Seeks stylish decor on meager means - Connecting with the Customer: Early Nester - Trends in home decor retailing are discussed

DSN Retailing Today, Dec 16, 2002 by Laura Heller

Forty years ago, Gordon Segal opened a little shop in Chicago called Crate & Barrel that catered to homeowners looking to furnish new abodes stylishly and inexpensively. Segal was one of the first merchants to effectively recognize and cater to what would become an increasingly profitable category: Early Nesters.

"Overall, Americans are spending more time at home and the trend toward 'local area nesting' has not passed young adults by," said Cary Silvers, vp of consumer research firm RoperASW. "(Home) is an important aspect of personal identity for early nesters as well as adults in later stages of life. The wider availability of home decor products at more moderate price points has made good design newly accessible to a highly receptive market segment."

Gordon Segal may have invented this type of retailing for housewares, according to McMillan/Doolittle consultant Neil Stern. "To get quality, fashionable merchandise at a cheap price didn't exist before that," he said. But like many other established retailers, Crate & Barrel has grown with its initial customer base of Baby Boomers, but Segal hasn't lost sight of that original group. Several years ago he opened CB2, a new format intended to reach just that consumer, with reasonably, stylish products designed to fit in the smaller living spaces of new apartment dwellers.

"We've matured as our shoppers matured," said Crate & Barrel spokeswoman Bette Kahn. "We wanted to go back to the 20- to 30-year-old market we thought we'd left behind."

This group is very attractive to retailers as Early Nesters are effected by trends and frequently purchase new items to stay in fashion, and 10 years of robust economic growth has trickled down into a much younger demographic. One that will not likely constrict in the same manner as the larger population, according to Erik Gordon, research director at the Center for Retailing at the University of Florida.

"People will adjust their spending for themselves, but not for the kids," he said. "Directly or indirectly, the parents are providing a lot more money."

Kids today, according to Gordon, "Want to live the lives of college students, but don't want to live like college students."

Nearly half of Americans are "very satisfied" with various aspects of their home, according to Silver, but younger adults (18 to 29) are the least satisfied with their homes. "Staying home does not mean staying in isolation," he said. "Young adults ages 18 to 29 are more likely to have friends over at least once a week-35% vs. the average of 22% for all Americans--and they're especially interested in entertainment and recreational products that enable them to have fun at home."

Which works out well for retailers, which each year offer increased selections of home decor, linens, storage and RTA items to fulfill these needs, making back-to-school shopping about much more than notebooks and pencils. The category ranks second only to the holiday season in sales.

But fall isn't the only time to capture this demographic. Discount department stores can claim a large chunk of this demographic, but retailers such as Bed Bath & Beyond, Cost Plus World Market and Urban Outfitters have sliced off a piece for the home decor and soft home categories and Best Buy caters to Early Nesters' electronics.

But possibly the best marketer to Early Nesters is IKEA, that bastion of cheap chic furniture and household accessories. Although the retailer has only 15 stores in just a handful of markets in the United States, its name is practically synonymous with the Early Nester set. Not only does the store contain virtually everything a new apartment or dorm dweller needs to make a home, but all items are in stock and available to take home that day-a very important part of marketing to this demographic who isn't going to wait six to eight weeks for delivery, said Gordon. Witness IKEA customers, who often rent moving vans and fill them up with several rooms' worth of goods.

Retailers typically have more than one opportunity to reach the Early Nester set, but this is more likely among females than males, as females care more about fashion and appearances. "It's not uncommon for freshmen women to buy things that they think are a little juvenile by sophomore year," said Gordon. "Then they buy something that lasts them through the rest."

Better quality and in-fashion merchandise also allows other demographics to trade down as Baby Boomers shop IKEA or Target for the home office, spare room or summer home. Even CB2 found an older group sprinlded among its customer base.

There are, of course, risks involved in catering to this demographic. Following trends is certainly difficult and programs such as Target's Todd Qidham-designed collection didn't translate well in much of America and ended up significantly marked down at the end of the season. On the positive side, the company received quite a lot of publicity for the attempt, but both that and Target's Philippe Starck line of home decor items will not be back for an encore. Of course, a series of several big miscalculations could cause a setback from which it may take years to recover. The Gap is the oft-cited example of just such a victim.