Millennials and Furniture in the US and the UK February 13 ...€¦ · 10. Use of social media for...
Transcript of Millennials and Furniture in the US and the UK February 13 ...€¦ · 10. Use of social media for...
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February13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
1) Sincemillennialsrangeinagefrom16to36,theyconstituteaconsumersegmentthatisofgrowingvalueinmostmarkets.Theseconsumersareenteringtheirpeakspendingyearsandareestablishingfamilyhomes.
2) Currently,millennialsintheUSandtheUKspendlessonfurniturethanoldergenerations,largelybecausetheyhavelowerincomesandhouseholdformationlevels,aswellasapropensitytoliveinsmallerurbandwellings.
3) Millennialsmainlyprioritizefurnitureitemsthatmaketheirliveseasierandmoreenjoyable,andonlymakeusefulpurchasesthatrepresentgoodvalue.
4) Millennialsareattractedbyfurnitureproductswithembeddedtechnologyaswellascustomizedproductsthatareunique.
Deep Dive: Millennials and Furniture in the
US and the UK— Ten Characteristics
That Define the Market
Deborah Weinswig
Managing Director,
Fung Global Retail & Technology
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
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February13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TableofContents
ExecutiveSummary.........................................................................................................................................3
Introduction....................................................................................................................................................4
TheMillennialsSeries......................................................................................................................................4
MillennialsandFurniture................................................................................................................................5
1.MillennialHouseholdFormationandHomeOwnershipisDeclining...............................................................6
2.MillennialsLivingSpacesareGettingSmaller..................................................................................................7
3.MillennialsareMoreMobile............................................................................................................................8
4.MillennialFurnitureSalesAccelerateintheBack-to-CollegePeriod...............................................................9
5.MillennialsSeekaStrongPriceandValueProposition....................................................................................9
6.MillennialsAppreciateVintageFurniture.......................................................................................................10
7.MillennialsAcknowledgetheImportanceofSustainability...........................................................................10
8.MillennialsareAttractedbyConnectedFurnitureoftheFuture...................................................................11
9.MillennialsStillVisitBrick-and-MortarStores................................................................................................12
10.MillennialsUseSocialMediaforDecoratingInspiration..............................................................................13
WhichRetailersareSettoBenefitfromMillennialPurchasingHabits?...........................................................14
KeyTakeaways...............................................................................................................................................15
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
ExecutiveSummaryThisfourthreportinourMillennialsSeriesexamineshowmillennialconsumersspendonhomefurnishings.
Millennialsaretypicallydefinedasthosebornbetween1980and2000.Giventhe20-yearspan,thisgenerationmakesupasizablechunkoftheUSandUKpopulation.Theseconsumersareincreasinglyvaluabletofurnitureretailersastheyareenteringtheirpeakspendingyearsandareestablishingfamilyhomes.However,aswenoteinthisreport,frugalhabits,moremobilelivesandsmallerlivingspacesareamongthefactorsdepressingtheirworthtoretailers.
Below,weidentifytencharacteristicsofthemillennials’furnituremarket.
1. Householdformationandhomeownershipisdeclining:Millennialsgetmarriedandformfamiliesandhouseholdslaterinlifethanpreviousgenerations,stiflingdemandforhomefurnishings.
2. Livingspacesaregettingsmaller:Millennialspurchaselessfurnitureastheyopttomakeonlyusefulpurchasesandseekmultifunctionalproducts.
3. Increasedmobility:Millennialsseekfurniturethatiseasytomoveandeasytoassemble.
4. Furnituresalesaredrivenbytheback-to-collegeperiod:Collegestudentsaresettingupnewhouseholdsandrequirefurnishingsfordormroomsandapartments.
5. Seekingastrongpriceandvalueproposition:Currently,millennialsspendlessonhomefurnishingsthanpreviousgenerations,largelyduetolowerincomesandapreferencetospendonexperiencesratherthanpossessions.
6. Appreciationofvintagefurniture:Millennialstendtoseekindividualityanddifferentiation,andduetotheirmorelimitedbudgets,tendtohaveanaffinityforvintageitems.
7. Acknowledgetheimportanceofsustainability:Millennialsappreciateproductsthatareethicallyandsustainablysourced.
8. Attractedbyconnectedfurnitureofthefuture:Millennialstendtobetech-savvy,sotheyarenaturalcustomersfortechnologicallyadvancedfurniture.
9. Stillvisitbrick-and-mortarstores:Tech-savvymillennialsbrowseforandresearchpotentialfurniturepurchasesonline,butstillembracethebrick-and-mortarshoppingexperience.
10. Useofsocialmediafordecoratinginspiration:ThisgenerationismorelikelytobrowseandresearchproductsonPinterestandInstagramtoobtaindesignideasandinspiration.
Establishedbrandsandretailersarefacingcompetitionfrominnovative,onlinestartupsthatarecateringtomillennialshoppingpreferenceswhilereshapingthefurnituresector.
Establishedbrandsandretailersarefacingcompetitionfrominnovative,onlinestartupsthatarecateringtomillennialshoppingpreferences.
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
IntroductionInthisfourthreportinourMillennialsSeries,weexplorehowthemillennialagegroupisreshapingthefurnituresector.Ourfirstreportinthisseriesconsideredhowthisgenerationischangingthenatureofgroceryretailing.Inthesecondreportoftheseries,wefocusedonthebeautycategoryandinthethird,welookedatleisureactivities.Wedefinemillennialsasthosebornbetween1980and2000.
Inthefollowingpages,weexplorehowmillennialsarereshapingthefurnitureandhomedécorsectorsintheUSandtheUK.Weidentifytencharacteristicsthathaveemergedtoshapetheirhomefurnishingsbuyingtrends,anddiscusstheimplicationsforretailers.Thesecharacteristicscovermacroeconomicfactors,prevailingconsumerpreferences,thecompetitiveenvironmentandfutureconsumerandtechnologytrends.WementionnewonlinestartupcompaniesthatofferuniqueandinnovativefurnitureandhomefurnishingsproductsintheUSandUKmarkets.
TheMillennialsSeriesMillennialsaretypicallydefinedasthosebornbetween1980and2000.Giventhe20-yearagespan,thisgenerationmakesupasizeablechunkofthepopulation.
Millennialsaccountedforapproximately29%ofthetotaladultpopulationintheUSand27%ofthepopulationintheUKin2015.
Figure1.US:PopulationBreakdown
Source:USCensusBureau/FungGlobalRetail&Technology
Thisdemographicissignificantnotonlybecauseofitssize,butalsobecauseitsconsumerdemandstendtodiffernotablyfromthoseofpreviousgenerations.Whilesuchalargegroupisinevitablydiverseandcomplex,thereareneverthelesssomeidentifiablemillennialtrends:
19.0 24.7
28.727.2
26.1 24.9
16.3 16.2
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20%
30%
40%
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2015E 2020E
Senior/Pre-Boomer BabyBoomer GenX Millennial GenZ
Millennialsaccountedforapproximately29%ofthetotaladultpopulationintheUSin2015.
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• Manymillennialshavelessmoneyandfinancialsecuritythanpreviousgenerations.
• Millennialsarehighlyadeptatusingtechnologyandareveryactiveonsocialmedia.
• Theytendtobemoresociallyconsciousthanolderagegroups,andareinfluencedbyproductofferingsmarketedasethical,sustainableorenvironmentallyfriendly.
• Theyaremoreconcernedwithvalueandbargainhunting,inpartoutofnecessity,astheireconomicopportunitieshavedecreased.
• Thereisevidencethatmillennialsaremoreinterestedinspendingonexperiencesthanonpossessions.
• Similarly,thereareindicationsthatsomemillennialsareshiftingtowardrentingratherthanowningbelongings,fromcarstofurniture,althoughthismaybeinfluencedbythegroup’srelativeeconomicinsecurity.
• Becausetheyareoftenpressedfortime,millennialsarelikelytobelookingforconvenience,especiallywhenshopping.
Thesepreferencesandbehaviorsaresubstantiallyaffectingproductandservicemarketsworldwide.Majorbrandsandretailersneedtoadapttocatertothedemandsofthisincreasinglylargeandvaluableconsumersegment.
MillennialsandFurnitureInthefollowingsectionsofthisreportwediscussourtenidentifiedhallmarksofthisagegroup’sfurnitureandhomedécorandspending.Theseare:
1. Householdformationandhomeownershipisdeclining
2. Livingspacesaregettingsmaller
3. Increasedmobility
4. Furnituresalesaccelerateintheback-to-collegeperiod
5. Seekastrongpriceandvalueproposition
6. Anappreciationofvintagefurniture
7. Acknowledgeimportanceofsustainability
8. Attractedbyconnectedfurnitureofthefuture
9. Stillvisitbrick-and-mortarstores
10. Useofsocialmediafordecoratinginspiration
Majorbrandsandretailersneedtoadapttocatertothefurniturebuyingdemandsoftheincreasinglylargeandvaluablemillennialconsumersegment.
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1.MillennialHouseholdFormationandHomeOwnershipisDecliningUSandUKmillennialsdelayhouseholdformationmorethanpreviousgenerations,duetohighhousingcostsinUSandUKcities,includinghighrentsandtightmortgage-lendingstandards.Additionally,manymillennialsdonothavestableemploymentandarestrugglingtopayoffstudentloans,soarebuyinghomeslaterinlife.Inresponse,millennialsarelikelytoliveathomewiththeirparentsforlonger,orrentaroominanapartmentwithotherflatmates.
AccordingtotheUSHarvardJointCenter,householdformationiscloselycorrelatedwithhousingaffordabilityandincome.Lowerhouseholdformationratesdepressconsumerdemandforfurnitureandhomefurnishings.
• ThepercentageofyoungAmericanslivingwiththeirparentshasincreasedtoa75-yearhigh.In2015,almost40%ofyoungAmericansbetweentheagesof18and34,werelivingwithparents,thelargestpercentagesince1940,accordingtoTrulia,anonlineresidentialrealestatewebsite.Infact,evendespiteanimprovedeconomysincethefinancialcrisisin2008–2009,thenumberofyoungAmericansaged18–34livingwiththeirparentshasincreasedsince2005.
Likewise,intheUK,theproportionofrentersversushomeownershasbeenincreasing,particularlyamongmillennials.
AccordingtopropertyfirmHammersonandmarketresearchersVerdict,lessthanhalfofUKcitizensbornin1990willbehomeownersbytheageof40,and54%ofmillennialsdonotthinktheywilleverbeabletoaffordapropertywithoutfinancialaidfromfamily.
Figure2.England:PrivateTenantsasaPercentageofAgeGroups(%)
Source:EnglishHousingSurvey,DepartmentforCommunitiesandLocalGovernment
58.162.5 64.8
68.0 67.7 65.470.7
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15.6 17.1 18.5 20.5 21.4 23.6 24.1
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Approximately,54%ofUKmillennialsdonotthinktheywilleverbeabletoaffordapropertywithoutfinancialaidfromfamily.
ThepercentageofmillennialAmericanslivingwiththeirparentshasincreasedtoa75-yearhighin2015.
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Weseetherentingtrendimpactingonthefurnituremarket.Forthosewhoarerentingunfurnishedproperties,orwhoneedtobuyadditionalfurnitureinafurnishedproperty,thereislikelytobelittlereasontoinvestinqualityandlongevity:theymayneedtodisassembleorevendisposeoftheitemthenexttimetheymove.
Peoplewhorenthomesmaynotinvestlargesumsintheirhomes,buttheywillstilllikelybuycategoriessuchashomewaresandsmalldecorativeitems.Itemsfromthesekindsofcategoriescanbetakeneasilyfromhousetohouse,arecomplementarytofurnishingsthatmaybeprovidedbylandlordsandtendtocarryalowerticketprice,whichmeansthereislessinvestmentbytheconsumer.
• Formore,seeourNovember2016reportRentingandRetailInTheUK:ShiftingPropertyMarketSettoImpactonHowShoppersSpend.
2.Millennials’LivingSpacesareGettingSmallerSpaceisoftenatapremiumformillennials.YoungpeopleintheUSandUKoftenmovetourbanareaswherethereisagreaterconcentrationofjobs,andwherelivingspacestendtobesmaller.Moreover,someUKandUSmillennials’homesaregettingsmallerduetoincreasinghousingandrentalcostsincities.Spaceandstorageconsiderationsmeanlessfurnitureisrequiredtoavoidclutter.Sincemanymillennialsliveinsmallspaces,theycarefullyassessproductpurchasesforneedandutilityaswellaswillingnesstotakethemwhentheymove.
SpaceisaparticularchallengeintheUK,wherehomesarethesmallestinEurope:averagenewbuildsthereareonly92%oftherecommendedsize,asarchitectsreducehomeandapartmentsizesduetosoaringhouseandlandprices.
Source:JohnLewis.com
Designersandretailerscanappealtomillennialsbyproducingsmallerandmoremodularandmultifunctionalfurniturethatcanmoreeasilyfitintosmallerlivingspaces.
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Designersandretailerscanappealtomillennialsbyproducingsmallerandmoremodularandmultifunctionalfurniturethatcanmoreeasilyfitintosmallerlivingspaces.
JohnLewisreportedthatsalesofsmallerbedsincreased53%yearoveryearandmini-sofasby12%in2016.Strongsellersincludedafull-lengthmirrorwithshelvesbehindit,acoffeetablethatturnsintoadeskandaTVthatdoublesasamantelpiece.
Urbanlivingalsomeansmillennialconsumersdesiretopurchasefurnishingsonlineandcollectmerchandisefromconvenientdrop-offpoints,insteadoftrekkingtoout-of-townsuperstores.Companiesneedtoofferaccessiblecollectionpointsincentralareas.
IKEAhasstartedopeningsmallerstoresandcity-centerpickuppointswithbetteraccessibilitytopublictransport,muchmoreconvenientlylocatedthanitstraditionalout-of-townwarehouses.
3.MillennialsareMoreMobileMillennialsarealsotendingtolivemoretransientlivesthanpreviousgenerations,movingcitiesorapartmentsmorefrequently,andsoaremorelikelytobelookingforefficientandpain-freefurnituresolutions.Millennialfurniturepurchasesaremoreshortterminnatureandflat-pack,deconstructablefurnishingsareeasytotransportandassemble.
Manynewinnovativeonlinefurnitureretailershavebeenestablishedthatofferuniquefurniturepiecesforthemigratorymillenniallifestyle.
Burrow,anonlinefurnitureretailer,designsandproducescouchesthatareshippedinthreeorfourboxesandareeasilycarriedandassembledwithouttoolsinafewminutes.
Casper,anonlinemattressretailer,sellsfoammattressesanddeliversthemcompressedinboxes.
Campaignisane-commercefurniturecompanythatoffersarangeofsofasandchairsthatcanbeassembledinafewminuteswithoutanytools,areeasilypackedandconvenienttomove.
Greycorkproducesfurniturepiecesthataremadeof9-10components.
Wood-Skin,anItaliandesignstudio,developedaself-assemblingtablethattransitionsfromflattofullybuiltwithasimplepull.Theproductfoldsbyitselfaccordingtoapredesignedpattern.
Source:wood-skin.com
OnlinemattressretailerCaspersellsfoammattressesanddeliversthemcompressedinboxes.
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4.MillennialFurnitureSalesAccelerateintheBack-to-CollegePeriodParticularlyintheUS,theback-to-collegeseasonisimportantforfurnitureandhomedécorspendingbyandfortheyoungestmillennials,ascollegestudentsaresettingupanewhouseholdforthefirsttimeandrequiremerchandisefordormroomsandapartments.
USmillennialsspentoverUS$6billionondormorapartmentfurnishingsduringtheback-to-schoolseasonin2015,accordingtotheNationalRetailFederation(NRF).IntheUK,themostcommonlypurchasedback-to-universitygoodswerebedroomitemssuchasbedsheetsandlamps,mentionedby53.8%ofsurveyrespondentsinNovember2016,accordingtoVerdictRetail.
5.MillennialsSeekaStrongPriceandValuePropositionMillennialsseekinexpensivefurnishingitems,astheyhavelimitedfinancialresources.Furthermore,duetotheirincreasedmobility,millennialstendtonotinvestinlong-termfurnishings.Manymillennialsalsoprefertospendonexperiencesratherthanpossessions.
Forthesereasons,millennialsseekfurnitureproductsthatareaffordableforadequatequality,providinggoodvaluefunctionality.AccordingtoEssentialRetail,27%ofUKmillennialconsumersdonotownalargepieceoffurnitureanddonotthinktheywillbeabletoaffordoneinthenextfivetotenyears.
Accordingtoa2016studybyFurnitureToday,USmillennialsplantodecorateorredecoratethelivingroomspacefirst.However,aspreviouslymentioned,millennialsspendlessevenonlivingroomfurnishings,thanotheragegroups,asdepictedinthefollowinggraph.
Figure3.US:Consumers’Planned2016LivingRoomRedecorationExpenditures,byAgeGroup(USD)
Source:FurnitureToday/FungGlobalRetail&Technology
Intermsofaesthetics,millennialsoftenpreferhomeswithcleanlinesandmodernstyles,andwell-organizedspaces,withefficientandabundantstoragespace.
$2,200
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$2,500
$1,500
AllConsumers Boomers GeneranonX Millennials
27%ofUKmillennialconsumersdonotownalargepieceoffurnitureanddonotthinktheywillbeabletoaffordoneinthenextfivetotenyears.
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Manymillennialstendtofavorfurniturestylesanddesignsthatareminimalist,modernandfashionable.Amongtheseshoppers,Scandinavianandindustrialstylesarepopular,benefittingretailerssuchasIKEA.
6.MillennialsAppreciateVintageFurnitureDuetolimitedbudgets,millennialsarelesslikelytopurchasepriceynamebrandstoimpress,whilemanyseekoriginalanduniqueitems.However,manywillstillseekindividualityanddifferentiation.Handmadeitems,artisticfeaturesandvintagepiecesbringinanelementofpersonalization.
AccordingtoFurnitureToday,63%ofmillennialsprefervintagefurniture,ahighersharethaninotheragegroups,asdepictedbythefollowinggraph.
Figure4.US:PercentageofConsumersWhoPreferVintageFurniture,byAgeGroup,2016
Source:FurnitureToday/FungGlobalRetail&Technology
Thispreferenceforvintagefurniturehascontributedtothepopularityofsecond-handandusedoutlets,aswellasonlinemarketplaces.
• AmazonlaunchedaUSandUKmarketplacecalledHandmadeatAmazonthatsellsartisanproductssimilartoNotonthehighstreet.comandonlinemarketplaceforhandmadeobjectsEtsy.TheAmazonmarketplaceoffersover1,000productsincludingfurniture,homedécorandartwork.
• CrateandBarrelalsorecentlyannouncedthelaunchofamarketplacethatoffershighlycuratedproductsfromthird-partysellers.
7.MillennialsAcknowledgetheImportanceofSustainabilityAccordingtoresearchfirmMintel,millennialconsumersaremorelikelythanothergenerationstoconsidersustainabilitybeforemakingpurchases.Millennialsappreciateproductsthatareethicallyandsustainablysourcedandconsideredenvironmentallyfriendly.Thesevaluestranslateintomillennialsseekingtopurchaseefficientappliancesandproductsthatreduceenergyconsumption,suchasLEDlightbulbs.AccordingtoAccenture,millennialstendtobekeentoadoptnewenergy-relatedproductsand
57%63%
52% 53%
AllConsumers Millennials GeneranonX Boomers
63%ofmillennialsprefervintagefurniture,ahighersharethaninotheragegroup.
Millennialsappreciateproductsthatareethicallyandsustainablysourcedandconsideredenvironmentallyfriendly.
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serviceapplications,forexamplesmart-hometechnologysuchaslightsandexhaustfansthatturnonandoffviasensors.
JohnLewis,aUKdepartmentstore,reportedthatsalesofconnectedhomeitems,suchasNesttechnologythatcanadjustheatingandlightingviaamobilephoneapp,wereup89%yearoveryearin2016.Homemonitoringtechnologygrew265%yearoveryearandrepresentedthechain’sfastest-growingcategories.
IKEAisaretailerattheforefrontofsustainableproductdevelopmentandhasdevelopedsmartlightbulbsandlightingpanelscontrolledbyaremotecontrol.IKEAisalsoworkingondevelopingplasticmaterialsmadefromrecycledandrenewablesources.
8.MillennialsareAttractedbyConnectedFurnitureoftheFutureMillennialstendtobetech-savvy,sotheyareanaturalcustomerbaseforanewwaveoftechnologicallyadvancedfurnitureproducts.
Thefurnitureofthefuturewillprovideallkindsofconnectivity,andtherewillbeariseininternet-enabledanddigitally-transformablefurniturethatwillbecontrolledremotelythroughapps.
InnovativeproductsthatconnectfurniturewithsmartphonesorcombinefurniturewithtechnologyandfashiondesignareemergingintheUSandglobally.
Curviluxdesignedanightstandthatcananswercalls,streammusic,setmoodlightingandchargedevices.
Source:curvilux.com
SleepNumber,aUSmattressmanufacturer,producedaSleepIQmattressthatcontrolsdesiredcomfortlevelsfordifferentbodypartsthroughasmartphoneapp.Thetechnologyalsogatherssleepingheartratedata,motionandbreathing,aswellasanalysesdataandratessleepquality.ThemattressalsoconnectswithhealthandfitnessappssuchasFitbit.
Millennialstendtobetech-savvy,sotheyareanaturalcustomerbaseforanewwaveoftechnologicallyadvancedfurnitureproducts.
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KingLiving,anAustralianfurniturecompany,producesKingSofa,whichincorporatesvoice-controlledrecliningviatheAppleiPhoneusingtheSiriassistant.
HUMElabdesignedaninteractivetouchcoffeetablethatservesasatypicalcoffeetable,butalsoallowsuserstoplayvideogamesonit,handledocuments,sendemailsandwatchvideos.
IKEAhasproducedfurniturethatincludeswirelessmobilephonechargingstations.
9.MillennialsStillVisitBrick-and-MortarStoresUSmillennialsresearchandpurchasehomefurnishingsataquickpace,withthemajorityspendingoneweekonlytoresearchproducts,accordingtoFurnitureToday.
Amongallfurnituretypes,millennialstakethelongesttoresearchasofapurchase;onaverage,theytakeamonthbeforecommittingtoapurchasedecision.
• USmillennialsarealsonotwillingtowaitforfurnituredeliveriesforalongtime,especiallyforonlinepurchases.
• Almosthalfofmillennialonlinebuyersexpectadeliverywithin1-2weeksand13%lessthanaweekoreventhesameday.
• Within-storepurchases,36%wantsame-daydeliveryand31%lessthanoneweek,accordingtoFurnitureToday.
Tech-savvymillennialsbrowseforandresearchpotentialfurniturepurchasesonline,butstillembracethebrick-and-mortarshoppingexperience.AccordingtoFurnitureToday,47%ofUSmillennialsshopforfurnitureonline,butbuyatbrick-and-mortarstores.Meanwhile,only3%ofUSmillennialsdonotfinditnecessarytotouchandfeelfurnitureandmattressesbeforemakingamajorpurchase,accordingtoAccenture.
Figure5.US:PercentageofConsumersthatResearchFurnitureOnlineandBuyIn-Store,byAgeGroup,2016
Source:FurnitureToday/FungGlobalRetail&Technology
47%
40%36%
Millennials GenX Boomers
Approximately47%ofUSmillennialsshopforfurnitureonline,butbuyatbrick-and-mortarstores.
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TheonlinechannelintheUSandUKwillcontinuetodeveloprobustlywiththeadoptionofnewtechnologiessuchasvirtualandaugmentedreality(VR/AR).ConsumerswillincreasinglyshopforhomeproductswiththeaidofVRandAR,facilitatingfastandeasyproductvisualization,includingofproductstailoredordesignedtoorder.AndfurnitureretailerscanuseapptechnologyandARtoshowconsumershowcertainfurniturecanfitintotheirhomes.
• IKEAusedVRatapop-uprestaurantinLondon,wherecustomerscoulduseanapptovisualizein3Dhowcatalogueitemswouldlookintheirhomes.
• Wayfair,aUSonlinepure-playfurnitureretailer,launchedanappdesignedtoguideshoppersusingVRthroughvirtualfurnitureshowrooms.
10.MillennialsUseSocialMediaforDecoratingInspirationMillennialsfollowdesigntrendsonsocialmediasitessuchasPinterestandInstagramandusethemtogeneratefurnishinganddecoratingideas.
Socialmediaisalsobecomingamorepopularchannelforonlineproductresearchandideasharing.PinterestistheleadingsocialmediasiteUSconsumersusetoresearchfurnitureproducts,andthesite’spopularityisthestrongestamongmillennials,accordingtoFurnitureToday.
Figure6.US:BreakdownofFurnitureConsumersWhoUsePinterestforOnlineResearch,byAgeGroup
Source:FurnitureToday/FungGlobalRetail&Technology
60%55%
50%
36%
Millennials GeneranonX YoungerBabyBoomers
OlderBoomers
Approximately,60%ofUSmillennialfurnitureconsumersusePinterestforonlineresearch.
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WhichRetailersareSettoBenefitfromMillennialPurchasingHabits?Webelievetheretailersthatarebenefittingthemostfrommillennialfurniturepurchasinghabits—andwillcontinuetodoso—willbethosethatofferlowprices,on-trendmerchandiseandcontinuouslynewmerchandiseprovidingamplechoiceandvariety.TheseincludeAmazon,IKEA,WayfairandAtHome.
Amazonhasbeenthefastest-growingUKfurnitureandhomewaresretaileroverthepastfiveyears,apartfromDunelm.AmazonhasmorethandoubleditsUKhomepurchasesmarketsharesince2011,andisforecasttoreach3.7%in2016,accordingtoresearchfirmConlumino.
IKEAhasincreaseditsUKsalesforafifthconsecutiveyearandhasannouncedagoaltodoubleitsUKsalesby2020.Thecompanyopenedfoursmallorder-and-collectionshopsintheUKin2016.
WayfairistheleaderintheUSfurnituree-commercespaceandpostedastrongperformanceintheholiday2016period.
Source:wayfair.co.uk
AtHome,aUS-basedretailer,hasreported11straightquartersofcomparablesalesincreasesanddoubleditsstorefootprintoverthepastfouryears.AtHomeoperatesbrick-and-mortarstoresonly(onlineselectionbrowsingcapability)anditsbusinessmodelissimilartofast-fashionappareldisruptorsZaraandH&M.Thecompanyhasafastproductcycle,duetothefactthatitdesigns70%ofitsmerchandise,havinga3-to9-monthdevelopmentprocess,comparedtotwoyearsforlegacyfurniturechains.
Atthesametime,establishedbrandsandretailersarelikelytofacecompetitionfromnewercompaniesthattargetmillennials’demandsmoresharply.Nimbler,tech-enabledonlinepureplayersareoftenfocusedonservingmillennialneeds,whichmeansthattheycanchipawayatlegacybrands’currentandfuturecustomerbases.
AmazonhasmorethandoublesitsUKhomepurchasesmarketsharesince2011.
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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
KeyTakeaways• Becausemillennialsrangeinagefrom16to36,theyconstitutea
consumersegmentthatisofgrowingvalueinmostmarkets.
• Currently,millennialsintheUSandtheUKspendlessonfurniturethanpreviousgenerations,largelybecausetheyhavelowerincomesandhouseholdformationlevels,aswellasapropensitytoliveinsmallerurbandwellings.
• Millennialsmainlyprioritizefurnitureitemsthatmaketheirliveseasierandmoreenjoyable,andonlymakeusefulpurchasesthatrepresentgoodvalue.
• Millennialsseeksmall,multifunctionandaffordablefurnishingsandareattractedbyproductswithembeddedtechnology.
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February13,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerSeniorAnalyst
EvaK.SeniorResearchAssociate
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