millennials and furniture in the us and the uk february 13 ... · millennials and furniture in the...

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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

[email protected]

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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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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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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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

9.9 7.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

31.036.4

40.6 40.944.6

48.245.5

15.6 17.1 18.5 20.5 21.4 23.6 24.1

0

10

20

30

40

50

60

70

2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15

16–24 25–34 35–44 45–5455–64 65–74 75+

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

$3,000

$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


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


47%

40%36%

Millennials GenX Boomers

Approximately47%ofUSmillennialsshopforfurnitureonline,butbuyatbrick-and-mortarstores.

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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


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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KeyTakeaways• Becausemillennialsrangeinagefrom16to36,theyconstitutea

consumersegmentthatisofgrowingvalueinmostmarkets.

• Currently,millennialsintheUSandtheUKspendlessonfurniturethanpreviousgenerations,largelybecausetheyhavelowerincomesandhouseholdformationlevels,aswellasapropensitytoliveinsmallerurbandwellings.

• Millennialsmainlyprioritizefurnitureitemsthatmaketheirliveseasierandmoreenjoyable,andonlymakeusefulpurchasesthatrepresentgoodvalue.

• Millennialsseeksmall,multifunctionandaffordablefurnishingsandareattractedbyproductswithembeddedtechnology.

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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerSeniorAnalyst

EvaK.SeniorResearchAssociate

HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017

FungGlobalRetailTech.com

millennials and furniture in the us and the uk february 13 ... · millennials and furniture in the...

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