Americans may finally be starting to emerge from their homes again after an 18-plus month pandemic-induced hibernation, but they are by no means forsaking them.
Even as spending starts to shift back to more traditional pursuits like travel, vacations, dining out and going to movie theaters and sporting events, all indications are that the consumer’s love affair with decorating, remodeling and generally fixing up where they live shows no sign of ending anytime soon.
Yes, the insane rate of growth the broader home furnishings and renovation sector has experienced over the past will start to slow down, but four important factors point the way for continued good times for the industry.
Life from Home
Forget about work from home as a trend. It’s really transitioned into life from home, and this could be more than just a temporary thing. Recent surveys have shown that as much as a quarter of the national workforce is continuing to do their jobs from their homes, either full-time or part-time. With so many people working remotely and so many companies downsizing their physical office space footprints, that may be understating the situation.
[callout]Fixing and furnishing your home was a prime pandemic activity but it looks like it’s going to continue well into 2022…and perhaps beyond[/callout]
But it’s not just working. Americans are spending more of their leisure time at home as well. They are watching more streaming services than going to movie theaters. They are cooking meals rather than dining out — and if they aren’t cooking, they are ordering in more. And rather than going on the vacations and getaways they used to, they are spending more weekends and free time in their backyards, on their terraces, decks and inside in basement mancaves and dens.
For the home business that all translates into more sales of high-end home entertainment electronics, cookware and housewares products, outdoor furniture and serveware and pool tables, home theater set-ups and auxiliary wine coolers. We are spending more time in our homes, and we want them to be nice.
The Great Migration
Much has been made about the massive movement of urban dwellers out to the suburbs, the exurbs and even the out-urbs, if such a place exists. And while there has been a significant exodus out of the cities as people look for more breathing – literally – space, it may be overstated as a long-term trend. We’re already seeing big cities like New York see a resurgence in their rental markets indicating that urban centers remain attractive destinations.
But there’s no denying that homes outside the city are gaining in popularity — and that means more business for the home business. People moving out of small inner-city apartments into bigger suburban homes need more furniture. The homes they are buying may need repairs, replacement appliances, new decks and windows. With new home building still severely restricted, it’s the resale housing market where the action is and that means even more renovation and remodeling spending. Used homes are the gifts that keep on giving to the industry.
Millennials Moving on Out
Family time. Every generation since World War II has done it, despite any naïve beliefs on the part of those involved or the forecasters who fall for a misplaced storyline. The single life of going to bars, concerts and hanging out with friends eventually morphs into a life stage where family formation, backyards, schools and soccer fields become the main pursuit. Now it’s the millennial’s turn.
The massive millennial generation is setting the room tone. They are well into their thirties and even with delayed marriages and postponed childbearing, enough millennials are in their prime home creation period. And that means they are doing exactly what their parents (and grandparents) did. Moving on out.
With a home purchase comes home furnishings purchasing: oversized sofas, bigger mattresses, dining room sets (to be used maybe twice a year) and more cabinets, containers and credenzas to hold all the stuff that comes with suburban sprawl. None of this is retail science, much less rocket science. A new home is probably the single biggest driver for the furnishings industry so this era – which anyone with any kind of understanding of basic demographics could have seen coming for more than 10 years – is prime time for the business.
And the Gen Zers are right behind the millennials and will be doing exactly the same thing in the 2030s… but let’s not get ahead of ourselves here.
Home Sweeter Home
Finally, there is the somewhat more esoteric factor that can’t be easily defined or quantified. But it also can’t be denied. Americans have come to a newfound appreciation for where they live in a way that just didn’t exist before the pandemic.
We’ve learned to live in sweatpants, seeing friends and family on laptop screens and finding a life at home that America hasn’t seen since before the invention of the automobile and mass travel. And even as we all know these conditions will not go on indefinitely, this is not a black and white issue. We’re not likely to abandon our homes as we start to venture out again. We’ve found that hanging out with each other isn’t really so bad…especially when the digs are comfy and cozy. It’s an intangible but that doesn’t mean it’s also not real.
Big national home furnishings retailers like Williams Sonoma and RH are continuing to put up strong quarterly numbers, but more importantly they are upping their forecasts for the rest of their fiscal years, which takes us into 2022. They are even suggesting the good times will take them beyond that point. (And don’t read too much into the devastatingly disappointing numbers Bed Bath & Beyond put up a last quarter: they are more about that retailer’s individual efforts than a hiccup in the overall industry.) If you don’t want to believe the demographics, social trends or the ephemeral factors, you should believe the numbers. They are real and they are magnificent.
They say home is where the heart is but at least for the immediate foreseeable future it’s also where the business is.