If you have known anyone who lived through the Great Depression of the 1930s, you’ve probably heard stories of legendary frugality. They saved tiny remnants of soap, reused envelopes for making lists, religiously put aside money. Few ever forgot the lesson of how fast things could go bad and how much worse they could always get.
The prevailing hypothesis is that, while today’s recession is unlikely to be as bad as the Depression, it will have a lasting effect on buying habits even as hiring resumes, credit frees up, and home prices improve. Many experts believe that entire generations will change their buying patterns.
In the July-August Harvard Business Review, an article called “ Understanding the Post-Recession Consumer” puts some meat on that hypothesis. The authors, Paul Flatters and Michael Willmott, lay out a number of trends that offer food for thought for remodelers.
An accelerating trend is discretionary thrift, a habit that is extending to many affluent buyers who “desire a more wholesome and less wasteful life,” write the authors. “Many postrecession purchases ... will be less extravagant versions of the originals.” To extrapolate: Remodeling buyers will want fewer frills, less-extravagant square footage, and more value.
Flatters and Willmott also predict a lasting trend for simplicity, in the interest of less stress in everyday life. This may bode well for remodelers who can simplify the buying process, clearly package their services and options, and streamline delivery.
One trend the authors see as slowing, at least temporarily, is “green consumerism,” due to what are often higher prices for green products. However, you can “expect green consumerism to recover and accelerate postrecession … as consumers regain confidence and disposable income to fully express their growing concern about climate change and the environment.”
Many remodelers sell sustainability because they are passionate about the environment. Other remodelers tout green mainly because they believe it will help them sell. A temporary dip may well move them out of the market.
In another article in the same journal, Eric Janszen writes that businesses will have to adjust to life “without the former life of the economic party: the monthly payer.” In “Selling to the Debt-Averse Consumer,” he predicts that consumers will want “[m]essages that center on family, life simplification, and getting back to basics ….”
Regardless of whether you offer financing, many of your clients finance their remodels. Or, they used to. How will you work with them in the post-monthly-payment society?
On the Money
The effects of this recession will be with us for many years. Nobody knows when our economy will be healthy again, or the long-term fallout of revelations such as: the stock market does not always go up; doing a good job does not guarantee job security; houses do not always rise in value; there’s a lot you can live without. In the meantime, it is critical for remodelers to be able to read and act on economic indicators.
- Gather economic information everywhere and all the time. In a month, you can chat with 100 sources in your market — your banker, accountant, plumber, grocer, fellow remodelers. Make a habit of seeing consumer trends from their perspective.
- Spend time with informative, trustworthy media sources, such as this one as well as those covering general business (I like Inc. and Harvard Business Review). Books may be too slow to relay up-to-date economic information.
- Strive for simplification as you change your company’s structure, offerings, and systems. Be user-friendly and efficient; focus on value. Make changes that will work for you and your buyers in the long run. It’s going to be a bumpy ride.
—Linda Case is founder of Remodelers Advantage, a national company that gives remodelers the tools to achieve consistent profitability and success through one-on-one consulting, the Roundtables peer program, and an online learning community, Advantage Associates. 301.490.5620; email@example.com; www.remodelersadvantage.com.