The Changing Consumer: Service remains key as flooring retailers adapt to evolving consumer habits - Aug/Sept 2020
By Meg Scarbrough
Few could have predicted what 2020 had in store. Heading into the year, flooring retailers and manufacturers alike were optimistic, predicting sales would exceed the prior year’s expectations, which had been less than ideal. But as COVID-19 forced shutdowns across the country, everything was turned upside down; retail sales dropped double digits in April alone, with some estimates saying flooring sales within the residential remodel sector were down 40%. Retailers were faced with unprecedented circumstances. While sales suffered early on, things now appear to be rebounding, and traffic for many is bouncing back. Despite setbacks in economic growth in the second quarter, economists expect a stronger third quarter.
Consumers have started to re-engage with the retail channel, but with new priorities in mind and spending limits in place. It’s pushing retailers to rapidly adapt, whether that be in handling day-to-day business, reassessing marketing campaigns that were upended, offering curbside service or investing in e-commerce.
As retailers assess a changing retail landscape, the questions become: How have consumer spending habits changed because of the virus? Are these changes permanent or fleeting? And how can retailers leverage that information to ensure they are giving their customers what they need? Ultimately, it’s all about connecting with the consumer, building trust and providing quality service from product selection through to installation.
Here are a few things retailers should know about the current consumer and ways to stay in the game:
PRIORITIES HAVE SHIFTED
First and foremost, health, family and home have taken on a renewed sense of priority, and that has brought changes in spending habits.
Nearly half of America’s office workers left their cubicles and conference rooms to shelter in place this spring.
Joining them in the home were an estimated 70 million students-from kindergarten through university level-as schools across the country began to close their campuses. Homes began to transform. Spare rooms and kitchen tables became hubs for office work and school projects.
Gradually, as those workers and students settled in, something else started to shift; consider that before COVID-19 most people-adults and children-were outside of the home for eight to ten hours or more each day. “People began to realize they hadn’t been spending enough time with their families,” says Holly Jansma, interior design sales associate at DeGraaf Interiors based in Grand Rapids, Michigan. “They weren’t being distracted by events or parties or work. They began realizing that they’d rather spend more time at home and how important relationships with people are.” With that realization came the sense for many that the home needed to support and comfort its dwellers.
Any homeowner will likely attest that there’s a seemingly never-ending list of projects that need to be accomplished-cleaning the garage, repainting the bathroom, organizing the linen closet, building a new deck. With a rekindled appreciation for family and togetherness and more time on their hands, homeowners have been taking a second look at those lists. How can I make a longer-term home office? Can we make our family gathering areas more comfortable since we are going to be here all of the time? Can we catch up on projects that we either didn’t have time for or just didn’t notice needed to be done before? Says Jansma, “I think it’s incredible that relationships are becoming more important as a result of [the shutdown].”
Around the same time as the shutdowns began, tax refunds started going out, and not long after that, the federal government, in an effort to inject money into the economy, sent out stimulus checks to many that ranged from $1,200 to $2,400. As weeks passed, families decided that vacations that involved flying or crowded destinations were a bad idea. Money saved up for that trip to the coast was just sitting in the bank.
Consumer researchers note that a rise in the reprioritization in spending began during this time. Overall, they say, consumers have been cutting back on discretionary spending and reassessing what they buy, such as stocking up on groceries and essentials instead of buying shoes, or investing in the home instead of booking a vacation, according to an analysis conducted by McKinsey & Company, a consulting firm. Tiffany Hooyman, interior designer at Macco’s Floor Covering in Wisconsin, says it’s something she’s been seeing in her showroom, adding, “Customers will say, ‘We were going to go on vacation, but now we’re not. So we’ve decided to do the flooring.’”
In May, as shelter-in-place mandates began to lift across the nation, consumers were feeling more confident about leaving home, and they were armed with spending power. They had also been home for weeks on end staring at their floors. As a result, some stores have reported record summer sales in May and June. Says Andrew Robrish, a store manager for A.J. Rose Carpets & Flooring in Massachusetts, “People want to spend money. It makes them feel good, even when they are in tough situations.”
But some uncertainty about the economy and the long-term impacts of COVID-19 remain, and that could hinder consumer spending, at least for a little longer. It’s a crystal ball moment for retailers trying to figure out whether this burst in demand will stick around or fade away. According to Hooyman, “As long as people are still working from home, there could be potential that this continues on.” Dave Rengo, branch manager of Great Floors’ showroom in Bellevue, Washington, says while things will likely level out in the winter as usual, “I absolutely believe this will last much longer than 60 days.”
In July, the federal government began weighing a second round of stimulus checks, something that could once again aid the flooring industry. Hooyman says, “I had one woman say, ‘Well, if we end up getting another stimulus, I’ll do this other room, too.’”
EXPANDING ROLE OF INTERNET
Along with a strengthened sense of home and family, consumers are also placing more emphasis on health and safety as it relates to the outside world, and it has changed the ways in which they shop and interact with retailers.
Arguably one of the biggest areas of impact related to consumer shopping behavior amid COVID-19 has been in e-commerce. Overall, online retail has been gaining ground year over year since it came to be. With the recent shutdowns, experts say that growth likely sped up four to six years, according to a report conducted by Adobe Digital Insights and published by Forbes. In the first quarter of 2020, Internet sales were up 14.8% from the previous year at the same time, according to the U.S. Census Bureau. Says Robrish, “We see more and more of that coming through. People want to shop when they can, and they prefer to stay home.”
While some flooring retailers say they’ve seen increases in e-commerce amid shelter-in-place orders, it’s not certain this is a trend that will remain long term. Many in the industry feel the brick-and-mortar experience can’t be replaced in the digital world because flooring is such a sensory product that needs to be felt and touched.
But it’s not just about buying online, it’s also about providing consumers with tools for exploring their options. Some of those include room simulators that allow homeowners to upload a photo and apply different flooring options so they can see what their room could look like. Other retailers are offering online consultations. It’s part of a strategy to promote safety and social distancing, but also offers prospective consumers a chance to educate themselves before they ever step in the door.
INCREASES IN DIY DEMAND
Retailers note that consumers’ desire to buy products on demand, both in-store and online, and handle projects on their own has grown in recent months. Searches for “DIY” in the months after the shutdown began were up 80% from last year, according to a report conducted by Google.
That shift is based on a couple of factors. One is that customers haven’t felt comfortable having outsiders, including installers, in their homes during a pandemic. The other is that, for many, there’s just more time to do it on their own. Says Hooyman, “People who buy materials usually get someone else to install it. But this changed during the pandemic. … There was a lot of, ‘Well, we are home and having nothing to do. Let’s do it ourselves.’” She says they’ve had more cash-and-carry business than normal in recent months.
Retailers say it’s probably too early to judge whether the DIY trend will become a more permanent fixture moving forward. Hooyman believes it is likely to taper off as things return to normal, especially once travel bans are lifted and as people head back to their offices. And Jansma adds, “We are a society of convenience, and a lot of people prefer to have other people install it. People just had so much time on their hands during COVID, it was beneficial to do it themselves.”
But Rengo sees potential for DIY to stick around to a degree, “If you can order boxes of planks to your house and install it yourself, why not?” Google’s experts say that with consumers feeling more empowered to tackle projects on their own, retailers can react by offering more services, perhaps courses, that can aid them in that process.
HOW RETAILERS CAN RESPOND
In order to connect with reluctant consumers right now, retailers will need to tap into the consumer mentality and leverage that. A recent survey by ZypMedia, a digital advertising platform, shows that amid the outbreak, Americans say they are more likely to turn to trusted brands and shop local, both based around a sense of wanting to help their local economies and communities. But consumers also expect safety and convenience that they feel they can find in major retailers. Says Aman Sareen, CEO of ZypMedia, an advertising firm in Los Angeles, “These are important messages for businesses to use in their marketing as they continue to engage with consumers to best address their concerns now, as well as their pandemic-altered purchasing behaviors in the future.”
Here are some tips from retailers across the country:
Know the consumer. It might sound like a no-brainer, but with lighter showroom traffic, there’s more time to connect with potential clients.
In general, consumers are doing homework before they seek out an independent retailer. “Everyone has the Internet, and there is a lot of information out there, good and bad,” Rengo says. “Sometimes it can be hard to tell the difference. That is why people like to speak with a professional they can trust to confirm the things they have read.”
Hooyman agrees, adding that customers may know the category, but they don’t understand the differences within the category, and sometimes it’s necessary to help them walk through those differences.
Jasnma says it’s important to really talk to them and find out about their lifestyles, too. She starts by learning if they have pets, children or grandchildren, and whether it’s an active household or if there are any family members who are disabled or in wheelchairs, requiring low-pile carpet or hard surface flooring to function. And she reminds them that it’s “a time to be really honest and frank about your needs.”
By learning about their lives, she says she is able to address flooring options that meet their needs while also fulfilling their personal desires, and having those types of conversations helps build trust at the same time.
Create a sense of safety. Experts say one component of being a successful retailer in these times is by creating a sense of security and trust for reluctant shoppers who may feel uneasy about venturing from the home, and there are a number of ways in which retailers are trying to do that. Showrooms across the country have responded by enacting safety measures like limiting the number of guests in showrooms or no-contact deliveries.
Robrish says A.J. Rose’s stores have implemented appointment-only showroom visits, curbside pickups, virtual consultations and even FaceTime calls. While he says the company might be limiting the amount of traffic and potentially sales, it’s gaining invaluable trust. “I think it shows we are concerned about customer well-being and safety, and I feel the customer appreciates that,” he says.
And the results can be two-fold. For starters, he says, the appointment-only process means customers are getting more one-on-one time than was possible before, and that can further grow their confidence in a brand. Additionally, he says, customers are making quicker decisions. Feeling less eager to spend extended amounts of time out of the home, some are doing research beforehand and are able to narrow down orders more swiftly.
Maryanne Adams, president and CEO of Avalon Flooring, created a virtual consultation to help customers narrow down decisions before entering the store in an effort to limit contact. “When [they] realize you’re taking this seriously, I think there’s a security that makes it feel safe to go into the store,” she says. Other retailers are offering samples by mail or will drop them off at a home; one has even created marketing around the company’s safety protocols. But the safety factor isn’t just for the customers; employees also expect a level of care to be provided by their employers. One retailer says some staffers weren’t thrilled to come back to work for fears of the virus and taking extra precautions helped ease their worries.
Stay knowledgeable. Some retailers have used the slowdown to brush up on new products and trends, agreeing that being armed with knowledge can be the best tool. “If you’re well-educated then you can educate the consumer about the products,” says Jansma. “Realize that you never stop learning.”
Knowing the products and programs can really help put consumers in flooring that fits their lifestyles and their taste. As an example, she pointed to a couple with whom she recently worked that was seeking to update a living room. The wife wanted hardwood; the husband wanted carpet. She gave them both using a carpet inset in hardwood, and “it was a good compromise for them both,” she says.
Ryan Betchold, operations manager with Contract Furnishings Mart, says creating a knowledge base in each team member as well as providing ongoing training are what set retailers apart. The key, he says, is “having trained qualified people, treating them right so they remain on the team for the long term and are able to build relationships with customers.”
For the most part, retailers say the average consumer demographic hasn’t changed much. And really, it can vary depending on the region in which you serve. While women still make up the majority of sales, more men are seeking solutions for their flooring needs. As far as age, retailers say it’s still generally people in their 30s and up. Jansma says she gets older clientele who have been saving their money and are ready to make investments. But as the younger generations grow, so do their priorities, and retailers report seeing more younger first-time home-buyers and those doing remodels are seeking professional flooring help.
Also unchanged is the amount of money people are willing to spend. While the projects vary much like the makeup of who the consumer is, retailers we spoke with said the average range on projects is anywhere from $3,000 to $6,000 for a single room and upwards of $20,000 to $50,000 for larger-scale investments. And despite an economic slowdown, those ranges have not been impacted.
As for the scope of the projects, they remain about the same, too. Before COVID-19, it was not unusual for flooring buys to be limited to one room or a couple of areas. Rengo notes, “People invest in their homes by upgrading them. Most often, it’s sections of their homes at a time over a couple-year period-a bathroom last winter, kitchen this summer, living room next year.” Where retailers are noting shifts is that there has been more focus on comfort areas of the home and shared spaces, like living rooms. Jansma says it’s part of the renewed value in relationships.
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