A record number of babies were born in the USA in 2007, suggesting a baby ‘boomlet’ is under way. To be considered a real boom, demographers say percent increases year-to-year have to be larger than the single-digit increases we’re seeing now, but regardless, 4,315,000 births were recorded last year. The last time the number was near this high was in 1957, in the middle of the Baby Boom.

The reasons for the boomlet include a ’perfect storm’ of factors, according to Arthur Nelson of the University of Utah in Salt Lake City.  The demographer attributes the spike to: more immigrants having children, professional women who delayed childbearing until their 40s now having them, and the large number of women in their 20s and 30s in the population (these are the Echo boom, now called Millenials or Gen Y).

The average number of births per woman was also 2.1 in 2006, the highest since 1971… suggesting demand for kids furniture should remain strong over the coming years.

Data source: USA Today, July 17, 2008

Although housing foreclosures in the U.S. are altering home ownership statistics for all age groups, the U.S. Census Bureau sheds light on some interesting stats about younger consumers:

* Gen X and Y together (born 1964-1995) make up 46% of the U.S. population, totaling 119 million buyers with an annual spending volume of over $700 billion.

* Gen X and Y combined are TWICE as large as the baby boomer generation, and buying homes at a faster rate

* a staggering 40% of buyers aged 25 to 29 own their own homes, as do 57% of buyers aged 30-34.

While baby boomers tended to focus more on their work, Gen X and Y group are focused on their personal lives. When it comes to their homes, they’re looking for a lot more than property or a good investment; they want a home with conveniences that help them live connected to technology and friends (entertaining is important), live a little greener and live ‘well’ every day. Their home is their fashion statement: they want a home that reflects their personal sense of style and aren’t afraid to mix furniture styles within a room or experiment with color.

Statistics: Sales & Marketing Ideas magazine (Feb ‘08)

When 400+ consumers were asked in a recent survey if they planned to take a vacation this year:

* 8% said yes they would, and would likely travel (highest was in the West at 10%)

* 22% said they’d likely take a vacation at home (highest was in the Midwest at 27% in the midwest / lowest in the West at 16%)

* 42% said they can’t afford a vacation (highest % was in the midwest at 46%)

* 23% said they’re too busy at work  (highest was in the West at 27%)

* 6% said they didn’t know yet

With rising food and gas prices, faltering stock and home values, airline price increases and hectic schedules, more consumers appear to be opting for what’s been coined a staycation… defined in the Urban Dictionary as a “vacation that’s spent at one’s home enjoying all that home and one’s home environs have to offer.”

Staycation purchases are among the healthier retail segments right now. Grills, outdoor kitchens, outdoor furniture and landscaping allow consumers turn their backyards into an outdoor resort, while, entertainment units, comfortable sofas and bedrooms that ‘feel like hotel rooms’ will likely remain priorities into the fall season.

Survey results: Home Furnishings Business, July ‘08

In a recent survey where 34% of U.S. consumers surveyed reported spending more on food in 2008 year over 2007, many consumers reported spending less on home decor… except among one demographic group - African-American women.

While 30% of caucasion women, and 21% of hispanic women reported spending less on their home this year over last, 6% of African-American women reported that they were spending more.

“It could be that African-American shoppers are more home-proud, less willing to cut back in this area,” says Shilpa Rosenbery, Senior consultant with WSL Strategic Retail, the firm that conducted the research. “Another school of thought is that, as they cut back in other areas, specifically entertainment and eating out, they’re spending more time at home and recognizing the home’s importance.”

Source: Furniture Style magazine, June ‘08 

‘Affluent’ people now total nearly 8 million in the U.S. But the mere affluent (net worth $1M to $10M) no longer represent the high end. The newest nation of affluents (net worth starts at $10M) now belongs to the Richistani’s, a term coined by Robert Frank, author of the book, Richistan.

Trends tend to trickle down from the top - in this case from super affluent to affluent to middle and lower income levels. So what are the current trends and priorities at the top end of the home furnishing market?

* unique, one-of-a-kind furniture, accents and materials… including products from foreign markets that tell a story or capture a piece of history. The growing access by the affluent to luxury brands and products is frustrating the ranks of the super affluent who now need to find something better… or at least more unique

* a bias toward conspicuous consumption… ‘opulence’ is the favored interior design style, with little that’s understated… including 30,000 sq ft homes with walk-in refrigerators, a bedroom closet the size of a small apartment, and so on
 
* finding the next best thing… insecure about keeping up with the next rich guy, the super affluent spend a lot of resources and effort separating themselves from mere ‘luxury brands’ by finding unique ideas and products that are new or unusual

* willingness to pay… the super affluent will pay a 20% premium, for example, to get their mansion built faster or to differentiate their product in some way

* obsession with details… rather than merely delegating work to designers and contractors, super affluent are highly involved with the process, supervising construction and spending a lot of time (traveling, if necessary) selecting distinctive materials that aren’t accessible to others

* obsession with quality… it’s not just about quality that’s ‘good enough’, the super affluent want to put themselves in a different league

* referrals rather than advertising … companies marketing to the super elite don’t advertise - they keep a low profile and cultivate referrals rather than marketing campaigns. The super affluent want to feel they’ve discovered a brand that’s known only to an elite inner circle

* home consultants… with each of their (multiple home) renovations, the super affluent require a team of managers to build and maintain… from cost consultants, business managers, designers, artists, painters to repair people who specialize in fixing “french faucets”, as an example.

“The huge numbers of Richistani are furiously ratcheting up the price of status”, says Robert Frank. “The flood of high-end products for Richistanis has set a new, irrational reference point that consumers will use when making their own purchasing decisions,” The author cites an example of how $5,000 grills created a market for $1,000 grills which now seem inadequate, even though grills used to cost under $100.

What does it mean for the home furnishing industry?   More consumers will want to trade up to products that makes them feel not just luxurious, but distinct. Watch for: (1) materials, furnishings or artifacts that look global, historic or personal, (2) less matching furniture within a room  (2) dressier, sophisticated styling,  (3) layered or mixed materials and more ‘details’ that suggest quality, opulence or tell a story, and (4) customer referrals, rather than strictly advertising to gain credibility with new consumers. 

More consumers want to spend time outdoors… inspired by some interesting trends:

* affluent consumers are driving the trend to more and better outdoor furnishings. With indoor spaces already comfortably furnished or memories of favorite resort destinations fresh in their memory, priorities are shifting to fixing up and furnishing decks and yards (many spending upwards of $2,500 for a stainless steel grill alone) as a way to live the good life everyday.

* outdoor living ‘appeal’ is being driven by internet and catalog more than brick-and-mortar retail. Images seen in catalogs like Horchow, Frontgate, Smith & Hawkin, and catalog retailers such as Pottery Barn and Crate and Barrel are encouraging consumers to imagine an outdoor space that’s an extension of the indoors. “If you’re sitting at home, looking through a catalog and you see a lot of outdoor lifestyle themes, it can really intrigue you,” says Gregg Bond, managing partner at The Helman Group. “For space reasons, it’s hard for brick and mortar retailers to merchandise products in an outdoor lifestyle theme. They can’t tell a story.” (Internet and catalog retailers also don’t have to worry about replacing retail floor space with another category during the off-season)

* outdoor living isn’t confined to warm weather states… “One of the findings we uncovered… which was really kind of surprising, is that in Chicago, which has a pretty long winter season, outdoor living was even more important than in warm weather locations,” says Pam Danzier, President of Unity Marketing (HomeWorld Business, May 11/08). “In warmer areas we found that people are heading indoors when it gets hot and turning on their air conditioners.”

* many consumers are looking for outdoor rooms as comfortable as indoor rooms, including outdoor lighting, fire pits, fans, comfortable seating, umbrellas and canopies, outdoor TV screens and more

* high gas prices are expected to increase demand for outdoor furnishings, with a back yard oasis an inexpensive vacation destiny and a stress reliever for difficult times and hectic lifestyles.