March 2009

For immediate release
Contact: Nancy Neumann
nneumann@albing.com
(908) 788-5411

A Silver Lining for Home Furnishings Spending in Spring 2009?

There may be some bright spots in the home furnishings landscape for the next year according to recent consumer research conducted by Albing International Marketing (AIM’s 2009 Consumer Spending Research, conducted in January and February, 2009). “Consumers continue to tell us that they WILL buy things to refresh the look of their homes this year,” according to Robin Albing, AIM’s President. “Their spending is more likely to be for smaller items than for large purchases like full rooms of furniture or major appliances, but if retailers and manufacturers can position a limited number of items at sharp price points, they will see some success.” Over the years, AIM consumer research has found that consumers always feel “gray” and a little depressed at this time of year, especially in the northern half of the country where the winter tends to drag on. This year the bad economic news is creating an even “grayer” attitude. Among people who are employed, there is caution and an overall pullback on large scale spending, but AIM is also identifying some pent-up demand which may result in increased spending in the spring. In focus groups and in-depth interviews with consumers, they cited a desire to “reward” themselves with small purchases to “spruce up” the look of their homes. In late January 2009, AIM also conducted an internet survey of 800 middle income consumers. 40% of consumers in the survey stated that they “plan to make a few small purchases to keep things fresh and updated.” Only 8% have “completely stopped spending on (their) home(s).”

When asked to rank their priorities for spending in the next year (after paying for housing and insurance), home furnishings spending (for housewares, furniture, appliances and accessories) ranked number four after food/basic necessities, fuel, and clothing/accessories. Home furnishings spending ranked higher than spending for home improvements, electronics, travel/leisure and education. Education ranked solidly at the bottom, chosen last by 40% of the participants. The top two choices were clear priorities: food/basic necessities drew 77% of the number one votes and 57% of the respondents selected fuel as number two. Home furnishings stood right in the middle in terms of anticipated spending with 20% of the number four votes and 20% of number five.

Albing urges home furnishings companies to be clear about which price points represent “value” in their respective categories. “The manufacturers and retailers must be able to understand the difference between what is considered investment spending and what is perceived to be an update. A colorful, new toaster at under $50 is an update, while a $300 state- of-the-art food processor is an investment.” And the channel of choice for consumers is online retail, which provided the only positive results of the 2008 holiday shopping season. Amazon.com, Overstock.com and the online divisions of traditional retailers were counter to the dismal results at traditional bricks-and-mortar or catalog retailers. In AIM’s research, consumers cited several reasons for turning to online retailers: consumers have become more comfortable with the internet in general, they perceive that online shopping allows shoppers to search for the lowest prices, they are travelling less often and must ship gifts, and, finally, they remain concerned about fuel prices which limit local shopping trips (despite the decline in fuel prices in late 2008). Home furnishings are also perceived to be easier for consumers to buy online than apparel, which must be tried on to assure fit. However, AIM has found that aggregate “online shopping” consumers include many catalog shoppers who visually “shop” the catalog, then “buy” online. Many of these consumers simply do not chose to buy over the telephone due to long waits, but would not buy at all without first seeing the product in a catalog. Most retailers do not differentiate between these catalog/online consumers and strictly online consumers.

For further information on AIM’s 2009 Consumer Spending Research, contact Albing International Marketing at (908) 788-5411 or ralbing@albing.com.

RELEASE: April 9, 2001
RELEASE: December 8, 2000