of Jamestown, N.C.’s Furnitureland South. “I think it’s across the board. … we’ve seen incredible demand across all quality levels.”
Harris said in addition to demand across quality levels, that interest has also been strong across all of the store’s categories. He said that’s been a key driver of business, particularly for when higher end clientele want to redo a few key rooms at a time, or even their entire home.
“We have the lighting, rugs, accessories, bedding, bed linens, wall art, furniture, office furniture. We’re a whole home resource. We don’t see any category stepping up outside of what normal business would look like— they’re all going up,” Harris said. “Certainly someone comes in and wants to buy a sofa or mattress, we’re the best resource for that but our sweet spot is if people have a whole room or whole home, that’s where Furnitureland South is at its best because we have such depth of price points and styling. We’ve seen an abundance of orders in each of these [aforementioned] categories.”
As such, the retailer’s lineup of around 150 design consultants have played a role in creating new home environments for customers. Harris said having that guiding hand can transform a customer’s order from good to great.
“I tell our staff and customers all the time that the consumer comes in with those pretty pictures she’s found on Pinterest or Houzz and they want their home or room to look like those pictures but they don’t know how to do it. I don’t think the role of the interior designer has ever been more important,” he said. “People want that look but they need the expertise.”
Design has also been a driver for business for Clive Daniel Home, which has two stores (and a third in the works) in South Florida.
“We have amazing clients and get to work on incredible projects. As amazing as they always are, they seem so appreciative of their purchases,” said John Roos, accessory buyer for Clive Daniel Home. “Spending so much more time in our homes, the smallest accessory can really breathe life into a room. We have heard from several of our clients, regarding how much they are enjoying their new purchase (single item to whole home).
While different regions in the U.S. have experienced growth differently in regard to post-lockdown reopenings, Florida has been an economic hotspot.
“Florida has been the beneficiary of record growth,” said Roos. “As the real estate market goes, so does home furnishings. Since June, we have posted one record month after another.”
While business continues to be strong, Roos said the only thing keeping it from reaching an even higher level is the ongoing kink in the supply chain. To counteract this, Roos said Clive Daniel upped its stock levels in many key categories.
“The supply chain keeps experiencing one ‘once in a decade’ event after another. Last May, we felt some of these issues could arise and we started ordering,” Roos said. “Our typical project is 70% special order. We have seen that flip, for the immediate gratification. It will slowly start to revert back, as supply chains stabilize.”
The bottleneck in supply has also been felt at Furnitureland South, Harris said, and he noted that it is working with its vendors to reacknowledge orders that are on back order, while having an array of vendor partners means it can come up with alternatives at any price range. He said by and large, customers have been patient.
“We’ve got so many brands so if one brand’s lead times have come down, we can in real time know which brands are going to have the best opportunity to have a successful transaction and get their cycle time in line,” he said.
While brick-and-mortar retail has been strong since last summer, online retail was one area that was unaffected by lockdowns and gained ground all year long. That’s been the case at Perigold, Wayfair’s high-end retail brand.
“We’ve seen strong demand for high-end home furnishings over the past year, and that’s across all product categories. Demand really accelerated when it became clear we were going to be spending more time in our homes for the foreseeable future,” said Taylor Fitzpatrick, Perigold’s head of merchandising. “In addition to what we’ve seen in our own business, many of our supplier partners have shared that they have had record months.”
Fitzpatrick noted that a combination of things led affluent consumers to Perigold, including having more unused discretionary dollars and more use for home spaces, since many are working and schooling at home.
“I think we’ve all had some flavor of this over the last 12 months but when you’re spending a good chunk of your day sitting in a chair that’s not really that comfortable or looking at the throw pillows on your sofa that have seen better days, the urge to replace them gets quite a bit stronger,” Fitzpatrick said.