Below is an article from the May/June issue of The Hardware Connection, written by Chris Jensen. For additional information on consumer behaviors, be it DIYers or Contractors, please contact us at info@thefarnsworthgroup.com.
Do you know who your best customers are under the age of 32? Chances are they approach shopping in your store differently than your best customers over the age of 65.
The internet is rapidly changing how consumers shop for hardware and home improvement products, so it is important to stay on top of consumer trends. Read on to gain insights into understanding today’s consumer.
Defining the Generations
Millennials, those born between 1982 and 2004, represent 80 million consumers with annual spending power approaching $1 trillion. Ignore them at your peril.
This year the millennial generation is projected to surpass the baby boom generation as the nation’s largest living generation, according to the population projections from the U.S. Census Bureau. Millennials are projected to number 75.3 million, surpassing the projected 74.9 million boomers (ages 54-71). The Gen X population (ages 33-53) is projected to outnumber the boomers by 2028.
“While it is important to identify and understand the differences across generations, it is equally, if not more important, to understand their similarities,” said Jim Robisch, senior partner at The Farnsworth Group, who delivered a presentation at the recent National Hardware Show on “Generational Buying Patterns in the Home Improvement Industry.”
Robisch shared research data from The Farnsworth Group that outlined those similarities and differences across the generations.
Generational Consumer Trends
Price/cost is driving store selection across all generations, Robisch pointed out, but boomers are slightly less price driven. Millennials are very price conscious, seeking the lowest price, while Gen-Xers are motivated by competitive prices.
Millennials are more influenced by service than Gen X or boomers and more interested in seeking out quality products, while convenience is slightly more important to Gen Xers, according to Robisch.
Robisch shared how the different generations determine whether a store has good prices. For millennials the top factors are shelf prices (50%) and check online (46), while Gen Xers prefer to check online (46%) and look at advertising (36%) and boomers rely almost equally on previous shopping (38%), advertising (36%) and check online (35%).
So how do you reach the different generations? Millennials look at direct mail (51%), circulars (47%) and email (42%), while boomers are much more inclined to use circulars (61%) followed by newspaper ads (26%), according to Farnsworth Group data. Gen-Xers, on the other hand, use circulars (56%), direct mail (30%) and email (30%).
Sixteen percent of millennials are using social media sites as a form of advertising, compared to 10 percent of Gen-Xers and 7 percent of boomers. “You have to make sure you’re still balancing the media you use,” Robisch advised.
All generations are doing a lot of online research and shopping for hardware and home improvement products, with millennials much more likely to shop or research for hardware products at least once a week, Robisch said. “All generations are purchasing hardware online, yet 40 percent of independent retailers still don’t understand that this is an emerging phenomenon,” he said.
Two other factors are impacting the hardware purchasing patterns of millennials: many are broke due to high student loan and credit card debt, and they are getting married and buying houses later in life. Those who live in apartments definitely have less need for hardware products.
Four in 10 millennials say they are “overwhelmed” by their debt, which is nearly double the number of baby boomers who feel that way, according to a Wells Fargo survey. They would also say that their parents’ generation messed up the housing market for them and made it harder and less attractive to own a home, but attitudes have a way of changing as one ages.
Seemingly on 24/7, but hardware retailers are well-advised to make sure their websites are mobile-optimized (easy to read on a smartphone). Also be aware that friend recommendations (garnered via social media) go a long way in influencing shopping decisions.
Robisch summarized the defining characteristics of the three generations in this manner:
Millennials—
- Price conscious
- Value seekers
- Hardware store shoppers
- Most frequent online shoppers and purchasers
- Most active with social media
Gen-X—
- Price driven (competitive prices)
- Value convenience
- Need project information
- Strong online shoppers and purchasers
- Looking for “sale” prices
- Active with social media
Boomers—
- Least price driven
- Seek out available and knowledgeable employees
- Want wide selection of products
- Need project information
- Heavy ad users
Marketing consultant and small business owner Caron Beesley notes, “Seniors and baby boomers generally buy what everyone else buys. But they tend to take more time to research and plan what and how they spend their money. As a business owner, this means earning their trust. And one of the best tools in your marketing toolkit for achieving this is to perfect your customer service—satisfaction comes first, but loyalty is earned and in the long term counts for much more.”
Retail experts Rich Kizer and Georganne Bender offer the following tips on how to more effectively sell to aging baby boomers:
- Place product at more easily reachable heights.
- Pump up the font type size used on signing, brochures, newsletters and other POP materials.
- Install brighter lighting.
- Merchandise your store so product adjacencies make sense.
- Look for spots on the sales floor to add a few benches.
- Offer lots of free product testing and demonstrations.
Female Consumer Trends
More financially empowered than any previous generation of women, according to Mary Brown and Carol Orsborn in “Marketing to the Ultimate Power Consumer—The Baby-Boomer Woman.”
American women over the age of 50 are the healthiest, wealthiest and most active generation of women in history. Senior women age 50 and older control net worth of $19 trillion and own more than three-fourths of the nation’s financial wealth, according to MassMutual Financial Group.
The 55- to 75-year-old female has seen her role change from homemaker to purchaser of security, convenience and luxury items, notes Barbara Kleger, president of 55+ Consulting.
Affluent female boomers are very particular about their houses, but they are not much on heavy DIY activity. They are willing and able to pay a retailer or a trusted service provider to repair, maintain, deliver and install products. Above all, they are seeking high-quality products that will last and items that are easy to use and maintain.
Wealthy boomer women are the marquee players in our country’s culture and commerce. They are educated, have a high income and make 95 percent of the purchase decisions for their households, according to Karen Vogel, co-founder of The Women’s Congress.
Lutz Ace Hardware in Lutz, Fla., has discovered how lucrative this demographic can be. The store features a 1,500-square-foot E.L.L.A. Boutique, a trendy gift shop operated by Tina and Andrea Andrews, whose husbands Scott and Tim oversee the hardware side of the business.
The boutique store-within-a-store is a true labor of love and it has generated stronger than expected sales due to community involvement, savvy social media and dedication to proper product selection for their market.
“Everyone that walks in (the boutique) for the first time says ‘I never knew this was here. This is beautiful. I’m going to need a gift,’” says Andrea. “People come into the gift shop just to waste time because it’s so pretty.”
“The more you can get the women in the gift shop the more you can get them to see the other stuff we have in the hardware store,” adds Scott.
Sheldon Ace Hardware in Elk Grove, Calif., features a nice housewares department, including canning sup- plies. “We stock some bric-a-brac type products that bring in women. Also, we have greeting cards that the older ladies enjoy,” says Manager Claudette Shade.
Marketing To Latinos
Hispanics are projected to represent 53 percent of the U.S. population by the year 2020, and 70 percent of Hispanics are under the age of 40, according to MediaPost, as Hispanics comprise 21 percent of the millennial generation in the United States.
Hispanic and Latino customers appreciate retailers who have bilingual employees and bilingual signage. However, an even better way to reach them is to provide online content in both Spanish and English. Fifty-six percent of Hispanics that are not online cite a lack of Spanish content as the main reason why they are not using the internet, according to Google.
The State of the Hispanic Consumer: The Hispanic Market Imperative, a study by Nielsen, estimates that Latinos currently have buying power of $1.5 trillion.
“The Hispanic community in the United States is large and growing, and businesses must make strides to understand and engage these consumers,” said Susan Whiting, vice chair of Nielsen. “Due to the general youth of this segment, family focus, strong culture and prevalent Spanish-language use, Hispanic consumers are impacting all areas of work and play and helping to redefine American culture in the 21st century.”
Looking more closely at Hispanics’ purchasing behaviors, The Hispanic Market Imperative reveals that:
- Technology and media use do not mirror the general market, but have distinct patterns due to language, culture and ownership dynamics. For example, Hispanics spend 68 percent more time watching videos on the internet and 20 percent more time watching videos on their mobile phones compared to non-Hispanic whites.
- Hispanics are the largest immigrant group to exhibit significant culture sustainability, with 90 percent of Hispanic parents wanting their children to speak Spanish but also be fluent in English.
- Latinos make fewer shopping trips per household than non-Hispanics, and spend more per trip.
When Hispanics go shopping they often bring the whole family, so when planning special events be sure to include activities to engage all age groups. Hispanic women are the driving force behind many purchases, but they are often torn between two cultures and it takes skill to craft a marketing message that resonates with them.
Getting to know your customers, one by one, remains the best strategy for marketing success.
