In a recent issue of Advertising Age, IKEA North America public relations manager Marty Marston describes how IKEA is meeting the challenge of the tough economy. As the world's largest furniture retailer, her company is tied to the struggling housing market, yet IKEA's sales rose 8 percent in 2010.
Though IKEA's strategy is clearly working, there are aspects of their market that Marston admits are not well understood. "Though there might be speculation...that IKEA is attracting a higher-end consumer who's trading down, Ms. Marston says that's not something that can be verified," according to the article.
Marston also notes, "We think that we're just doing a better job casting a wider net, appealing to consumers who may have shopped with us before and came back, or capturing new consumers."
"Her instincts are right on both counts," says Pam Danziger, president of Unity Marketing and author of the new book, Putting the Luxe Back in Luxury: How new consumer values are redefining the way we market luxury (Paramount Market Publishing, 2011). "With a double-dip recession on the horizon, retailers need to understand their customers, especially the affluents who are the heavy-lifters in the economy more than ever. Affluent consumers are making more strategic decisions about their buying; far from simply 'trading down,' their behavior indicates smart choices and high standards, just as one would expect from these value-driven consumers. Only now, the choice is not just which brand and how much, but whether to buy at all."
"Although Unity Marketing doesn't track the IKEA brand specifically, we do know several things about high-end consumers shopping for home furnishings including furniture that might interest them. Today's affluent consumers are shopping much smarter than their pre-recession counterparts. They are looking for bargains, quality, and value, rather than just splashing money around to display their wealth. Our research shows that affluent spending on furniture sank during the first quarter of 2011, but rose almost 5 percent during the second quarter, and we know in which types of stores they shopped and what items they bought."
Unity Marketing also has demographic data that backs Marston's second speculation about casting a wider net. According to Danziger, "Our most recent data show that the specialty furniture retailers have very uniform market penetration of the demographic segments we track for high-end furniture shoppers. Nearly every other type of retailer that sells furniture has demographic blind-spots, missed opportunities, among the affluent consumers. A careful analysis of this data would help these retailers fill the gaps in their customer profile."
Danziger is concerned about the economic recovery, "Our unique Luxury Consumption Index (LCI) measures affluent consumer confidence and predicts the direction of spending on luxury goods and services in the future. The LCI predicted the original recession before it began in 2008. Now it is strongly predicting a double dip."
On September 15 Pam Danziger will host a webinar to share the results of our latest survey and what it means for marketers in the coming months. Click here to learn more and sign up to attend.
For home furnishings marketers & retailers who need to learn more about the potential of the luxury consumer segment...
Unity Marketing's Home Luxury Report 2011 is the ultimate guide to the U.S. market for luxury goods for the home. This report focuses on the buying and spending habits of the nation's affluent households -- the top quintile or 20 percent of U.S. consumer households -- of high-end or luxury products and services.
About Pam Danziger and Unity Marketing: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar.
Pam gives luxury marketers "All Access" to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers. Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.
Follow Pam on Twitter @ www.twitter.com/PamDanziger
Pam's latest book is Putting the Luxe Back in Luxury: How new consumer values are redefining the way we market luxury (Paramount Market Publishing, 2011). Her other books include Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, published by Kaplan Publishing in October 2006; Let Them Eat Cake: Marketing Luxury to the Masses—as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) and Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).