'A home-centric lifestyle is here to stay,' says this consumer analyst – Business of Home
As an analyst at marketing research firm The NPD Group, Joe Derochowski’s job is simple, at least in theory: He tries to understand what people buy and why they buy it. In practice, it’s fiendishly complicated, requiring everything from high-level analysis of the housing market to deep dives into human behavior—and more than a few retail field trips to observe the American consumer in its natural habitat. It’s a mix, he says, of number crunching and simple observation.
“There’s an old line that Yogi Berra has, which is, ‘You can observe a lot by watching,’” he tells host Warren Shoulberg on the latest episode of Retail Watch. “That’s what all of us need to be doing at this time: watching the consumers and trying to understand, but then also listening. Everything we do comes with an ‘I wish,’ ‘I hate,’ ‘I love,’ ‘I miss.’ Listen for those and then sit there and ask, Can I tie into that? And if you can, that’s where the money is.”
Derochowski’s specialty is the home industry, meaning that the past two years have been a busy time. All of what you’d expect to be true is true: Derochowski says that consumer spending on home is still far above pre-pandemic levels (though it’s leveled off a bit since the 2020 growth spurt); online shopping is still on a tear (though that, too, has leveled off); and inflation is pumping (in the last 8 weeks alone, prices have increased a whopping 9 percent, averaged across all categories). Interestingly, despite skyrocketing prices, Derochowski says demand hasn’t softened.
“In a normal pricing and promotion model, you would raise prices and sell fewer unit or lower prices and sell more units. What we’ve seen during the pandemic so far is that’s not the case,” he says, “If your product is in demand, you’ve been able to raise prices and sell more units, and if your product is not in demand, lowering prices is not necessarily gonna make you sell more units. If we want the product, we’re going to pay for it. If we don’t want it, we don’t want it
Elsewhere in the episode, Derochowski weights in hot topics in home retail, ranging from what we can expect for the holiday season to how long the home boom will last (he thinks the consumer mindset has been permanently shifted to being more ‘home-centric’), and why the debate between e-commerce sales and brick-and-mortar retail is overhyped. “When you think [about] fertile ground for innovation,” he says. “I think the retail environment is perfect at this moment.”
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