The Home Improvement Research Institute (HIRI) recently presented the latest research on home improvement trends and the economic and social factors affecting the channel.
Speakers at September’s 2017 Insights Conference in Chicago addressed topics including customer service, home technology and the economic impact of hurricane-related home repairs.
The event kicked off with a presentation from Sarah Catlett, senior vice president of Kantar Futures, and Laura Kennedy, director of retail insights at Kantar Retail. The speakers said today’s consumers are shopping fewer retailers and seeking stress-free shopping experiences like Amazon’s Dash buttons, which order products at the tap of a finger. The two pointed to IKEA as a retailer that was succeeding in winning young shoppers by offering products focused on “life stage and lifestyle,” including modular furniture that can be customized to fit a consumer’s living space.
Catlett and Kennedy also raised the issue of “invisible consumers,” citing data that showed 80 percent of African-Americans, 70 percent of Hispanics and 66 percent of the LGBT community feel they are often afterthoughts to retailers.
Josh Rosenbaum, managing director and co-head of industrial and diversified services at RBC Capital Markets, presented information on Wall Street’s influence on home improvement projects. He said the home improvement index has performed nearly two times better than the Standard & Poor’s 500 index, and housing starts are up roughly four times their 2009 level.
Rosenbaum said that overall, the economic outlook is good for the home improvement industry, but recent hurricanes will likely weaken third-quarter figures temporarily. He said some of the biggest growth factors for the home improvement index include an aging home inventory that needs to be updated, the rise of home digitization and a turn toward green building materials.
Kermit Baker, senior research fellow at Harvard University’s Joint Center for Housing Studies, explored the issues shaping the outlook for the $340 billion home remodeling industry. He said rising American home prices and steep rent are keeping many millennials from owning homes, which could impact long-term home remodeling forecasts. Affordable metro areas in the Southeast, Midwest and inland California appear most likely to see a growth in homeownership.
He also said aging-in-place renovations and projects aimed at improving homes’ air and water quality are becoming increasingly popular as rising home prices encourage more homeowners to remodel their homes instead of selling.
Christina Cooley, director of diversified service industries practice at J.D. Power, reminded attendees about the value of customer service. Her data showed a strong correlation between a consumer’s satisfaction with the product a retailer sells and their overall satisfaction with the retailer. She also said that customer satisfaction rates are much lower when customers buy a product online, showing that positive interactions with salespeople are still a valuable part of the consumer experience.
Other speakers included Dave Pedigo, vice president of emerging technologies at CEDIA, a technology trade association. He said that home technology has gone from a “would-like-to-have” to “a must-have” in new homes. He detailed new in-home technology like bio-adaptive lighting, which can adjust brightness to boost a household’s circadian rhythm.
He stressed that smart home technology was not “a gimmick,” saying that smart-home automation has life-saving implications in the event of floods, fires and home break-ins. Pedigo also stressed the importance of having a specialized workforce able to install smart-home components, many of which are built by different manufacturers and present tricky interoperability issues.
Brad Hunter, chief economist at HomeAdvisor, presented data regarding 2017 home improvement trends and the 2018 forecast. More than any other speaker, Hunter highlighted the effects recent hurricanes in the southern portions of the U.S. will have on upcoming home improvement trends, saying that the hurricanes hit several affluent areas and repairs on those homes could boost the industry’s forecast.
His data showed that baby boomers spent the most on home improvements, roughly $5,600 per project. Millennial homeowners were close behind at around $5,000 per project. Baby boomers tend to invest in outdoor enhancements like sheds, gazebos and outdoor lighting, while millennials favor basement repairs, childproofing and landscaping projects and are motivated by the desire to personalize their living space and add authenticity.
Grant Farnsworth, director of business development at The Farnsworth Group, detailed remodeling trends among professionals. He described an optimistic outlook among contractors, who see a marked improvement compared to the years immediately after the housing market crash. He said that as construction projects increase, contractors can charge more and include more expensive products from specialty manufacturers.
Other speakers at the HIRI 2017 Insights Conference included Nino Sitchinava, principal economist at Houzz; Jordan Rost, vice president of consumer insights at Nielsen; Todd Tomalak, vice president of research at John Burns Real Estate Consulting; Patrick Stroh, vice president of data science and decision analysis at Brunner; and Dave Sladack, senior vice president and director of channel marketing at Brunnerworks.