Marketing Minute: Marketing to the next generation of flooring buyers - Jan 2019
By Paul Friederichsen
Understanding the behavioral and preferential nuances of different generational groups is essential for any marketer. Just as no two people are alike, generational groups are not the same either.
“Generations exhibit similar characteristics-such as communication, shopping and motivation preferences-because they experienced similar trends at approximately the same life stage and through similar channels (e.g., online, TV, mobile, etc.),” according to the Center for Generational Kinetics.
Who are these groups, and what age ranges define them? Business Insider recently published a Pew Research Center breakdown f the generational groups recognized by most demographers.
If marketing can simply be defined as “selling more things to more people more often,” then understanding what makes people tick in these different groups becomes important. Knowing your customer is the first step in knowing how to sell to them. This not only means knowing what they are most likely to purchase but also what they are likely to watch, read, listen to and post on social media. All of this behavior is based, in large part, on generational similarities. Having a basic understanding of these behaviors and preferences will sharpen the marketer’s message and choice of media to reach the desired target audience.
In this time of “intense competition” for the floorcovering retailer, as reported in the annual retailer survey published in the July 2018 issue of Floor Focus, there has been a great deal of consternation and concern regarding the growth of online sales, as well as big box and category-killer retailers. The cause of this angst is the disruptive effects of a marketplace in transition-both generationally and technologically-that the flooring industry finds itself in.
The American Dream is still home ownership, but the look of that dream is changing dramatically. On the top rung, Baby Boomers are living longer and staying in their homes longer than the previous generation. Their ability to move off the ladder and into retirement housing is stymied by the economics of little to no retirement savings. Gen-Xers are likewise finding it difficult to move up, which leaves Millennials struggling to get a foothold on the bottom rung. Once in a home, many growing families must stay put and make the best of a crowded situation-bad news for builders but good news for remodelers and floorcovering dealers.
THE NEXT GENERATION OF CUSTOMERS
Perhaps no generation since the Silent Generation of the 30s and 40s has been more affected by an economic catastrophe than Millennials. As the Great Recession was setting in, many Millennials were poised on the launch pad, their college diploma firmly clinched and ready for a countdown that never ever came. “Failure to launch” became a national punchline, with many a Millennial starting their future in a job that required no college degree, all while living in mom and dad’s basement. To this day, according to a new survey from Zillow, 22.5% of Millennials ages 24 through 36 are still living at home, the most in any year in the last decade. Of the top U.S. markets, New York and Los Angeles have the largest percentage (30+%), while Seattle has the lowest (14.4%).
Many flooring retailers are somewhat skeptical of Millennial demand and buying power. “The numbers just don’t bear out the optimism and anticipation for the next generation’s (Millennial’s) flooring appetite,” say many dealers and the marketing and advertising services that support them. When a business is worried about making sales numbers to keep the lights on and make the payroll, they aren’t overly concerned about what may or may not be coming over the generational horizon. Should they be?
As the economy continues to improve, unemployment continues to shrink and the Baby Boomer generation continues to dwindle, Millennials will become more and more a marketing factor. Actuarially speaking, this is inevitable.
Meghan Biro said it best in the title of her Forbes article “Listen Up Leaders: We Are All Millennials.” In the floorcovering food chain, marketers are starting to catch on. Manufacturers are the most attuned to this shift for a variety of reasons. First, they must reach a broader market. Second, investments in manufacturing, supply chains, innovation and design mean they must plan much further ahead to ensure their brands will keep pace. And finally, our youthful cultural bent requires that in order to be deemed acceptable and desirable, our brand image must be skewed in that direction.
To understand this, you need look no further in the floorcovering industry than the Coretec trade campaign of hip, athletic and cool Millennials identifying with Coretec styles that match their personal lifestyles. This campaign not only visually identifies with a “we are all Millennials” psychology but positions the brand as embracing it. Reading between the lines, the message to the dealer seems to be, “Get on board, guys, your future is with us.”
Even with their rocky start, Millennials are beginning to make their mark while making their beds in their own home-and not their parents’. Consider the following:
• Four in ten Millennials are now homeowners, according to CNBC, Bank of the West Report, July 2018
• Homeownership rate of Millennials (now at 36%) is the largest gain among all age groups in 2017, according to the National Home Builders Association Report (NAHB), April 2018
• Millennials are in the market for single-family homes in the suburbs for raising their families, according to the NAHB Report, April 2018
• Millennials want three bedrooms and two bathrooms, outdoor space and flexible areas that can be used for a variety of purposes, as well as more luxurious finishes, like quartz countertops, according to the NAHB Report, April 2018
PLAN YOUR STRATEGY
In order for retailers to cash in on the Millennial shopper, they have already discovered many factors that are necessary to up their game. Here is a top-ten checklist to keep in mind when planning a strategy for Millennials:
1. They are more price-conscious and used to getting by on less. You can thank the Great Recession and student loan debt for that.
2. They are more knowledgeable about their purchase beforehand. Many retailers are surprised by their flooring savvy, probably due to equal measures of online research and HGTV viewing.
3. They are more sophisticated than their predecessors in digital media use. Remember, this generation was birthed at about the same time Steve Jobs introduced the Macintosh. They’ve never known life without a mouse click. Consider that five years ago a Better Homes and Gardens survey showed that nearly six in ten Millennial homeowners were already using smartphones or tablets to access home-related information.
4. They are more receptive to at-home shopping. They simply do not see the point of wasting time with the traditional comparison-shopping process of the previous generation.
5. They are the tour de force behind the explosive growth of e-commerce. Thanks to Millennials, this year’s Black Friday shopping frenzy showed another double-digit leap in online sales, and meanwhile major retailers like Sears are in freefall.
6. They are more likely to be single or an unmarried couple purchasing a home than any generation in history. Unmarried couples accounted for 16% of first-time homebuyers in 2017-the highest share on record, according to the National Association of Realtors.
7. They expect products (especially those for the home) to be responsibly made in terms of sustainability and ingredient transparency and non-harmful through exposure and use.
Copyright 2018 Floor Focus