Charting The Path:
Home Retail
The home retail category is in flux as consumers navigate cost-of-living pressures and reassess what they value in their domestic lives and their relationship with home ownership.
At the same time, category entry points require consumers to become experts in the category overnight, but with brands too often being indistinct and choosing to focus on decontextualised differentiating benefits, consumers can struggle to make heads or tails of the category.
This is the first in a new series in which B&T and The Growth Distillery (TGD) will unpack five different research programs to help marketers chart the path to growth across different categories. For this piece, TGD surveyed 3,000 consumers to learn their desires, needs, and wants in the home retail category.
If marketers can meet these consumer expectations and simplify the consideration phase, there are significant gains to be had.
Home Retail:
The Macro Backdrop
It’s no secret that Australians are feeling the pinch at the moment thanks to rising costs and pretty stagnant wages. While interest rates may be declining, changes to the status quo of world trade have made it clear that we are not out of the woods on economic uncertainty.
Consumers have overwhelmingly reported that their day-to-day costs are rising and that this is impacting their spending habits and future plans.
9 in 10 Australians report that their day-to-day costs are rising
With less money than before, consumers are spending more time at home. And while the dream of home ownership and the idea of home as a sanctuary have always been powerful in the minds of Australians, consumers are reappraising their domestic lives. We’ll explain more about how this reappraisal is manifesting itself later.
For brands in the home retail category, shrinking wallets might be a cause for concern, especially with half of Aussies saying now is a ‘bad time to buy’ a major household item. But as the home retail journey is often defined by urgency and a compressed timeline, purchases in the category are not discretionary. As such, the sector should prove relatively resistant to any further changes in cost-of-living pressures.
That said, 31 per cent of Australian households (or 2.9 million households) were renting according to the 2021 census. This was up from 23.9 per cent of households in 1994-5. This change in living arrangement is worth keeping in mind, as renters are often more price-sensitive and less concerned with products with overwhelming feature sets.
Confusion Abounds
The key to understanding consumers in the home retail market is that their purchases are infrequent and often made at moments of high stress. You could likely count the number of times a person will buy each significant good in their life on one hand. Then, when those break, they’ll come to buy a new one.
But rather than being presented with easily digestible information on each white good at the high-stress time of purchase, consumers are overloaded with information on their options. More information leads to more decisions, and as the number of decisions we make increases, the more we struggle to rationally process each decision and place it within its proper context.
Half of home retail consumers say they are not confident navigating a major home retail purchase on their own.
72% of shoppers still prefer to go in-store, driven by the need to "try before you buy."
Two-thirds specifically prefer shopping via the big brand retailers.
When making their decisions in the home retail sector, consumers need to become short-term experts on whichever product they’re searching for. But there are more brands than ever, including big international names, and some consumers might be less familiar with them.
For instance, in the refrigeration market, brands such as Samsung and LG command greater mental space thanks to their products in other areas. Brands such as Fisher & Paykal and Westinghouse might be more familiar to consumers than Hisense or CHiQ, giving them an initial advantage. But when all these products perform the same function, it can be nearly impossible to separate them, with each decision feeling arbitrary. Product functions have leapfrogged basic utility, especially when products become internet-connected.
With the cost of living rising, it can be even harder for consumers to understand what exactly constitutes value.
Home As Desire, Sanctuary & Stress
That changeable and challenging macro economic environment is causing Aussies to rethink their domestic lives. Now that we’re spending more time at home, we’re trying to find joy in the everyday spaces, as well as comfort and functionality.
The furnishings and items in our houses and apartments play a crucial role in turning them into homes—whether that’s new wallpaper or a big white box.
85% of Australians say their homes are a sanctuary from the outside world's demands.
Two-thirds say that maintaining their home places demands on their time and energy.
At the same time, however, our homes are among our biggest sources of stress. Two-thirds of us, for instance, say that maintaining our homes places demands on our time and energy and that’s before you get to the decidedly stressful time of buying goods in the home retail sector.
But the inescapable desire to make our houses into homes remains. And we see that play out in popular culture, too.
This remarkable level of category interest means that there is a significant opportunity for brands to get involved whether through advertising, integrations or sponsorships of content or creators. With more choice than ever for consumers, the brands they opt for can be a reflection of themselves in the home retail space if brands think and act correctly.
There are few more powerful tools in marketing than being able to tap into an emotionally charged and personal part of a consumer’s life. For home retail brands, there has never been a better opportunity than right now to do so.
Everyone has a fridge, or a washing machine, but it’s the furniture around them that offers us the chance for self expression.
Charting The Path
The path to growth in home retail requires brands to get closer to their customers. Before you plan any sort of marketing communications, you must carefully consider their category entry points.
Consumers in the category are often stressed and overwhelmed, particularly if they’re in the market for white goods. At the same time, consumers are looking for their homes to be a sanctuary from everyday stresses and a reflection of their personal aspirations, dreams and values.
Reframe the value proposition
Brands must reframe their value propositions to meet consumers. Their products can be heroes in consumers’ domestic life. Go beyond talking about product benefits that everyday consumers may not understand. Instead, showcase how they can improve customers’ lives.
They aren’t simply tools or resources. Instead, they can restore energy and improve mental wellbeing in someone’s home. Kettles and toasters, perhaps those most functional of goods, are perfect examples of being able to bring a positive brand experience into someone’s home—look at a brand such as Delonghi or Smeg, for instance. People also want to convince themselves that they’ve made the right investment.
Products can also be facilitators of people’s goals, passions or interests. They can also be markers of achievement and aspiration. They could be the missing ingredient to someone’s dream home and you can position your brand and products as such. They could be the facilitator of a family lunch, for instance, or the thing that takes a night in on the sofa with a partner to a whole new level.
Physical As King, Digital As Reinforcer
Being in-person is key to overcoming the overwhelm that consumers can often feel at key buying moments in the home retail sector.
The in-store experience is far greater than many realise. It’s a chance to create an engaging and memorable experience for consumers and to truly make your brand and products stand out from the crowd but also create a space that allows consumers to envision products in their homes, encouraging hands-on engagement. When was the last time you went to IKEA and didn’t sit on a sofa or lie down on a bed?
These moments also build confidence in products and elevate the vindication that consumers can feel after making a purchase. It’s also a great opportunity to add some sweeteners to the deal and elevate the post-purchase experience.
Charting The Path for growth in the home retail sector poses challenges but there are myriad opportunities for brands to take the lead in the market and sail ahead of the competition.
