Frugal fatigue or frugal forever?
Consumer spending will shape four industry trends.
I first heard the phrase “frugal fatigue” a couple months ago at the Kitchen & Bath Industry Show in New Orleans. It refers to people who have grown so tired of minding their tight budgets that they are starting to spend money again.
Moen President David Lingafelter cited the frugal-fatigue effect in his State of the Kitchen and Bath Industry speech. Many consumers, he said, are starting to feel confident enough to buy a new kitchen appliance or update their bathroom vanity.
If that’s the case, then you would stand to benefit whether your contracting company works in service, remodeling or new construction. I’ve had conversations with other people, however, who believe the recession made a long-term impact on consumers’ buying habits. If they’re not frugal forever, they could be frugal for the foreseeable future.
Either way, it’s safe to say that most of your customers still want a good deal on the products and services you offer. Many of them will continue to demand what they perceive as high-quality products at a good value.
While frugal fatigue was not one of the four industry trends that Lingafelter cited in his speech, your customers’ willingness to pay a fair price will play a factor in each. The trends were identified by Moen’s Market Research and Insights Group led by Senior Director Jack Suvak.
The first trend shows that consumers are using their smartphones and Internet information sources — particularly online reviews — more frequently before they purchase a product. Due to the recession and slow recovery, consumers want be empowered to make better decisions. They have higher expectations for products and services, and they are using multiple channels to collect information as they make their buying decisions.
The good news is that consumers who use more than one channel before making a purchase spend up to 80% more per transaction than those who shop only in-store. Whether they buy them online or not, 40% of homeowners say they plan to use the Internet more in the future to research home-improvement products.
A second, related trend has to do with the level of digital devices and other electronic technology found in people’s homes these days. Research outside Moen’s indicates that 25 billion connected devices such as laptops, tablets and smartphones will be in operation in 2015; the number will double just five years later.
With kitchen technology particularly, more manufacturers are introducing hands-free faucets with electronic sensors. At KBIS, these products were on display not only in Moen’s booth, but also at Kohler, Delta, Danze and others.
A third trend shows that an increasing number of people are occupying smaller living spaces and are willing to sacrifice space for higher-end amenities. I had reported on this trend earlier this year from the International Builders’ Show in Las Vegas and the ISH trade show in Frankfurt, Germany.
You can observe this movement take place especially among younger generations living in cities. Metropolitan areas with more than 5 million people saw double-digit population growth in their downtown areas between 2000 and 2010, according to the U.S. Census Bureau.
A survey by the National Association of Home Builders states that 63% of today’s homeowners would choose a smaller home with high-quality products compared with 37% who want a bigger home with fewer amenities. Regardless of generation, 58% of respondents to a poll taken by the National Association of Realtors say they prefer to live in a neighborhood with a mix of houses that have stores and other business within an easy walk.
That leads to the final trend in Lingafelter’s speech that shows baby boomers — who now make up 44% of the population — will continue to invest in their homes. Most of them aren’t going anywhere, and they want to live in safe and comfortable surroundings as they age.
According to AARP, 86% of homeowners born between 1946 and 1955 want to grow older in their own homes rather than migrate. A survey of remodeling contractors two years ago showed that 60% had done aging-in-place projects and 75% were fielding requests for similar projects. Bathroom products aimed at this segment include grab bars in the shower, showers that are level with the floor for easy entry and higher toilets.
Baby boomers with savings in the bank and equity in their homes are in the financial position to improve their homes. Their necessity to do so may be as big a driving force as their frugal fatigue.