BUILDING THE FUTURE Dynamics Shaping the Future of Home Improvement at Home and in the Store

Transcription

1 BUILDING THE FUTURE Dynamics Shaping the Future of Home Improvement at Home and in the Store Presented by: Sarah Catlett, SVP Laura Kennedy, Director

2 OUR PROCESS UNDERSTAND Drivers of Change 15 of the most critical macro-level forces changing and shaping consumer needs and expectations in their homes and in retail ANTICIPATE Future Dynamics 3 broader consumer and retail dynamics of change you must adapt to today to engage consumers tomorrow SHAPE Growth Opportunities Ideas and future provocations for consideration by HIRI members to begin to embed and apply this insight to key business issues UNDERSTANDING THE MARKET TODAY SHAPING FUTURE GROWTH 2

3 The rise of predictive technology & artificial intelligence Increasingly extreme weather & environmental crises Increasing information surrounding healthy living Increasing diversity of household structures & roles Increasing constant and ubiquitous social connectivity Increasing decentralization of manufacturing Declining affluence of the middle class Proliferation of connected technologies and platforms Continued impact of urbanization on the environment Increasing subversion of traditional lifestage trajectories Expanding identities & points of reference Continuation of post-recovery macro environment Increasing visibility of the sustainability agenda Big data s increasingly important impact on health Increasing consumerization of personalized data 3

4 4 THE MACRO CONTEXT (RE)CONSIDERED CONNECTIONS ANTICIPATE Future Dynamics FOCUSED FLEXIBILITY ENHANCED ENGAGEMENT

5 THE MACRO CONTEXT Normalizing Trends Benefiting Engagement Unemployment Rate 4.4% 10.0% 4.5% 6.0% 4.0% 2.0% 0.0% Headwinds Dampening Engagement Wage and Salary Growth Recession % 4% 3% 2% 1% Renewed/Sustained Challenges Growth in Healthcare Costs 0% ,000 Household Net Worth Uneven Regional Job Trends Gasoline Prices $ ,000 40,000 $1.68 $2.23 S Source: U.S. Department of Labor, Kantar Retail analysis 5

6 6 (RE)CONSIDERED CONNECTIONS

7 The end of the middle ground (RE)CONSIDERED CONNECTIONS In general, I feel that my personal values and point of view are shared by most Americans today 68% 68% 65% 2017 Generational Breakdown 56% 57% 51% 53% 49% 46% Centennials Millennials Xers Boomers Matures Kantar Futures 2017 U.S. MONITOR 7

8 A more insular view (RE)CONSIDERED CONNECTIONS 26% 32% 55% 56% How good do you feel about (top-3 box on a 7-pt. scale) The state of things in the world The state of things in the country today The state of things in your town or city The state of the communities you belong to Uncertainty in the broader world Positivity in smaller worlds Kantar Futures 2017 U.S. MONITOR 8

9 A withdrawal into smaller worlds (RE)CONSIDERED CONNECTIONS With all of the conflict and controversy in this country, I find myself spending more time with my closest friends and family 66% Total Pop 62% Men 70% Women 68% Centennials 73% Millennials 63% 62% 59% 63% Xers Boomers Matures White (Non- Hispanic) 68% African American 73% 72% Hispanic Asian American GENDER GENERATION RACE/ETHNICITY Kantar Futures 2017 U.S. MONITOR 9

10 Creating new aspirational reference points (RE)CONSIDERED CONNECTIONS SELF OTHERS EXPRESSION CONNECTION Signs of success/accomplishment Having close family 90% 68% Consumers % Consumers 18+ Spending lots of time with your family Having close friends Being respected in the community Being spiritually fulfilled 88% 87% 84% 81% Regularly donating your time to help people in need 80% Agree It is more important for everyone to have a minimum standard of living vs. It is more important that any one person be free to make millions of dollars. Agree that the American Dream is about the opportunity for all members of society vs. the American Dream is about my personal achievements Having a lot of money Having the latest tech Large/expensive home 37% 31% 46% Expensive car 25% Kantar Futures 2017 U.S. MONITOR 10

11 Home as a point of self-expression and connection (RE)CONSIDERED CONNECTIONS How your home looks is a sign of success and accomplishment I often reference things I ve seen on social media when I make decisions about home improvement products or projects 73% 74% 72% 83% 67% 68% 71% 44% 39% 20% Total Owner Renter Millennial Xer Boomer Total Millennial Xer Boomer 2017 HIRI Future Trends Study 11

12 Social media platforms increasingly shoppable (RE)CONSIDERED CONNECTIONS 45% 45% 34% 68% Kantar Retail research and analysis, social media website 12

13 (RE)CONSIDERED CONNECTIONS Source: Kantar Retail research and analysis, Pinterest 13

14 (RE)CONSIDERED CONNECTIONS 14

15 FOCUSED FLEXIBILITY

16 Information exposure increasing FOCUSED FLEXIBILITY GB of data delivered per day per person

17 Cognitive capacity changes the time and intensity of engagement FOCUSED FLEXIBILITY I am overwhelmed by the amount of information I have to deal with everyday 76% I am always looking for ways to simplify my life 47% Total Pop 60% Centennials 54% Millennials 47% Xers 37% 40% Boomers Matures HIGH/NO INTENSITY [We have] a more fragmented consumer that on the one hand seems to have the attention span of a goldfish, but on the other hand spends hours binge-watching their favorite series online. FRAGMENTNATION KANTAR TNS 17

18 Tracking the cognitive costs of home improvements FOCUSED FLEXIBILITY Importance when thinking about making home improvements How much MONEY it takes to complete Improvement to QUALITY OF LIFE SAFETY and SECURITY TIME it takes to complete PRIDE in completing ENERGY/ATTENTION it takes to complete ROI or increase in resale value 93% 92% 87% 86% 84% 83% 80% 2017 HIRI Future Trends Study 18

19 Looking to reduce energy invested in home FOCUSED FLEXIBILITY I would prefer to live in a smaller home that requires less maintenance or upkeep How much MONEY it takes to complete (vs. I would prefer to live in a bigger home, even if it requires more maintenance or upkeep) Improvement to QUALITY OF LIFE SAFETY and SECURITY 64% 67% TIME it takes to complete 60% 50% 56% 81% I wish I had more flexible spaces or rooms in my home that could be used for multiple activities without much hassle or effort to reconfigure them 62% 58% 69% 74% 71% 53% PRIDE in completing ENERGY/ATTENTION it takes to complete ROI or increase in resale value Total Owner Renter Millennial Xer Boomer Total Owner Renter Millennial Xer Boomer 2017 HIRI Future Trends Study 19

20 Seeking choices AND manageability FOCUSED FLEXIBILITY I prefer to have more options in the marketplace even if it makes my decision more complicated I wish it was easier to compare competing home improvement products in the store (vs. How I prefer much to MONEY simplify it my takes decision-making to complete even if it means I don t have as many options to choose from) Improvement to QUALITY OF LIFE SAFETY and SECURITY 73% 74% 70% 80% 70% 66% 53% 53% 52% 54% 54% 51% TIME it takes to complete PRIDE in completing ENERGY/ATTENTION it takes to complete ROI or increase in resale value Total Owner Renter Millennial Xer Boomer Total Owner Renter Millennial Xer Boomer 2017 HIRI Future Trends Study 20

21 Reducing stress? Shoppers have rationalized their retailer sets FOCUSED FLEXIBILITY ~5 retailers visited regularly ~11 total retailers shopped ~4 retailers visited regularly ~9 total retailers shopped Source: Kantar Retail ShopperScape, January-September 2012 and

22 FOCUSED FLEXIBILITY Source: Kantar Retail, company reports 22

23 Embarking on a journey to predictive-replenishment FOCUSED FLEXIBILITY Today Subscription management 1-touch ordering No-touch ordering By 2025, 5% of all U.S. ecommerce transactions will likely consist of some type of auto-replenish or subscription process. This is equivalent to the annual sales of approximately 800 Walmart Supercenters! Integrated replenishment Tomorrow If you don t have an AI strategy, you will die in just a few years. - Devin Wenig, CEO, ebay Predictive replenishment Source: Kantar Retail research and analysis, Company website 23

24 Conversational commerce the next retail frontier FOCUSED FLEXIBILITY "Imagine what happens with Hot Wheels and Thomas the Train when you have this connected hub. Do you hear sound effects? Can you have greater interactions? - Robb Fujioka, senior vice president, chief products officer at Mattel Source: Kantar Retail research and analysis, Fast Company 24

25 25

26 ENHANCED ENGAGEMENT

27 Service and convenience gain importance ENHANCED ENGAGEMENT 1 2 I ve had such a positive experience with a brand that it will always be my first choice 3 4 PRICE QUALITY SERVICE CONVENIENCE I got a great deal I got the highest quality product or service 79%? I got amazing customer service? It was really convenient for me 58% 46% 37% 36% 27

28 The value of the experience continues to increase ENHANCED ENGAGEMENT The experience I have when buying something is just as important as the product or service itself 68% 70% 68% 71% 66% Total Pop < $50K $50K - $74.9K $75K - $99.9K $100K+ As the mechanics of value become more personal, dynamic, contextual, and volatile and traditional sources of differentiation and price leadership become commoditised or disappear retailers and suppliers need to reimagine value. REIMAGINE VALUE KANTAR RETAIL 2017 U.S. MONITOR (Q2); 2017 U.S. MONITOR 28

29 Shopper DNA Continues to Evolve ENHANCED ENGAGEMENT Demand for stress-free shopping and value essentially now equal What Matters to Shoppers (% ranking factor among top four most important when shopping in general) Minimizing spending Feeling like I got a "good deal" Stress-free shopping Shopping in one place Completing shopping quickly Purchasing high-quality products Having fun/enjoying myself Employee interaction Discovering new products/brands Having acccess to info Shopping to reflect my values 19% 16% 11% 11% 27% 48% 44% 37% Engagement 60% 65% 64% Value Convenience Note: Arrows indicate direction of change vs. previous year. Source: Kantar Retail ShopperScape, April 2016-March

30 Stuff Loses Share to Not Stuff ENHANCED ENGAGEMENT Leaving less money for goods By 2020, every American household will spend $2 on services for $1 on goods Healthcare services Waste management Recreation Social services USD (Trillions) Total Economy (i.e., GDP) $16.8 $22.8 Total Household Spending Including Services Retail Sales $3.0 $11.5 $15.6 Household Spending on Goods $3.9 $5.2 18% $4.1 Source: U.S. Department of Commerce and Kantar Retail 30

31 ENHANCED ENGAGEMENT

32 ENHANCED ENGAGEMENT

33 ENHANCED ENGAGEMENT 33

34 Opportunity in creating experiences for underserved, no-longer-niche markets ENHANCED ENGAGEMENT I am frustrated by brands that treat people like me as an afterthought Asian Americans Hispanics African Americans People with disabilities LGBTQ+ consumers 64% 70% 80% 59% 66% $891 billion in buying power in 2016, up 222% from 2000 $1.4 trillion in spending power in 2016, up 181% from 2000 $1.2 trillion in spending power in 2016, up 98% from 2000 $500 billion in spending power $884 billion in spending power, up 3.7% from

35 ENHANCED ENGAGEMENT 35

36 SHAPE Growth Opportunities

37 (RE)CONSIDERED CONNECTIONS FOCUSED FLEXIBILITY ENHANCED ENGAGEMENT Help them find and build smaller-world allegiances Inspire unity Create chances for discovery Reduce the cognitive load Expect and invite disengagement Make it modular Move beyond the transaction Help them shop for values, not value Attend to invisible markets

38 38

39 THANK YOU For more information, contact: Gayle Davey, SVP Laura Kennedy, Director