NEW YORK— Shifting demographics and the evolution of healthy living has created a perfect storm for the home industry, opening an opportunity for manufacturers and retailers to strengthen their relationships with consumers and seize growth potential, according to NPD research.
“I believe that the home industry is in a window where we are going to experience five to 10 years of really good growth that we haven’t seen since the 1970’s. My hope is that we as an industry see this window and take advantage of it,” said Joe Derochowski, executive director and home industry analyst for The NPD Group.
Derochowski noted that it will take more than just riding the coattails of favorable consumer habits to unleash the industry’s potential. It will come down to product innovation and the
acceptance of that innovation by retail to drive growth, in addition to evolving the industry towards showcasing whole home solutions for a changed consumer.
According to NPD, the largest growing “Pre and Post Baby” demographics, namely Baby Boomers and the Millennial Generation, are moving into life moments that demand housewares purchases such as home buying, downsizing and marriage. However, while these two demographics have historically been driven by different needs, healthy living has arguably emerged as a unifying lifestyle, which both demographics now keep top of mind while purchasing products.
“Once you start getting into your mid-50’s, 65% of people have some sort of medical issue,” Derochowski explained. “They are managing it, treating it or trying to prevent it. They start acting on their health. Well now, the younger generation, who historically hasn’t acted on their health, is acting on it, and not only that but they are able to do so. The reason why that’s important is because if we ask anybody to live a healthy life, it’s now universal.”
The home industry overall was strong in 2016, according to NPD research. For example, according to its 2016 holiday shopping bag weekly report, home outperformed every other industry tracked by the market research firm over the holiday season, and saw a 4% increase in dollar sales versus 2015.
Derochowski said product categories that saw the most success, with three consecutive years of growth, were those that lend themselves to home cooking, entertaining and cleaning, and each category’s success points to strong consumer preferences towards health.
Those categories included products that focus on bake/mix/measure, chop/slice/core and grate/peel/clean such as kitchen scales, mixing/prep bowls, spiralizers, multi-cookers, electric pressure cookers as well as other items, according to NPD’s retail tracking service.
“The growth of homemade fresh meals is a wonderful thing and that’s what’s driving this,” he explained. “Now, if you’re making homemade meals there are most likely leftovers. So it’s not surprising that food storage is one of the other categories that has grown three straight years.”
He added that product categories that allow consumers to lead whole home healthy lifestyles, such as air purifiers, water filtration and floor care, also experienced growth, and NPD expects that to continue.
“Health is not just conceptual.
It’s showing up in our data, and it’s driving the trends. We have a window where people are going to be very involved with their meals and their homes,” he noted.
However, opportunity for further growth abounds. While the home industry has seen success in terms of dollar and unit sales in 2016, new product innovations were down for the fourth consecutive year.
According to Derochowski, 2016
saw 25% fewer new products introduced compared to 2015 across primary small home appliance segments including kitchen, home environment and personal care.
“If I’m not only entering into a growth industry but I’m in a growth industry, that number should be up,” he noted.
Derochowski said manufacturers when developing products should focus on solving pain points while also looking for opportunities to build on moments of joy, which can be found in almost everything consumers do at home and especially at mealtime.
In addition, as consumers begin to focus on whole-home solutions, vendors should also be shifting their marketing strategies.
“If we can help the consumer better connect the dots to the entire solution so it’s not about products or categories, it’s going to open up a lot of innovation opportunities,” he said.
In addition, as the Millennial and younger generations continue to enter the market, manufacturers and retailers now have a unique opportunity to help them develop their at-home habits.
“Millennials and the younger generation are still developing their repertoire as far as what they are going to be eating, how they are going to prepare meals and how to entertain, and I think that opens up a tremendous amount of opportunities,” Derochowski said. “I think manufacturers and retailers alike can continue to work this year to help these consumers at these life moments learn and develop their own self.”
In terms of retail, the success of e-commerce has hit some retailers hard, with many scrambling to develop successful online strategies.
According to the NPD Group’s consumer tracking service, online dollar sales of small home appliances increased 10% in 2016 to $5.8 billion, following 14% and 13% growth in 2015 and 2014, respectively, while in-store dollar sales decreased 1% to $15.2 billion, following a 1% and 5% decline in 2015 and 2014, respectively.
In order to take advantage of the current shift in demographics and overarching healthy lifestyle, brick-and-mortar should begin to embrace its core value, Derochowski said.
“We know that online is growing and continues to grow. It’s not going to go away. That said, brick-and-mortar isn’t going anywhere either. The core of brick-and-mortar really is about unbelievable experiences and helping consumers navigate moments in life and moments in time. I think there is a lot to be played with there,” he said.
The challenge, he said, is evolving the brick-and-mortar landscape towards creating experiences that speak to more than just marriage and baby.
Taking advantage of advancing technologies should also be added to brick-and-mortar retail strategies, he said, as a way to help consumers visualize their purchases.
“Part of the barrier to making the decision for the consumer is, ‘Does it fit? Will this look good?’ With virtual reality, augmented reality, connected intelligence, there are so many tools out there that can help the consumer visualize what this purchase is going to look like. We’ve got to leverage that, and I don’t think that’s been done yet,” he said.
He also noted that smart home innovations have opened up an opportunity for retailers to grow their relationship with consumers by boosting the in-store experience and sales.
“This is one of the places that I’d be looking at because a lot of smart home consumers are going to want to talk to somebody, they are going to want to be educated and they are going to want help putting it together. And that’s the beauty and the benefit of the in-store experience,” he said. “This is a clear playground that brick-and-mortar retail can start to play in to really help win the hearts and minds of consumers again.”
