Seen here is an example of a website homepage for a Flooring America retailer
By Teresa O’Dea Hein
Home is where we’ve all been spending far more time in 2020 than ever before. And as the old saying goes, “Familiarity breeds contempt”— or at least a desire to spruce up those 24/7 surroundings where worn, outdated or faded furnishings are inescapable.
The “homebody economy” describes our new normal.
For the first 10 months of 2020, overall retail sales turned out to be up 6.4 percent versus the first 10 months of the previous year, according to National Retail Federation (NRF).
Katherine Cullen, NRF senior director of industry and consumer insights, noted, “Retail sales have been performing very well due to consumers’ resilience, adaptability and willingness to try new ways of shopping, such as shopping online with curbside pickup and online grocery delivery services.”
For example, once the pandemic hit, “People who used to insist that they wanted to pick out their own produce instead got used to doing their grocery shopping online on services like Instacart,” she pointed out.
At the same time, “Retailers demonstrated that they can safely operate and are essential,” Cullen said. “People are focusing on how to make their space comfortable,” she explained. “In the midst of all stress, financial insecurity and upheaval, spending on decoration actually rose, with people buying candles, decorations, etc., to make their homes feel more special.”
The pandemic has imposed lifestyle changes that prompted people to set up home workspaces, buy desks and chairs, and more, Cullen noted. “Furniture and furnishings sales were up 5.8 percent over last year as of October.”
Consumer Confidence
Consumers are shopping with cautious enthusiasm. According to the NRF, 59 percent of holiday shoppers said they had started making holiday purchases as of early November — a 21 percent increase from a decade ago.
“After all they’ve been through, we think there’s going to be a psychological factor that people owe it to themselves and their families to have a better-than-normal holiday,” said NRF chief economist Jack Kleinhenz. Specifically, he noted, “There are risks to the economy if the virus continues to spread, but as long as consumers remain confident and upbeat, they will spend for the holiday season. Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago,” Kleinhenz predicted.
Despite uncertainty, he added, “We are optimistic that households will keep up the energy of spending through the end of the year,” he added.
With ecommerce sales up 36.7 percent year-over-year during the third quarter, according to NRF, it expected households to depend on digital shopping to make many of their holiday purchases, just as they have for much of their everyday spending this year.
Since the pandemic started, Shopify surveys found an increased preference among consumers toward supporting local, independently owned businesses. 46 percent of buyers in the U.S. and Canada said they made purchases from local, independently owned businesses. Furthermore, for 34 percent of them, they reported shopping locally more often than they did pre-pandemic. A majority (79 percent) explained they did so to support their communities or protect local jobs.
In addition, Shopify noted, 61 percent of buyers said they plan to buy from local and independent retailers six months from now — significantly greater than those who reported doing so in the first three months of the pandemic.
Both Shopify and McKinsey research emphasized the necessity of retailers spotlighting their COVID-19 safety precautions.
For example, an August McKinsey & Company consumer research report pointed out, “As Americans contemplate going back out to shop, hygiene and hygiene transparency have emerged as important sources of concern. It is becoming increasingly important for stores and restaurants to not only follow hygiene protocols (thorough cleaning and masks for consumers and employees are top priorities) but also communicate effectively that they are following those procedures.”
McKinsey research on consumer sentiment recently found that post-COVID-19, 15 to 29 percent of respondents expect to make a portion of their purchases online than before, even for household furnishings and appliances.
The allocation of dollars to home improvement projects was confirmed by the National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) reported in their Q3 2020 Kitchen & Bath Market Index (KBMI), released on Dec. 1, 2020.
NKBA members rank the overall health of the industry at 6.9 (on a scale of one to 10), just below the 7.2 reported in pre-COVID Q4 2019. While confident about current business conditions at 56.5, industry members are even more optimistic about future conditions, which they set at 66.9 as 2020 drew to a close. Scores of 50 and above indicate expansion.
The kitchen and bath industry now expect a 1.1 percent increase in year-over-year sales compared to 2019. In fact, Q3 sales in 2020 were up 2.1 percent from 2019, and sales grew 5.9 percent since the last quarter overall.
The research found that for the first time, supply chain disruption is reported as the industry’s greatest challenge, beating out economic uncertainty and recession and further hinting at an optimistic outlook for 2021 as manufacturers ramp up production in response to demand.
Another promising indicator for 2021 is increased pipeline demand, with 53 percent of NKBA members seeing larger pipelines of projects or project orders in Q3 2020 compared to the same period in 2019.
The Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies projected that annual expenditures for renovation and repair of owner-occupied housing stock will rise from about $332 billion in mid-October 2020 to $337 billion by the latter half of 2021. Initial concerns of a possible pandemic-induced downturn have largely dissipated, the organization noted.
“While a softening of growth is projected in 2021, recent strengthening of home prices and sales activity — including second home purchases — could provide further boosts to remodeling and repair next year,” added Abbe Will, associate project director.
“The results from the Houzz Q4 Barometer show that the home remodeling and design industry is truly resilient, and is seeing business activity return to pre-pandemic levels,” said Marine Sargsyan, Houzz senior economist. “Sargsyan pointed to the increasing use of online tools and collaboration platforms, continuing their momentum from the previous quarter.
From the floor up
“Everyone you talk to has a home renovation project, large or small, and, of course, home fashion starts with the floor,” said Keith Spano, president of Flooring America/Flooring Canada, The Floor Trader & The International Design Guild at CCA Global Partners, Manchester, N.H.
Due to the pandemic, Spano observed, “We’re seeing far fewer shoppers and many more buyers, bolstered by the fact that most consumers prefer to shop local and support independent small community businesses. Additionally, our robust digital presence featuring our product catalog, room visualizer, chat and virtual appointments have provided our customers the ability to shop how they want, where they want, and when they want,” he pointed out. “We've made it even easier with our Design at Home concierge service and our new sample program where consumers can get up to six samples delivered directly to their door to help them with the design process.
“The vast majority of our members’ stores were closed for almost 90 days from the end of March through mid-June; however, since reopening, we’ve seen a tremendous uptick in not only traffic but sales,” Spano reported. “People have been home looking at their floors for quite some time now and have finally committed to getting new floors. Once that decision is made, they want it now. We’ve seen particularly strong sales in our Floor Trader Outlets which feature deep inventory, promotional pricing and strong consumer financing offers catering to consumers who want to take their flooring home today.”
Spano added, “The fact that consumers are waiting sometimes six weeks for installation (especially tile) is a huge testament to the reputation of our members, that customers will wait for quality. Our consumer financing has been stronger than ever,” he concluded.
“Buying trends changed as customers spent more time in their homes due to the pandemic,” agreed David Ellis, marketing director for Alliance Flooring Inc. in Chattanooga, Tenn. “People were paying much more attention to what their homes looked like and they decided to spruce them up. Flooring was not left out of the home improvement explosion,” he pointed out. “Almost unbelievably during 2020, sales went up for most, and many stores are ahead of where they were last year, year-over-year, even with the terrible sales months of April and May.
Ellis reported that luxury vinyl plank and tile are still growing at a fast pace. “That growth is perhaps partially due to its DIY nature which wouldn't require an installer to enter a home,” he said. “Many people aren’t able or comfortable with installing carpet and tile, so the lower sales of those two categories is somewhat attributable to the requirement of installers in their homes during a time of social distancing, etc.”
“Some of our members reported that during the summer and fall, customers came into the store having already made up their minds to purchase,” Ellis said. “Sales teams were nearly closing an amazing 75 percent of those who walked in! What happened was, they had done their research and went ‘shopping’ online, then went to the store to confirm everything and make the purchase.”
Salespeople also developed new ways to reach customers, he said. “Some stores offered video sales calls to potential customers and gave a more detailed sales pitch. It allowed the customer to interact and ask questions and the salesperson could show different floors and colors to the customer.”