Appliances Market Research & Business Solutions

Craving pizza? Just Tweet a pizza emoji. Want that area rug? Just click the Buyable Pin for it to adorn your own home. Wish the watch in your Instagram feed were on your wrist? Just click on the brand’s profile link to buy it.

Since 2012, social media platforms have integrated click-to-buy features that allow retailers and manufacturers to sell directly to consumers within social platforms. Twitter, Facebook, Instagram, Pinterest, Tumblr, and Snapchat have all gotten in on the trend.

But even though online sales are growing and consumers are spending more time on social media, the jury’s still out: do these social buy buttons actually encourage people to buy, or have we seen the last of them?

Get our latest Insights – The Future of Social Commerce: How “Buy Buttons” Are Disrupting the Retail World

10 Ways Younger and Older Millennials Shop Differently

The retail world is obsessed with Millennials.

It wouldn’t be a normal day if newsletters, tweets, and the media didn’t overflow with headlines on the latest Millennial trend, how to “harness” their alleged power, or how to reach this malleable and unpredictable segment.

Who are these Millennials? Do a quick Google search, and you’ll learn they’re foodies. Social media savants. Selfie experts. Experience seekers. Value hunters. Convenience junkies. Savvy shoppers. They’re “authentic.”

In demographic terms, they’re people between the ages of 18 and 34 who reached young adulthood around the year 2000.

But Millennials don’t like to be stereotyped as Millennials. We get it, Ryan Seacrest—they’re tired of being generalized into a broad demographic box and find the label patronizing. They just want to be treated as unique individuals.

When it comes to the wide-spanning age bracket, they do have a point—the difference between life in your late teens and life in your early 30s is pretty substantial. Do 18-year-old you and 34-year-old you want the same things, behave in the same way, or buy the same stuff?

With this in mind, we decided to divide the group into two smaller segments for study: younger and older Millennials. We set out to learn how these groups differ, both attitudinally and behaviorally, in their retail choices. We learned a lot, like the fact that older Millennials over-index in loyalty apps. And younger Millennials shop more at department stores.

If you’re a retailer or manufacturer looking to better understand the complexities of these highly-coveted sub-segments across the retail and foodservice spaces,

The Gen Y Gold Rush

Before we dive into retail specifics, let’s review an economic reality to set the context: U.S. Millennials haven’t had it so easy. Coming of age during the Great Recession, 13.8 percent of those 18-29 are unemployed or out of the workforce, far above the national jobless rate of 5.1 percent. And they’re a “boomerang” generation—33 percent stay at home with their families and fewer live independently. (Who can blame them? Seven out of 10 college grads from 2014 have a student loan, owing an average of $28,950 per borrower.)

But debt and other deterrents haven’t kept Millennials from buying things.

Any obsession with the Millennial demographic—also known as Gen Y—is with good reason. U.S. Millennials outnumber Baby Boomers by nearly 10 percent, surpassing them as the nation’s largest living generation in 2015, according to the U.S. Census Bureau. They’re estimated to reach $1.4 trillion in annual spending by 2020—roughly one-third of all retail spending. So retailers and manufacturers need Gen Y’s share of wallet to increase their market share. And this dependence will only intensify as Boomers continue to age and the Millennial segment gains purchasing power. Frankly, if you’re a retailer who’s not focused on this budding segment, we’re seriously concerned. (Please call us immediately and we’ll help.)

Given that Millennials are such an expansive, diverse group, our Chief Industry Analyst Marshal Cohen reminds us that there are many ways to divide up this set for study; segmentation by age is just one way to showcase their differentiated spending. But make no mistake about it: age really does matter. As consumers navigate through shifts in life stage, it reflects back in their purchasing behavior.

Age Matters

When we divide the group into two segments (ages 18-24 and 25-34), there are already some major demographic differences to note. For one, older Millennials are more educated and have a higher income, shown by data collected by our partner, CivicScience. But with more than one-third of 18- to 24-year-olds still in college, they can’t be expected to have the same level of education or earning power. Older Millennials are less racially diverse and are primarily white (74 percent compared to 68 percent of young Millennials). A greater percentage of young Gen Yers are single/never married (80 percent compared to 44 percent of older Millennials), fewer are married (only 10 percent compared to 40 percent of older Millennials), and fewer parent a child (10 percent compared to 40 percent of the old Gen Y segment).

The two groups think and behave differently, too. Younger Millennials are more optimistic about the state of our economy. They’re less likely than their older counterparts to think Donald Trump would make a good president, and more likely to see the new “Star Wars” movie. Younger Millennials are more likely to applaud Bernie Sanders’ performance in the first Democratic debate. And they eat granola with a higher frequency than their elder Millennial brethren.

So how do these differences play out on the retail floor? Here are 10 ways the groups differ in their shopping behavior:

1. Young Gen Y Specialize in Beauty

We studied the receipts of 8,766 Millennials through our Checkout Tracking^SM service, following the purchases they made during the first half of 2015, both online and offline. This revealed younger Millennials devoted a greater share of spend to specialty beauty retailers compared to the total Gen Y population. The younger set significantly over-indexed at retailers like Lush, meaning they are more likely than the senior Gen Y group to visit a specialty beauty retailer when they need new concealer or mascara.

But there were also some “neutral” beauty brands that earned consistent share of wallet across the Millennial age bracket. Both Gen Y groups devoted about 20 percent share of beauty spend to Bath & Body Works and 22 percent share to Sephora. The only specialty beauty retailers where older Millennials significantly over-indexed compared to their younger comrades were The Body Shop and bareMinerals.

But it’s not all about specialty shops when it comes to cosmetics. In an online poll of 15,031 U.S. adults conducted from January 2014 through January 2015 through our partner CivicScience, we asked respondents where they buy most of their makeup and cosmetics. The result? Millennials do the majority of this shopping (49 percent) at superstores like Walmart, Target, and Costco—a greater share compared to that of the total U.S. adult population (45 percent). And younger Millennials demonstrate a slightly greater affinity for superstore makeup than older Millennials.

When it comes to how Millennials shop for beauty products, their purchasing behavior is pretty consistent throughout the segment, but there are also some differences. Our Shopper Engagement survey fielded in August 2015 showed Millennials old and young are equally likely to browse in store and buy in store (58 percent). Younger Millennials are more likely than older Millennials to browse and buy online (20 percent vs. 17 percent), less likely to browse online and buy in store (14 percent vs. 15 percent), and less likely to browse in store and buy online (8 percent vs. 10 percent).

"With so many retailers and brands trying to court this segment, it becomes very competitive and challenging to win share of younger Millennials’ discretionary, hard-to-come-by spending"

Marshal Cohen

2. Young Millennials Shop More Specialty Apparel

The Millennial segments demonstrated the biggest discrepancy when we looked at share of wallet devoted to specialty apparel stores. Young Gen Yers like shopping in specialty stores for specific items, devoting 3.2 percent share of wallet to this retail channel, compared to older Millennials’ 2.1 percent share and the total adult population’s 1.9 percent share, shown by Checkout Tracking receipt data.

Marshal Cohen thinks reaching younger Millennials requires laser-like focus. “With so many retailers and brands trying to court this segment, it becomes very competitive and challenging to win share of younger Millennials’ discretionary, hard-to-come-by spending”, he explains. Millennials want to shop and play at places that market their products directly to them. If they feel you’re “for real,” or in other words, not only including them, but genuinely speaking directly to them—they will be more inclined to shop with you.

Specialty fashion retailers are the perfect example. We took a deep dive into data on some of these top retailers to see at which specific retailers younger Millennials over-indexed compared to more senior Millennials over a 12-month period. One look at the over-indexing stores on this list, and you’ll see just how these specialty stores fared with the younger Millennial.

Here we see very clearly how young Gen Yers spend a significantly lower share of their apparel spend at children’s retailers (Carter’s and The Children’s Place) compared to the older Millennial segment. The data reflects young Gen Yers’ preference for stores like Hollister and American Eagle over places like Ann Taylor and Banana Republic.

What we found particularly significant was the fact that two of the most neutral apparel retailers—Lululemon and The North Face—earned similar wallet share among Millennials of all ages, demonstrating activewear’s ability to transcend ages 18 to 34.

But Department Stores Aren’t Dead
Given younger Millennials’ affinity for specialty apparel retailers, perhaps we can understand Macy’s decision to mimic this specialty/boutique feel by opening a basement floor dedicated entirely to the younger consumer (Gen Z and young Millennials), only showcasing the brands most relevant to this age group.

But it is important to note that across the entire channel, Millennials of all ages devote a greater share of wallet to department store spend than the rest of the U.S. adult population. And younger Millennials are also more likely than older Millennials to have shopped at department stores. While the younger group is more likely to have shopped at Nordstrom, the older group is more likely to have shopped at Sears.

Interestingly, while younger and older Millennials differ in their likelihood to have shopped at Nordstrom (26 percent vs. 15 percent), the likelihood of the groups to have shopped at Nordstrom Rack, the fashion retailer’s off-price subsidiary, is not as polarizing (25 percent versus 22 percent respectively). Though less significant, younger Millennials are slightly more likely to have shopped at Marshall’s, while both age groups are equally likely to have shopped at TJMaxx.

3. Younger Millennials Are Sportier

Though activewear share of spend is consistent across the Millennial spectrum, budding Millennials are more likely than older ones to have shopped at sporting goods stores (29 percent vs. 20 percent reported to have shopped at one in the past year). The differences were significantly pronounced at REI (49 vs. 16 percent). There were also marked differences at footwear retailers Nike (40 vs. 19 percent) and Finish Line (32 vs. 19 percent).

So does this mean younger Millennials are more active than their older counterparts? Our Sports Industry Analyst Matt Powell shed light on this question. “I’ve been talking a lot about viewing the generational changes on a spectrum (from the oldest Boomer to the youngest Gen Zer), rather than as distinct and dramatic changes,” he explained. For example, Boomers are mostly white, conservative, less technically inclined, lavish, and not particularly focused on health or fitness. In contrast, Gen Z is less white, liberal, tech-reliant, frugal, and very health/fitness focused. And Millennials fit somewhere in between on this spectrum.

“So when we think of changes moving along a spectrum over time, it is logical that younger Millennials behave somewhat differently than older ones, and in this case—have a greater focus on fitness and health,” Matt explains.

That’s not to mention that as older Millennials buy homes and start families, they spend less money on themselves (and less on things like sports equipment), while the younger Gen Yers do not yet have those financial obligations.

4. Younger Millennials Eat Healthier, Cook Less, and Shop Wholesale

When it comes to the food and beverages they order, younger Millennials are more likely than older Millennials to look for benefits they can obtain by eating healthier, seeking items that provide energy, are filling, reduce stress, and build muscle. These are messaging opportunities for building a younger Millennial customer base.

In addition, young Gen Yers are more adventurous than older generations in their food choices, with 47 percent of younger versus 40 percent of older Millennials claiming to choose something new (compared to only 34 percent or less for older generations). And younger Millennials have other considerations when trying something new. For example, convenience is at the top of the list. Items that are quick to order, prepare, and consume with easy portability and little mess satisfy this need.

An analysis of data from CREST^®, our flagship restaurant and foodservice information service, found the Millennial segment experienced the greatest decline in restaurant visits of any generation from 2007 to 2014. This decline was greatest among the older Millennial segment (the group more likely to have kids under age 13 in the household). And if you’ve ever been responsible for a child at a restaurant who is having a meltdown or making a concoction out the table condiments, you get it. Not to mention the impact of having more mouths to feed; the relatively cheaper expense of eating at home was the primary reason for the decline in visits among older Millennials. Healthy eating concerns also played an integral role in the decision to eat at home.

Older Millennials are also more into cooking than are younger Millennials, with just over half of the older segment saying they love or like to cook. It may be easier to attract younger Millennials back to restaurants because they are not as tied to cooking at home.

Last month Whole Foods revealed it will open a line of grocery stores specifically targeting the Millennial shopper. These smaller stores will offer curated, limited selections of products at value prices. While research indicates Millennials do like to specialize, our Checkout Tracking receipt data indicates an affinity for wholesale clubs across this segment. When it comes to at-home food purchasing, younger and older Millennials devoted the greatest share of wallet to wholesale clubs Costco and Sam’s Club, and were similarly likely to have shopped at each grocer. Younger Millennials over-indexed at BJ’s and Publix, but under-indexed at Safeway.

"When it comes to accessories, younger Millennials are not the robust market one would think they are..."

Marshal Cohen

5. Young Gen Yers Devote Less Spend to Accessories

Accessories are growing fastest among the Millennial segment. These consumers are responsible for the greatest share of the category’s purchases, with spending up 15 percent from one year ago. Younger Millennials, however, under-index (compared to total Millennials) in the share of wallet they devote to this category. We found this stat surprising, so we asked our Chief Industry Analyst, Marshal Cohen for his thoughts on the trend.

“When it comes to accessories, younger Millennials are not the robust market one would think they are,” Marshal explains. “Traditional thinking has younger Millennials spending more on accessories, as they tend to be more affordably priced than apparel items. But with less discretionary funds, young Millennials need to be very picky about what and when they buy. Spending across a wider scope of ‘necessities’ like phones, data plans, and even food competes for young Millennial spending on experiences—and that means things like accessories will fall short on the priority list for spending.”

6. Older Millennials Use More Loyalty Apps

Older Millennials are more likely than younger Millennials to be a member of a retailer’s loyalty program. But one surprising trend is that older Millennials are more likely than tech-reliant younger Millennials to have at least one retailer’s app downloaded on their mobile device (48 percent vs. 33 percent). The older group is also more likely to frequently use the downloaded app (46 percent often use their app to browse, look for product information, or shop compared to 38 percent of young Millennials). Older Gen Yers substantially over-indexed for use of mobile apps from Target, Walmart, CVS, Dollar General, eBay, Rite-Aid, Best Buy, Gamestop, and Costco.

7. Millennial Youth Need Less Stuff and Shop Less in Store

Younger Millennials are more likely than older Millennials (28 percent vs. 23 percent) to say they have shopped at brick-and-mortar stores less often than last year, primarily because they don’t need to buy as much as they used to (41 percent). This is also a factor of Millennials’ attraction to experiences, and their desire to do more and buy less.

Older Millennials are more likely than younger Millennials to shop less at brick-and-mortars because they cannot afford to shop as much as they used to (32 percent vs. 25 percent)—perhaps a reflection of the financial demands of parenting.

Both groups are similarly likely to have shopped at Amazon and to be members of their loyalty program, though younger Millennials are more likely to be familiar with Amazon as a place to buy consumer electronics. Older Millennials are more likely to have shopped at direct mail/e-commerce sites like eBay.

When it comes to shopping for apparel, younger Millennials are more likely than older Millennials to browse in store and buy in store (62 percent vs. 51 percent), but less likely to browse online and then buy in store (10 percent vs. 16 percent). Younger Millennials are also less likely than older ones to browse in store and buy online (8 percent vs. 14 percent).

8. Younger Gen Yers Are More Adam Levine, Older Are More Metallica

Our BrandLink^® solution reports that if you’re looking for a celebrity endorsement that would appeal to Millennials of all ages, B.o.B. and JT are your guys (that’s Bobby Ray Simmons, Jr. and Justin Timberlake to all you non-Millennials). Both would be good fits to target younger Millennials (index 225 and 132 respectively) and older Millennials (index 167 and 137 respectively).

If you want to home in on younger Millennials, Adam Levine and Daniel Radcliffe are good choices (index 138 and 134 respectively), but they could miss the mark for older Millennials.

Only trying to target older Gen Y consumers? Metallica and Guns N’ Roses would fit the bill (index 130 and 121 respectively), but might not have the same recognition, let alone impact, with young Gen Yers.

9. Older Millennials Buy More Kids’ Stuff

Younger Millennials under-indexed compared to the total Millennial segment in child-related categories: baby products and toys. Specifically, older Millennials are more likely to have shopped at Babies R Us, The Children’s Place, Toys R Us, and Party City. This isn’t surprising, since the 18-24 segment is less likely than the 25-34 segment to parent a child. And in today’s day and age, baby photos don’t really start to take over your Facebook or Instagram feeds until you hit your mid-to-late-20s.

The same trend applies to pet products: older gen Yers are more likely than Millennial youngsters to have shopped at pet stores like PetSmart and Petco.

10. Older Millennials Have More Home-Related Expenses

We know it might sound shocking, but younger Millennials also under-indexed in home improvement, appliances, tools, and home textile purchases. Older Millennials are more likely to have shopped at home hardware stores like Home Depot and Lowe’s in addition to home specialty stores like Bed Bath and Beyond, Crate and Barrel, West Elm, and Pottery Barn. But, really—no surprises here. What 20-year-old do you know who is remodeling her new home, buying a fancy KitchenAid, investing in a state-of-the-art power saw, or ordering a new line of linens? Let’s face it, whether you’re in school or starting your first job, it’s all about scrounging up repurposed furniture from older family and friends or simply sticking with mom and dad for a few more years until you get your feet on the ground. And when young Millennials finally do uproot themselves, typically this means moving to an urban environment where there are more jobs and inhabiting smaller, rented, and/or shared homes that require fewer furniture expenses.

Older and Younger Millennials: Two Distinct Segments

In the world of market research, people aged 18-34 are typically grouped into one giant segment for study. But they do not share the same experiences, think, or act the same. Half the group grew up on Britney Spears, the other on Justin Bieber. Some grew up with Facebook in middle school, while the rest didn’t create an account until after having their first child. Moreover, this 16-year span represents a pivotal coming-of-age period, and the differences between the oldest and youngest Millennial can be great, as evidenced by our top 10 list. It’s time to start treating these segments as two distinct groups, to better get to know them and to speak to them directly if we want to earn their precious spending power.

There may not be a word in the English language that carries more subtext, more connotative and emotional weight, than “home.”

We fill the word with significance over the course of our lives. We have a “hometown” that defines us. We “head home for the holidays.” We practice “home improvement,” we work to have a “happy home” life. When we are lost or tired or afraid, every instinct in us yearns to “go home,” or to “phone home” or just to “stay home.”

Another word that is filled with meaning is “connect.” It wasn’t always so. “Connect” has taken on new significance in the modern world. No one seems to fall in love at first sight anymore. But we are filled with joy when we feel “an instant connection.” We describe our friendships as “sharing a connection.” We don’t introduce ourselves anymore. We reach out on social media and ask to “connect” with people.

So what happens when we combine those two words into a phrase -- “connected home” -- that describes an emerging industry of intelligent devices that live with us?

What do we seek in a “connected home”? What are our expectations? What are the emotional states, the human needs that such a phrase speaks to?

Filing for divorce

It seems that what people want in a “connected home” -- and what the industry is selling -- is an intuitive bond between people and the devices in their homes.
And it also seems that the “connected home” is falling short of creating that bond.
Kara Pernice is the managing director of the Nielsen Norman Group, arguably the most influential organization in the world of design and user experience.
In February Pernice published an article about how she had bought a Nest thermostat and experienced exactly such a bond. But over time her “pure love (for the device) morphed into abhorrence.”
Pernice wrote that “things went bad” when the semi-intelligent device let her down “emotionally.”
It’s a fascinating article. And one worth reading in its entirety.
The core of her argument is that rather than answering an emotional need, the device eventually created emotional distress. At issue was that it simply didn’t respond the way a member of a home would.
For example: Pernice lives in Boston. And that city has suffered from an extraordinarily harsh winter this year. The result of being subjected to such conditions is something that all humans understand, but that machines cannot: “... even on days when the thermometer says it’s not that cold, it looks and feels cold,” Pernice wrote. But the programmable thermostat doesn’t respond to subjective states. And turning up the heat with the programmable device is more complex than simple cranking up the heat on a traditional thermostat.
Eventually Pernice decided to get rid of her device. And it’s instructive that the word she used to describe this parting was “divorcing” -- a word generally used to describe the end of a marriage bond.
It’s easy to mock Pernice. A programmable thermostat is, after all, just a machine. It’s unreasonable to expect it be more.
But that’s the point. The promise of the “connected home” is that our lives will be filled with things that are more than machines.

Machine Learning

There may not be anyone on earth who thinks more about the future of the “connected home” than Eddie Hold, vice president of The NPD Group’s Connected Intelligence practice. As such, Hold is central to NPD’s new home automation point- of-sale (POS) data and advisory service. That service comprises consumer panel-based reporting, qualitative reports, U.S. point-of-sale data, and unique analysis of the automated home market. Hold read Pernice’s article, and he thinks her reactions are worth noting.
“It’s an interesting concern as we move more into the automated home: these things are supposed to make life easier for us, but it’s very difficult to predict just what an individual may believe is ‘easier’” he said.
More importantly, when consumers feel unable to control a machine, it triggers a visceral contempt and a deep-seated fear. Anyone who has ever seen a Terminator movie knows that.
“It’s the start of machines taking over the world,” Hold joked. “We think they are working for us, but somewhere along the way, they decide they know what is better.”
This sense that either we control our machines completely or risk annihilation is perhaps the great fear of our era. Is there anyone who doesn’t get just a wee bit nervous when the elevator jolts to a stop and folks start making those “open the Pod bay door, Hal” jokes? Is anyone perfectly comfortable with drone war? with driverless trains?
When consumers grew outraged that their voice-activated televisions were actually listening to what people said in their homes, it felt both funny and true. Of course the machines listen! They’re voice-activated!
Interestingly, we have this level of concern even though we are still very, very far away from having machines that are smart enough to hurt us.
There are now more than a half-billion Internet-connected devices in U.S. homes, according to data from The NPD Group. But the overwhelming majority of those devices are PCs, tablets, smartphones, gaming consoles and the like. The technologies in our homes today, although they may evoke fears and inspire sci-fi movies, are not true Artificial Intelligence. They are just machines … albeit with some impressive capabilities. They are based on brute force computing power and sensors. They’re not intelligent. They’re neither sentient nor sapient.
They are machines. And they do not feel the cold. Nor are they capable, yet, of knowing that we feel the cold but wish not to.
And therein is the challenge of building the “connected home.”
Consumers want devices that bond with them on an emotional level. We want the machine to know how we feel and how we wish to feel.
We want, for example, that should we wake one day when we are old and not feel particularly well, that our fitness trackers and body sensors will scan our medical records, review what we ate the night before, and then speak to us through an interface. “Are you OK? Should we call your children? Do you want to go to the doctor? Or do you want to stay here, at home?”
Until then, until we have a connected home that understands the significance of words like “connected” and “home,” we will always be disappointed by the machines in our life.
And perhaps it’s just as well. Because someday soon it’s likely we will have machines with just such capability.
And then we will have to face the fear that a recalcitrant semi-intelligent thermostat only hints at: What will we do if the machines in our homes come to know how we feel, but don’t care?

With the back-to-college spend estimated to reach $6.6 billion this year, competition among retailers is already heating up like nothing I recall in recent memory. In order to capture their fair share of the sales pie, retailers are pulling out all the stops, developing college registries and wish lists, providing product recommendations, and in-store pick-up options convenient to the college location, to name a few.  National retailers have even posted packing lists specific to a wide range of colleges and universities, detailing approved/unapproved items, or struck deals to operate co-branded websites for everything from textbooks to ramen noodles.

It should come as no surprise that the biggest chunk of planned back-to-college spend is on electronics, followed by apparel, and footwear; but let’s not overlook the market opportunity for home-related products, which is estimated at $1 billion annually for home textiles and small appliances alone. ² That’s nearly 15 percent of the total back-to-college spend, and doesn’t even include housewares, décor, and furnishings. Clearly, there’s plenty of reason to give attention to home products during the back-to-college season.  In the small appliance world, back-to-college is the key selling period for compact refrigerators, and, to a smaller degree, countertop microwave ovens and electric kettles. ³

Another area of opportunity for the home industry lies in aligning the online shopping experience with the equally important in-store experience (at least half of shoppers still prefer a physical store experience⁴). Retailers vying for the attention of consumers know consistent messaging and coordination of complementary promotions across these two channels is critical to success.

While we can expect most customers to be price sensitive as they gear up to start tuition payments, retailers can also effectively compete on shopping solutions by simplifying their selections, having consistent messaging and promotions both in-store and online, creating the right adjacencies, making recommendations, and providing flexible purchase and delivery options.

¹U.S. Census Bureau, October 2013
²Source: The NPD Group / Consumer Tracking Service, 2014
³Source: The NPD Group, Inc. /Retail Tracking Service, 2014
⁴Source: TheNPDGroup, Inc. / December 2014 Omnibus

With the back-to-college spend estimated to reach $6.6 billion this year, competition among retailers is already heating up like nothing I recall in recent memory. In order to capture their fair share of the sales pie, retailers are pulling out all the stops, developing college registries and wish lists, providing product recommendations, and in-store pick-up options convenient to the college location, to name a few.  National retailers have even posted packing lists specific to a wide range of colleges and universities, detailing approved/unapproved items, or struck deals to operate co-branded websites for everything from textbooks to ramen noodles.

It should come as no surprise that the biggest chunk of planned back-to-college spend is on electronics, followed by apparel, and footwear; but let’s not overlook the market opportunity for home-related products, which is estimated at $1 billion annually for home textiles and small appliances alone. ² That’s nearly 15 percent of the total back-to-college spend, and doesn’t even include housewares, décor, and furnishings. Clearly, there’s plenty of reason to give attention to home products during the back-to-college season.  In the small appliance world, back-to-college is the key selling period for compact refrigerators, and, to a smaller degree, countertop microwave ovens and electric kettles. ³

Another area of opportunity for the home industry lies in aligning the online shopping experience with the equally important in-store experience (at least half of shoppers still prefer a physical store experience⁴). Retailers vying for the attention of consumers know consistent messaging and coordination of complementary promotions across these two channels is critical to success.

While we can expect most customers to be price sensitive as they gear up to start tuition payments, retailers can also effectively compete on shopping solutions by simplifying their selections, having consistent messaging and promotions both in-store and online, creating the right adjacencies, making recommendations, and providing flexible purchase and delivery options.

¹U.S. Census Bureau, October 2013
²Source: The NPD Group / Consumer Tracking Service, 2014
³Source: The NPD Group, Inc. /Retail Tracking Service, 2014
⁴Source: TheNPDGroup, Inc. / December 2014 Omnibus

It is an interesting time in the coffee maker market. The total coffee machine market declined in Canada by -15% in dollars YoY in 2014, largely driven by single serve coffee machines, which declined -17% in the same period. The decline was even greater in the fourth quarter.

This makes sense to me. When the single serve coffee market was developing and new, pod coffee machines were a hot gift item. However, now the market is more mature and the number of new customers to the category is declining. In our February Omnibus consumer panel study, we found 42% of respondents currently own a single serve coffee system, and less than half of those consumers intend to replace their machine in the next 3 years. Also, of people without a single serve machine, 75% have no intent to purchase one, and only 10% intend to buy one in the next year. To me, it looks like there aren’t many first time buyers remaining in the single serve machine market.

Despite the single serve market seeming to be moving into a more mature stage, there are some interesting bright spots in the coffee market that point to further opportunities. In my household, my single serve machine has been a gateway into the world of coffee, and I suspect for many other consumers as well. I have friends that use a single serve on weekday mornings for speed, and then use a more time and labour intensive manual method (such as pour over coffee, French press, and cold brewing) on the weekend.

Coffee grinder sales may be an indicator of the growth of these non-electric methods of coffee brewing, having grown 7% in units year over year in 2014. Some of the more exciting products I saw showcased at the International Home and Housewares Show in Chicago last week included an electric siphon coffeemaker and an electric pour over machine from KitchenAid – making these traditionally manual methods easier for the end user. Drip coffee makers YoY declines have been steadily shrinking since August 2014. If this trend continues, drip coffee may start to recover some of the volume it has lost to single serve over the last few years, and with new innovations bringing premium or gourmet coffee brewing methods into more homes, the coffee world remains exciting as ever.