Steven Hong, CEO, Discount Bandit
The COVID-19 pandemic drastically increased the demand for housing. As a result, many people scrambled to find additional indoor and outdoor space while navigating work from home and spending more time at home in general.
It’s no surprise that the last six to eight months have seen the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) values higher than they’ve been in 35 years. As a result, builder confidence in single-family home sales is high right now and expected to be so for the coming months.
While the HMI spike is driving more home sales, it’s also boosting consumer spending on home decor, furniture, and appliances. There are several items that first-time homebuyers need: refrigerator, television, washer and dryer, indoor and outdoor furniture, all the decor, the list goes on. So, retailers that want to reach this large homebuyer market should consider the following strategies: targeting price-savvy shoppers online, pricing segmentation, load balancing and exploring new digital channels.
Reaching price-savvy homebuyers online
Retailers can take advantage of the housing boom by capturing shoppers building new homes, especially those looking for a discount. These consumers fall into the category of frugal or price-savvy shoppers. Due to the pandemic and acceleration of ecommerce, there are more frugal shoppers than ever before. These consumers have ample time to find the best deals and are doing price-specific shopping for their homes. Therefore, smart retailers will prioritize selling to price-sensitive homebuyers with specific discount pricing strategies.
Price segmentation isn’t just for hospitality and travel
Pricing segmentation is a pricing strategy used to reach more of the marketplace by offering products to consumers at a range of prices, capturing the most sales revenue possible at a profit. You may be familiar with pricing segmentation from other industries like hospitality and travel. But the strategy can work for retailers, too. When implementing a price segmentation strategy, you may consider working with a third-party partner. Look for a vendor that knows how to reach frugal consumers without violating pricing policies and can ensure your customers don’t feel like they’ve overpaid by seeing lower prices advertised.
Load balancing to take a load off
Typically, consumers want things right away (think Amazon Prime). As a result, retailers are left to deal with short lead times and rush orders. But when consumers are building a home, they have time on their hands. They care primarily about finding the best deal as they outfit their home with appliances, furniture, and decor. So, there’s no need for retailers to overwhelm their warehouse as they typically might. Using load-balancing operations, retailers can shift order processing to less busy days and let their warehouse take a breather.
Explore new digital channels to reach homebuyers
By now, most retailers have explored legacy online channels, whether through online marketplaces like Amazon and eBay or directly from their sites. Unfortunately, these come with challenges like the overhead for maintaining online marketplaces with a high cost of sales. Retailers spend money to administer these channels and pay high fees and fulfillment costs to meet their demands. ecommerce giants like Amazon also own the customer relationship and remove the retailer’s ability to sell more to that customer in the future. Instead, retailers should consider working with a new digital channel or third-party broker that allows them to own the customer relationship with no cost of new customer acquisition.
If you’re a furniture, appliance or decor retailer and want to capture today’s homebuyers to increase online sales, these four strategies will help you get there.
Discount Bandit is an online shopping service that connects shoppers with retailers and manufacturers selling items at a discount.