Soaring housing costs have made homeownership an increasingly distant dream for many Americans, particularly younger generations. Homeownership rates have been steadily declining in recent years, with a particularly pronounced trend among Gen Z. This shift towards renting is a seismic change that could have significant implications, particularly for the home improvement industry. Data from the J.D. Power 2024 Home Improvement Retailer Satisfaction StudySM underscores this trend, revealing that a staggering 60% of Gen Z respondents indicated that they do not own a home. As a result, traditional retail strategies designed for homeowners are no longer sufficient for sustainable growth. To thrive, the home improvement industry must adapt and tailor its offerings to meet the distinct needs and preferences of a predominantly rental-based demographic.
Gen Z's Home Improvement Habits
While Gen Z may not be purchasing homes at the same rate as previous generations, they are still significantly investing in their living spaces, and their buying power should not be underestimated. Last year, they spent an average of $1,757 on home improvement products and supplies, only $128 less than the Baby Boomer average.
However, their spending habits and priorities differ significantly from homeowners. Rather than focusing on long-term investments, Gen Z renters seek immediate transformations with maximum impact. They prioritize quick, affordable, do-it-yourself upgrades that can easily transform their space. Their top three home improvement purchases—tools, appliances, and paint—reflect a generation eager to take control of their environment and express their personal style without breaking the bank.
Younger generations are reshaping the home improvement retail landscape in other unexpected ways. A common misconception is that these digital natives prefer online shopping. However, Gen Z is only slightly less likely to make in-store purchases compared to Baby Boomers (80% vs. 92%, respectively), and their experiences are disproportionately influential. Unlike Baby Boomers, Gen Z shoppers are more satisfied with their overall retail experiences and are significantly more likely to become brand advocates. In fact, 44% of Gen Z shoppers made an in-person recommendation to a friend, relative, or colleague and 39% purchased more/additional products. This data underscores the importance of a strong brick-and-mortar presence for reaching this demographic. To capitalize on Gen Z's valuable influence, retailers must prioritize creating engaging and informative in-store experiences that foster loyalty and advocacy.
How Can the Home Improvement Industry Adapt?
By understanding the unique needs and preferences of Gen Z renters, home improvement brands and retailers can position themselves for success in this growing and evolving market.
Here are some key considerations:
Focus on Rental-Friendly Products: To cater to this demographic, businesses should develop and market products that allow renters to upgrade their spaces without jeopardizing their security deposits. Consider items like cabinet hardware, temporary wallpaper, simple window treatments, light fixtures, and more easy-to-install solutions.
Prioritize Affordability: Gen Z renters are budget-conscious and prioritize value, making affordability a crucial factor in their purchasing decisions. To gain a competitive edge, businesses should offer a wide range of price points and clearly communicate the benefits of their products or services.
Enhance the In-Store Experience: Home improvement retailers must embrace innovation to captivate Gen Z consumers. To thrive, they must transform their physical stores into immersive and technologically advanced spaces. By incorporating interactive displays, virtual reality experiences, and personalized product recommendations, retailers can create engaging environments that resonate with younger consumers' desire for unique and personalized experiences.
Leverage Digital Marketing: While Gen Z prefers shopping in-store for home improvement products, digital marketing remains a crucial tool for reaching and engaging with this tech-savvy demographic. By crafting compelling online campaigns, businesses can effectively drive foot traffic to physical stores. Moreover, digital platforms provide an opportunity to foster customer relationships, encourage online reviews, and gather valuable insights. This data can then be leveraged to refine in-store experiences and create a seamless omnichannel customer journey.
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