Furniture sales are on the rise as the property market starts to bounce back, according to Georgina Tilby, from online marketing agency Metakinetic – but how can retailers capitalise on this trend?
The property market continues to regain stability since its reported recovery in June, and furniture and household goods retailers are already experiencing stronger sales than 2012 thanks to the steady increase in first-time buyers.
As consumer confidence begins to return to the UK market, the sales of household items and furniture products are on the increase, no doubt aided by the rapid adoption of October’s new Government-backed Help to Buy scheme, which is making it easier for young savers to join the property ladder.
This new sector of homeowners presents a fresh opportunity for furniture retailers to engage with an emerging market of young, savvy, first-time buyers looking to purchase quality furnishings from trusted suppliers, and requires a different marketing approach that will leverage all available sales channels and align offline and online marketing communications.
Highest number of first-time buyers for six years
Government backed Help to Buy schemes and healthier mortgage rates have boosted the UK property market further in the third quarter, with house prices rising 1.1% in November alone and a reported 7.7% annual increase, says a new Halifax survey based on its own mortgage data.
"The revival of the housing market means that furniture retailers will be required to create new marketing strategies if they are to capture and convert these new customers"
The average price of a UK house is now valued at £174,910, and renewed activity in the property sector has seen house building rise in Britain by 6% during the first half of 2013. The percentage of first-time buyers has also risen dramatically as the result of the improved lending conditions. Over 26,000 homes were sold to first-time buyers in the first seven months of the year, according to LSL Property Services’ First Time Buyer Monitor, marking a 45% increase which is the highest percentage of first-time buyers for the past six years.
More London homeowners
Even London has experienced a boost to its property market, despite having an average house price of over £475,000, which is up 3.9% on the previous quarter. The Council of Mortgage Lenders (CML) released figures this week recording that 13,100 loans were advanced to first-time buyers in the capital during the third quarter alone, an increase in 25% on lending from quarter two.
The percentage of first-time buyers living in London has also risen since September. Newcomers to the housing market now contribute to 55% of all house purchases made in the city, compared to 44% of the total UK market. The CML have also reported a trend in the shifting London demographic, with proportionately younger people living in the capital which coincides with the rise of first-time homeowners.
High demand for home furnishings
This rise in first-time buyers has resulted in greater demand for home furnishings, and the need is being felt by retailers right across the country. George Hubbard, MD of Surrey-based oak furniture retailer Furniture Therapy says of the property boom: “We have noticed an increase in clients buying furniture for new homes in the local area following recent moves. Whilst our customers haven't necessarily been buying one particular piece of furniture, there has been a much greater interest in the living room, dining room and bedroom oak furniture ranges we sell, and interestingly we have noticed that first-time buyers are purchasing more bedroom furniture than any other.”
The shift in the type of products consumers are looking to buy has also been noticed by Peter Harding, MD of one of the South-west’s largest furniture retailers, Fairway Furniture. Peter says: “We have already noticed a significant increase in customers shopping specifically for more ‘compact’ furniture, as they (typically ‘empty nesters’) look to downsize into smaller properties. We have been working on our range of more compact furniture for about three years, and now actively market it within its own section in our three-times-yearly brochure. This growing trend for space-saving furniture has also affected the way that we buy at trade shows, because we take much more into consideration the sizes of items before agreeing to add them to our range plan.”
"Now is the time for retailers to review their online and offline campaigns and prepare to make the changes that will reach out to the growing number of new homeowners looking to decorate their first house"
Peter continues: “As the housing market does improve it is sales within the floorcoverings sector that increase most noticeably, and we are seeing this already, with sales in this category outperforming all other product groups this year, and some three times better than overall sales growth. We credit some of this to our use of innovative ‘all inclusive’ offers, where voucher redemption from press, online and email marketing can be used by customers to get free underlay or fitting, with additional upgrade options offered at competitive prices to further enhance the value of the offer.”
New marketing for a new market
The revival of the housing market means that furniture retailers will be required to create new marketing strategies if they are to capture and convert these new customers. For the wave of first-time buyers, the value of home furnishings will stem from the quality and craftsmanship of the product, rather than the rock-bottom price propositions many retailers have previously relied on.
Now is the time for retailers to review their online and offline campaigns and prepare to make the changes that will reach out to the growing number of new homeowners looking to decorate their first house. Featuring a complete range dedicated to first-time buyers may be one way for furniture retailers to capitalise on this new demographic, but they will need to communicate their value wisely if they are to keep buyers engaged and encourage purchases within an increasingly competitive industry.
Georgina Tilby is the head of marketing at Metakinetic, an award-winning full service e-commerce agency providing everything a growing retailer or brand needs to promote their products online.
