Today’s consumers are facing harsh financial realities due to inflation. But not all consumers have been impacted equally, nor are they reacting in the same way. In Numerator’s latest home improvement report, we examined inflation’s influence on home improvement purchase behavior and future intentions across five core financial segments previously identified in our New Realities custom segmentation study.
Our analysis shows that, while rising prices appear to be delaying consumers from pursuing home projects broadly, there remains opportunity among specific consumer segments and project types in the second half of 2022 for brands and retailers that know where to look.
Shoppers are nervous about their financial future, and their behavior is shifting accordingly. Nearly all households are taking some measures to combat rising prices, with approximately half (49%) planning to decrease spending on non-essential items in the next few months. A smaller number (18%) will also pause major financial commitments— like home renovations. But there is a silver lining: consumers who intend to cut back non-essential spending are more likely to do so on dining expenses and recreational activities than home improvement projects.
Consumers’ stated intentions to pull back is in line with shifts we’ve observed in purchase behavior. Compared to 2021, most consumers this year have spent less on non-essentials in general, including home improvement. Reviewing purchase data from Numerator’s GM Static Panel— which is comprised of 225K households uploading receipts daily — we see that, through the first five months of 2022, projected sales and trips are down versus YA across key home improvement categories in the home improvement channel.
When asked if inflation had impacted their plans for home projects this year, nearly 80% of shoppers replied that it had. Still, roughly 42% of households plan to pursue home projects in the second half of the year, whether on their own or with a pro, and an additional 37% would do so if prices fall.
Across all segments, consumers appear most likely to take on paint or yard projects in the coming months. However, key opportunities within specific categories can be uncovered by examining project intent by consumer financial segment. Diving deeper, we see that shoppers in the Comfortably Retired segment are more likely to start a kitchen or bath remodel, while Struggling + High PP households will focus on patio & yard projects. Struggling + Low PP households are least likely to start projects this year, but if they do are more likely to take on a kitchen/bath remodel or replace appliances than consumers as a whole.
What does this mean for Home Improvement brands and retailers hoping to successfully navigate through the uncertainty? Inflation is impacting consumers’ plans for home projects across the board, but the demand hasn’t disappeared— it’s simply been delayed. The way shoppers respond will differ based on their financial health, and not necessarily in ways that are intuitive. Having a nuanced understanding of different consumer segments will be crucial, as a household’s general demographic profile or income level isn’t necessarily indicative of their financial wellness or willingness to take on home projects. Savvy brands and retailers will find success by bringing targeted messaging to each segment based on their top home improvement priorities, and in a way that is mindful of those facing financial hardship.
Numerator can help you reach a deeper understanding of custom consumer segments along with other key home improvement shopper groups, like PROsumers & DIYers or Homeowners & Renters, so you can engage with them more effectively. Get in touch to find out more.
To learn more about the impact of inflation on home improvement shoppers, download the full report from Numerator.
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