The impact of the pandemic can be seen on customers and retailers alike. While restrictions have been easing over time, consumers too have opened their minds and pockets to moving beyond the basics. The value for money and concept of essentials has changed due to the pandemic.
Majority of people who are working from home have accepted this as the new normal and are redefining their home furnishing needs. Homes are evolving from a place to bond with family, sleep, relax, cook and eat, and pursue pastimes to being offices, classrooms, conference rooms, and mini diners.
Consumer buying behaviours & shopping trends
In India, there is great diversity in income levels and when it comes to home furnishing, we have families that spend somewhere between Rs. 3,000 to Rs. 300,000 per year on home furnishing, so there is no singular average price sensibility that fits all consumers. This makes price and quality variables very important. For example, in the home furnishing space, if we take sofas and seating solutions, there is a need for retailers to offer many different price points, ranging from Rs. 10,000 to maybe Rs. 200,000 to address the diversity in spending power.
Being able to reach a wide consumer base with right product and solution offers across price points will create greater brand loyalty.
A recent report by SBI Research points to rising financial distress among households, where expansion of disposable incomes slumped to 0.8 times in 2019-2020, in contrast to the 2.3 average growth rate earlier.
Keeping this in mind, it is imperative for players in the market to offer affordable products and services to meet customer demand while also being able to stand out among other market peers.
To address the many needs of consumers, it is important to not just offer a range of products but also solutions that can meet the needs of consumers. In the home furnishing space, it is not just about offering a sofa, but also being able to put together a living room that is affordable, meets every kind of wallet in the market and can be changed easily with minimum spends.
In the context of discretionary spends, consumers are spending time to do their homework, compare across options and decide on the best place to buy from. This also extends to physical retailing, where window shopping is no longer the choice, but planned shopping trips will become more prominent as restrictions ease.
The biggest leapfrog in consumer behavior that we are seeing is linked to digital adoption. According to most consumer surveys, over 25% of consumers are buying online for the first time across multiple categories of goods and services. Earlier this year, Capgemini published their consumer sentiment research, according to which Indians shopping online and on different ecommerce sites was expected to increase from 46%-64% over the next six to nine months. And while Indian consumers have taken to digital channels (consumers previously using ecommerce as well as new customers) owing to easier access to products, and the convenience of home delivery; there has been a stark change in consumer mindset recently, as consumers are now willing to meet us halfway through contactless delivery services.
An offshoot of the digital adoption is yet another change in consumer behavior linked to how consumers commit to product purchases online. Pre-lockdown, it was all about the touch and feel of products, but now the variables impacting purchasing decisions are evolving. People are now influenced by how updated websites are, customer testimonials, ratings and reviews; they expect retailers to make their online shopping journey intuitive and easier. People who are new to digital especially need a lot of hand-holding. New customers who are looking to shop online have discovered convenience and are more likely to continue shopping online, if the convenience and satisfaction goes beyond their expectations. IKEA, for instance, provides customers with buying guides, personal shoppers, online planners and home furnishing consultants that aid customers and make their shopping journey effortless no matter what their demographic profile or digital competence.
In the home furnishing space, it is also interesting to see consumer behavior evolve in terms of what people consider a need today. In the past a study table was a nice to have feature in consumer homes, but today it is an absolute need. Work from home furniture seems to be at the top of the list on categories in demand, followed by other areas of interest in the home including the kitchen accessories, dining needs, and categories like storage and organizing. It is interesting to see consumers view their homes from a whole new perspective. Consumers are looking for furniture and home furnishing needs that are both functional as well as aesthetic. We see great interest in decorations as well as outdoor furniture and furnishing sales due to this. While these aren’t typically considered to be essential items, the enormous time spent at home is leading to this new behavior. Strict restrictions and social distancing have not given people much of a chance to step out, because of which they have taken to decorating their balconies, gardens, terraces and so on. Overall, consumers are beginning to experiment with different parts of their homes to make it as multi-functional and aesthetic as possible.
Future of retail
Due to a high level of uncertainty for the future, businesses need to be agile and adapt to the times; this is the only way businesses can keep pace with evolving consumer behavior. Omnichannel is a strategy that will prove to be fruitful, for both the retailers as well as the customers. It offers convenience to consumers and possibilities for growth to businesses. Retail continues to be a people-centric business and it is critical for businesses to continue to engage their employee and consumer base through these tough times. The last 6-8 months have pushed the industry to move forward and we can expect many more innovations and reinventions to take root in the coming months.
Kavitha Rao, Country Commercial Manager – IKEA, India.