Marketing Home Products

It seems the more you have, the more you need. What if Americans traded in all of their “somethings” for nearly nothing? The recent “extreme-downsizing” trend is becoming a tempting challenge for many, and as their piles of possessions shrink, so do their homes.

In “Forget Marta Stewart—Try Martha Hubbard,” Ellen M. Kozak claims she is on the verge of tossing nearly all of her possessions and moving to a small space because the idea of less junk to dust, less floor space to sweep and less to account for is appealing. So appealing, in fact, that some are even setting a limit on the number of things they own. The 100 Thing Challenge, a grassroots movement in which people eliminate all but 100 of their possessions, is a minimalist trend that is proving successful for people across the country who are “overwhelmed with stuff.”

One reason for the purging of our possessions is the technological advances we’ve seen in the past few years. Electronic readers have replaced the books on our bookshelves and iPods have diminished our CD collections. Smart phones have virtually everything we need: camera, calculator, computer, alarm clock, and so much more including, of course, a phone. These things that took up space before are now all housed in one or two central systems. We don’t need alarm clocks, calculators, CD players or books if there’s an option to consolidate all into one device. These objects could even be considered irrelevant, especially to those adopting the “100 Thing” mentality.

But even if you do have more than 100 possessions and haven’t packed up your car and headed to warmer weather where you can toss your bulky winter wear and never worry about that snow shovel, the idea of having fewer items in smaller spaces is a continuing and noticeable trend, especially in the housing industry. According to the National Association of Home Builders (NAHB), the average size of a new- single family home declined from 2,521 square feet in 2007 – the peak of the housing boom – to 2,377 square feet in 2010. After the economic downturn in 2009, it seems everyone learned to cut out what they don’t need. People are now making the most of the space they do have; they’re remodeling their homes instead of moving into new ones.

Whether it’s an extreme elimination of items or a simple downgrade, it looks like the “bigger is better” mentality is on its way out. Much like we’ve seen the change from big gas guzzling SUVs and trucks to fuel-efficient eco-friendly cars, the change from excess to absence in possessions – and subsequently living spaces – is right behind.

From bank meltdowns and housing market slumps to bail outs and fears of inflation, it’s hard to ignore the effects the recent recession has had on our lives. During the height of the recession, unemployment peaked at 10.1% and consumer spending dropped significantly in all sectors. Nearly three years after it began, much has been written on the long term effects of the recession and what Americans have supposedly learned from it.

A significant finding in recent months concerns the effect the economic downturn has had on the wealthiest Americans and their purchases in the luxury category. Spending by wealthy Americans (those with annual household incomes above $200,000) has returned to pre-recession levels while spending by middle and low income Americans is still low. In the housing market, despite a 20% decrease in existing home sales between $100,000 and $500,000, sales of homes valued at more than $750,000 increased.

But the rich aren’t spending their money in the same way they used to. A study by the Harrison Group found that the shopping behaviors of the affluent have become more price conscious. Even though many of these people didn’t lose their home or job during the recession, they saw how others were affected around them and have changed their habits because of it. Affluent consumers now report using coupons, waiting for sales and buying less expensive brands more frequently than they did a year ago. Brands are having significantly less effect on luxury consumers. Forty-one percent of luxury consumers currently believe that the brands they wear say a lot about who they are as a person compared to 51% in 2008, and only 32% of luxury consumers are willing to spend more for the style and fashion of designer brands as compared to 51% a year ago.

Affluent consumers are also more distrusting of salespeople and advertisements that focus on the brand image and luxury status. These consumers instead desire one-of-a-kind items and experiences that create fond memories. They demand personal value from the products they purchase. Harrison Group vice chairman Jim Taylor says that “In the end, the increase in spending we foresee is not a return to the wanderlust of the past, but rather, an expression of sensible, resourceful, self-confident consumers expanding their portfolio of needs.”

It is also important that companies understand the changing face of the luxury consumer. In the new Ad Age Insights White Paper, “The New Wave of Affluence,” a Digitas study reports that a person’s financial standing before they are 35 is a significant indicator of what their financial standing will be later on in life. If a person reaches the $100,000-$200,000 income level before they turn 35 (labeled Emerging), they have a greater chance of crossing the $200,000 mark into the Affluent category later on in life. Because those currently in the Affluent category are spending more conscientiously now, it is the Emerging group that is most likely to see an increase in demand for luxury brands. These young professionals have secure jobs that will lead to affluence later in life and have fewer responsibilities such as mortgages and children, leading to ample disposable income to splurge on the luxury goods. And because individuals in the Emerging category are widely plugged into interactive and social media, they can be much easier for companies to reach than older, Affluent consumers.

In the post-recession environment, it is no longer acceptable to assume customers will buy luxury products solely for the brand they flaunt. As affluent consumers begin to reject their old habits of spending based on brand image, companies must be able to communicate and deliver real value to their consumers.

Anything to avoid driving. That’s what many Americans now favor, seeking living communities where walking, biking or jogging is encouraged… especially if it means errands may be run sans car.

According to a report by the National Association of Realtors, “Americans favor walkable, mixed-use neighborhoods, with 56 percent of respondents preferring smart growth neighborhoods over neighborhoods that require more driving between home, work and recreation.”

Interestingly, they’re willing to sacrifice larger footprints in order to live in such environments, further supporting the trend of smaller space living.  As America “right sizes,” home owners and apartment dwellers prefer quality over quantity and purchase home products to follow suit, making the most of their small spaces.