You don’t have to look further than your Facebook or Instagram feed to see the vast array of hip, on-trend home furnishing and décor options available. Whether you are actually making your purchase online or using social and digital media to do your research, selection, and validation, the home retail sector has been disrupted by savvy online retail marketers.
Digital Research Leads the Revitalization
Today’s consumers are driving the demand for budget-friendly, trendy home décor. In fact, a U.S.-based study by Impact Consulting found that 27% of the population says their home furnishings must be a reflection of their personal style, while 40% of millennials (ages 25-34) feel that way. At 37% millennials have the largest share of spending on furniture and bedding in the U.S. than any other generation. This age group also represents the fastest-growing segment of the market, according to the 2015 ‘Furniture Today Consumer Buying Trends Survey.’
In Canada, Ikea sold over $2 billion in 2016, and the actual size of the marketplace (depending on how broadly you consider retail home furnishings and décor) is south of $10 billion and continues to grow. The weak Canadian dollar may be one reason for the uptick in home retail spending. Canadians tend to cocoon when the dollar is weak, choosing to invest more time and money in their homes.
Whether the purchase happens online or in-store, smart home furnishing retailers like West Elm, Room and Board, Article, Ikea, Crate and Barrel, Wayfair, and much more are leveraging social and digital media to drive sales. The Deloitte study ‘Capitalizing on Digital Influence in Retail’ shows the power and potential of social — shoppers are 29% more likely to make a purchase on the same day when they use social media to help shop either before or during their trip, and consumers who use social media during their purchase process are 4 times more likely to spend more than non-users. More specifically, the study showed that in the home furnishings/décor/improvement category high-frequency shoppers use digital 50% more than low-frequency shoppers. In this category, consumers are living in the digital space, getting inspired by marketing efforts, reading reviews and testimonials, and comparison shopping — all leading to online or in-store purchases.
Digital & Social Media Disrupt Retail
The impact of digital and social marketing and e-commerce has greatly disrupted this retail sector, and companies that haven’t kept up are being left in the dust. E-commerce retail has in many instances greatly reduced the high cost of brick-and-mortar stores, warehousing, and investment in inventory levels. At the same time, e-commerce creates new operational costs such as technology, data, marketing, and logistics. Online sales often get abandoned at check-out due to delivery costs, but in-store purchases often have delivery costs tied to them as well. Wayfair, like Amazon, may be losing money on purchases by covering delivery costs in the hopes of building their market share and showing growth to investors. This has worked for Amazon, but they are so much larger and are the leader in so many categories. Wayfair stock has gone up and down, and at this point, it is hard to know if their strategy will work or if investors will expect profits in the short term.
For many retailers, online sales are a small portion of their revenues, as some consumers still want an in-store experience where they can feel and touch their new furnishings. It is obvious that for home retailers, a digital presence and a superior consumer experience (especially on mobile) are critical to their success. For those who are doing it well, there is a great upside. Having a great website experience; content that connects along the purchase journey at multiple touch points, from inspiration to client testimonials; and special offers are table stakes. Using social and digital media to engage and drive back to site or in-store is a new reality. A recent comScore report showed that Canadians are spending 62% of their digital time on mobile and 86% of their mobile minutes on apps. According to Media Technology Monitors, Canadians surveyed spend an average of 24.5 hours per week on mobile, and this number rises significantly to 34 hours a week with a younger demo (18-34).
These stats and mini case studies all show that the retail home furnishing and décor category is another example of how leveraging digital technology – from marketing to operations – to enhance your business is creating new opportunities and challenging the status quo.