The Boomers' kids, Generation Y, are poised to take the reins

By Dana French -- Home Accents Today, 2/1/2006

Baby Boomers have been the dominating force in retail for the past two decades. At 78 million strong, they're the largest generation ever and as everyone knows Boomers love to spend, spend, spend.

The retail scene is beginning to change however as the oldest Boomer turns 60 this year. According to the Census Bureau, 7,918 will turn 60 every day this year, about 330 every hour. Well-known Boomers hitting this milestone include President Bush, Cher, Tommy Lee Jones and Sally Field.

As the clock continues to tick, nests have emptied or are emptying rapidly. And even though they're in their peak earning years, retirement is around the corner for the older members and college expenses are looming for the younger set. While Boomers are still well worth courting, marketers need to look toward the next wave of buyers.

Fortunately, the Boomers' kids, Generation Y, are poised to take the reins. Born between 1976 and 1994, the oldest member turns 30 this year. Totaling 76 million, Gen Y appears to have inherited their parents' free-spending habits. The industry must understand all they can about Gen Y and learn how to most effectively market to them.

Demographic characteristics

Several demographic differences exist between home accent buying Boomers and Gen Y'ers. Take housing — Gen Y are becoming home owners at an earlier age than Boomers did; about half of Gen Y already own or are buying their home. About four-fifths of Boomers are homeowners.

Don't count Gen Y out when it comes to household income and earning potential. While 40% of Baby Boomer households earned $75,000 or more a year last year, a whopping 35% of Gen Y did, too.

Gen Y is more highly educated than their parents. Even with approximately one-third of the over-18 portion of Gen Y still in college, it still has a higher percentage of members with a four-year college degree.

Gen Y is also more ethnically diverse. According to recent census figures, 17% of Gen Y are African-American and 17% are of Hispanic origin. With Boomers, only 13% are African-American and 11% are Hispanic.

Mostly due to lifestage and age, Gen Y is more transient. More than two-fifths of Gen Y have moved within the last year, compared with only 14% of Boomers. And, 44% of Boomers have lived in their home for 10 or more years, compared to only 4% of Gen Y.

Boding well for the industry, Gen Y entertains at home more often. Nearly two-thirds of Gen Y entertain at home once a month or more, compared with only one-third of Boomers.

Home accent buying

While more Gen Y households bought lamps, area rugs and wall decor during 2005, Boomers spent more than twice as much on what they bought. Nearly half of Boomer households bought a lamp, area rug and/or wall decor last year, spending a total of $8.5 billion, while 55% of Gen Y did, spending $3.7 billion. Home Accents Today's exclusive survey presents where both generations shopped and bought each product, along with how much they paid and how they paid.

	GEN Y	BOOMERS
IN 2005,
percent of households buying lamps, area rugs and/or wall decor	55%	48%
total dollars spent on lamps, area rugs and wall decor	$3.7 billion	$8.5 billion
HOUSEHOLD INCOME
	percent of home accent buying households
under $30,000	32%	22%
$30,000 – $49,999	12%	20%
$50,000 – $74,999	21%	18%
$75,000 – $99,999	17%	21%
$100,000 or more	18%	19%
RESIDENCE TYPE
house	66%	76%
apartment	19%	10%
mobile home	4%	9%
condominium	4%	3%
other	7%	2%
MARITAL STATUS
now married	67%	73%
never married	29%	8%
divorced, widowed, separated	4%	19%
Source: Home Accents Today Consumer Buying Trends Shopping Attitudes Survey, 2005

Generation Y

Born between 1976 and 1994

Adult members currently between 18 and 30 years old

Total 76 million — 27% of U.S. population

Also known as "echo boomers" and "the millennium generation"

Defining moments include 9/11 and the War on Terrorism

Embrace technology (the Internet, the Ipod, TiVo and Instant Messenger)

One out of three consider themselves non-Caucasian and three in four had working mothers

Celebrity members include Britney Spears, Venus Williams, Justin Timberlake, Prince William, Beyoncé, and Ashton Kutcher

Baby Boomers

Born between 1946 and 1964

Currently between 42 and 60 years old

Total 78 million — 28% of U.S. population

Also known as the "me" generation

Revolutionized popular culture with rock 'n roll music

Lived through the longest period of national prosperity in history

Defining moments include the civil rights movement, feminism, Woodstock and The Vietnam War

Celebrity members include Cher, Demi Moore, Brad Pitt, Susan Sarandon, Hugh Grant, Dolly Parton, Denzel Washington and President Bush

Lamps

U.S. households spent $7.4 billion on lamps last year. Boomers and Gen Y together accounted for more than three-fifths of all buyers and of the total dollars spent.

Boomers spent more on their 2005 lamp purchase, a median of $40 compared to a median of $30 for Gen Y. Nearly one-fourth of Boomers spent $100 or more, while only 11% of Gen Y spent that much. About one-third of both groups spent $25 or less.

Boomers bought with longevity in mind. Among the Boomers who replaced a lamp last year, 45% replaced one they had owned for more than 10 years and 41% plan to keep their new lamp for 10 years.

Discount department stores and off-price retailers snagged the most lamp sales for both generations. Just over half of Gen Y shopped for a lamp at a discount store, with 45% buying one, spending a median of $25. Forty-five percent of Boomers shopped at Wal-Mart, Target, T.J. Maxx and the like, and one-third bought there, spending a median of $25.

Lifestyle stores, including Pottery Barn, IKEA and Z Gallerie, are a definite option for lamps, especially for Gen Y. Nearly one-third of Gen Y households shopped at a lifestyle store and more than one-fourth made a purchase there, spending a median of $35. Only 14% of Boomers shopped at a lifestyle store and 11% made a purchase at one.

Furniture stores appear to be equally appealing to both groups. One-fifth of Boomers shopped for their lamp at a furniture store, with 10% making a purchase. Eleven percent of Gen Y shopped there, with 10% buying.

Home improvement centers and warehouse membership clubs were the shopping destination for 19% of Boomers and 6% of Gen Y. One-tenth of Boomers bought a lamp there and spent a median of $42. Only 4% of Gen Y bought a lamp at one.

Two-thirds of Baby Boomers paid cash for their lamp, as did 70% of Gen Y. Nearly one-third of Boomers paid with a credit card and one-fourth of Gen Y used plastic.

TOTAL 2005 LAMP SALES $7.4 billion

Spending by Generation

BOOMERS	GEN Y
$3.2 billion 43%	$1.3 billion 18%

Payment Methods

	GEN Y	BOOMERS
Cash	70%	67%
personal credit card	24%	30%
in-store financing	<1%	2%
other	6%	1%

Budgets

	GENERATION Y	BABY BOOMERS
Median	$30	$40

Percent of households spending

	GENERATION Y	BABY BOOMERS
under $15	11%	14%
$15 – $24	25%	18%
$25 – $34	19%	12%
$35 – $49	14%	16%
$50 – $99	20%	17%
$100 – $149	2%	10%
$150 – $199	2%	7%
$200 or more	7%	6%

Where Bought¹

	GEN Y	BOOMERS
discount department stores/off-price retailers	45%	33%
lifestyle stores	26%	11%
traditional furniture stores/mfr. gallery stores	10%	10%
home improvement centers/warehouse membership clubs	4%	10%
home accent/gift stores	6%	5%
direct-to-consumer	3%	6%
department stores	2%	6%
other²	4%	19%
1. The percentage of total number of purchases through each channel, not the percentage of total dollars spent through each channel. 2. Other includes lamp and lighting stores, interior designers, craft/fabric stores, antique shops, variety stores, trade shows, custom-made, rent-to-own and military exchanges, among others.

Replacement Cycles

	GENERATION Y	BABY BOOMERS
Percent of households replacing a lamp they currently own	30%	43%

Length of time households have owned the lamp being replaced			Length of time households plan to keep the new lamp
16%	45%	MORE THAN 10 YEARS	16%	41%
31%	24%	5 TO LESS THAN 10 YEARS	43%	32%
21%	18%	3 TO LESS THAN 5 YEARS	30%	20%
32%	13%	LESS THAN 3 YEARS	11%	7%
Source: Home Accents Today Consumer Buying Trends Shopping Attitudes Survey, 2005

About the Survey

This exclusive consumer data originates from the responses of 1,135 households to a survey conducted in August and September 2005. Home Accents Today had New York-based TNS poll 4,500 U.S. households via an online survey to examine home furnishings shopping and purchasing patterns for the 12 months, September 2004 through August 2005.

Because of the sample size and a respondent profile closely matching the demographics of all U.S. households, survey data can be projected nationally with a margin of error of plus or minus less than 3%.

The research was analyzed by Home Accent Today's research department, led by Senior Research Specialist Dana French and Director of Market Research Kay Anderson.

Wall Decor

Baby Boomers and Gen Y together spent $3.5 billion on wall decor, including mirrors, in 2005, accounting for three-fifths of the total dollars spent on the category. Together, the two generations accounted for 65% of all wall decor buyers.

Budgets for both generations were remarkably similar, with each spending a median of $50. As expected, slightly more Gen Y households spent less than $30 on their wall decor purchase. More Boomers spent in the mid-range, between $30 and $99. And, spending at the higher price points was about the same with about 18% of both groups spending between $100 and $199 and 13% spending $200 or more.

As with lamps and area rugs, discount department stores and off-price retailers accounted for most of the wall decor purchases last year for both groups. Two-fifths of Gen Y shopped for wall decor at a discounter, with 29% making a purchase, spending a median of $30. Slightly more than one-fifth of Boomers bought wall decor at one, spending a median of $40.

For Boomers, the largest alternatives to discounters are home improvement centers and warehouse membership clubs. Nearly one-fifth purchased wall decor, including mirrors, there and spent a median of $55. Fifteen percent of Gen Y made a wall decor purchase through the channel, spending a median of $50.

The direct-to-consumer channel, including catalogs, the Internet, TV shopping and home parties, is more often an option for Baby Boomers. Twelve percent of Boomer households made a purchase there and spent a median of $60. Only 6% of Gen Y purchased wall decor through the channel.

About one-tenth of both generations purchased wall decor at a lifestyle store last year. Generation Y spent a median of $50 at Restoration Hardware, Kirkland's, Bed Bath & Beyond and the like, while Baby Boomers spent a median of $120.

Only one-fourth of wall decor purchased by Boomers and one-fifth by Gen Y in 2005 replaced a piece they already owned. With the new purchase, 45% of Boomers and 41% of Gen Y plan to keep the new art or mirror more than 10 years.

TOTAL 2005 WALL DECOR SALES $5.9 billion

Spending by Generation

BOOMERS	GEN Y
$2.3 billion 39%	$1.2 billion 21%

Payment Methods

	GEN Y	BOOMERS
Cash	99%	70%
personal credit card	<1%	30%
in-store financing	<1%	<1%
other	<1%	<1%

Budgets

	GENERATION Y	BABY BOOMERS
Median	$50	$54

Percent of households spending

	GENERATION Y	BABY BOOMERS
under $20	15%	14%
$20 – $29	22%	14%
$30 – $49	11%	14%
$50 – $59	15%	9%
$60 – $99	6%	19%
$100 – $124	13%	7%
$125 – $199	5%	10%
$200 – $299	6%	5%
$300 or more	7%	8%

Where Bought¹

	GEN Y	BOOMERS
discount department stores/off-price retailers	29%	21%
other²	26%	23%
home improvement centers/warehouse membership clubs	15%	19%
home accent/gift stores	9%	11%
lifestyle stores	10%	9%
direct-to-consumer	6%	12%
traditional furniture stores/mfr. gallery stores	5%	5%
1. The percentage of total number of purchases through each channel, not the percentage of total dollars spent through each channel. 2. Other includes craft/fabric stores, interior designers, department stores, lamp and lighting stores, rent-to-own, military exchanges, variety stores, art shows, mall kiosks and custom-made, among others.

Replacement Cycles

	GENERATION Y	BABY BOOMERS
Percent of households replacing wall art they currently own	22%	25%

Length of time households have owned the wall art being replaced			Length of time households plan to keep the new wall art
6%	26%	MORE THAN 10 YEARS	41%	45%
11%	30%	5 TO LESS THAN 10 YEARS	26%	29%
22%	11%	3 TO LESS THAN 5 YEARS	17%	17%
61%	33%	LESS THAN 3 YEARS	16%	9%
Source: Home Accents Today Consumer Buying Trends Shopping Attitudes Survey, 2005

Terms

Households: All those living together in one housing unit, including family members or unrelated individuals.

Household income: Combined income of all household members.

Median: Divides the responses into two equal portions, half above and half below the median amount.

Share of purchases: The percentage of the total number of purchases through each distribution channel, not the percentage of total dollars spent through each channel.

Generation Y: Born between 1976 and 1994. Survey data is for adult members only, those 18 to 29 in 2005, born between 1976 and 1987.

Baby Boomers: Born between 1946 and 1964.

Department stores: Full-line operations carrying a variety of merchandise, including national and regional stores. Examples include JCPenney, Macy's, Bloomingdale's and Sears.

Direct-to-consumer: Retailers who sell primarily through catalogs, television, the Internet and/or home parties. Examples include QVC, Lillian Vernon, PartyLite, Red Envelope and Longaberger Baskets.

Discount department stores/off-price retailers: General merchandise retailers, including national, regional and local stores, as well as off-price retailers and closeout stores. Examples include Wal-Mart, Target, Kmart, Meijer, Big Lots, Tuesday Morning and T.J. Maxx.

Home accent/gift specialists: Home accents and gifts are the total business or single largest category. Most are local or regional companies.

Home improvement centers/warehouse membership clubs: Home improvement centers, such as Lowe's and Home Depot, as well as local and regional centers. Membership warehouse clubs include Sam's Club, Costco and BJ's Wholesale Club, as well as local and regional clubs.

Lifestyle stores: Retailers that carry accent furniture, portable lamps, area rugs, wall decor, other decorative accessories and soft goods at full price and some combination of housewares, small appliances, gourmet foods, apparel, jewelry and/or personal care items. Examples include Bed Bath & Beyond, Crate & Barrel, IKEA, Kirkland's, Linens 'N Things, Pier 1 Imports, Pottery Barn and Restoration Hardware.

Traditional furniture stores/manufacturer's gallery stores: Furniture is the total business or single largest product category. Includes local, regional and national traditional furniture stores, as well as manufacturer's gallery stores where all product or the majority of product comes from a single manufacturer. Examples include Ethan Allen, Havertys and Rooms To Go, as well as local independent furniture stores.

Area Rugs

Last year, 12 million U.S. households bought an area rug, spending a total of $6.1 billion on the category. Boomers alone accounted for almost half of the total dollars spent, spending $3 billion. Generation Y added another $1.2 billion to area rug coffers last year.

As with most categories, Boomers spend more — but only slightly more in this case. More than two-thirds of each generation spent $50 or more on an area rug last year. Boomers begin to pull away at the higher price points though. Half of Boomers spent $75 or more, compared to 45% of Gen Y. And, one-fifth of Boomers spent $250 or more, with only 6% of Gen spending that much.

Discount department stores and off-price retailers rule in the category, especially with Gen Y. Half bought one there and spent a median of $50. Nearly half of Boomers shopped for an area rug at a discounter and 38% bought one there, spending a median of $40.

Lifestyle stores are the second largest alternative to discounters for Gen Y. Nearly one-fifth of Gen Y shopped for an area rug at one, with 15% buying one, spending a median of $75. Only 6% of Boomers shopped at one, with 4% making a purchase at a lifestyle store.

With Boomers, home improvement centers and warehouse membership clubs are the second largest channel. About one-fourth of Boomers shopped for an area rug at one, with 18% buying, spending a median of $100. With Gen Y, 13% bought there, spending a median of $90.

Department stores also come into play for Boomers. Fifteen percent of Boomers shopped for an area rug at a department store, with 10% making a purchase.

About two-fifths of Boomer households replaced an area rug they currently owned. Among these households, two-fifths were replacing one they'd had for five or more years and one-third were replacing one they'd kept for less than three years. One-third of Boomers plan to keep the new area rug for five to less than 10 years and 22% plan to keep it for 10 or more years.

TOTAL 2005 AREA RUG SALES $6.1 billion

Spending by Generation

BOOMERS	GEN Y
$3.0 billion 49%	$1.2 billion 20%

Payment Methods

	GEN Y	BOOMERS
Cash	60%	64%
personal credit card	20%	18%
in-store financing	<1%	<1%
other	20%	18%

Budgets

	GENERATION Y	BABY BOOMERS
Median	$68	$75

Percent of households spending

	GENERATION Y	BABY BOOMERS
under $20	11%	9%
$20 – $29	11%	11%
$30 – $49	10%	13%
$50 – $74	23%	16%
$75 – $99	14%	13%
$100 – $124	7%	7%
$125 – $249	18%	10%
$250 – $499	3%	10%
$500 or more	3%	11%

Where Bought¹

	GEN Y	BOOMERS
discount department stores/off-price retailers	50%	38%
home improvement centers/warehouse membership clubs	13%	18%
other²	12%	17%
lifestyle stores	15%	4%
department stores	5%	10%
traditional furniture stores/mfr. gallery stores	5%	6%
direct-to-consumer	<1%	7%
1. The percentage of total number of purchases through each channel, not the percentage of total dollars spent through each channel. 2. Other includes floor covering stores, home accent/gift specialists, interior designers, rent-to-own, military exchanges, antique shops, variety stores, art shows, trade shows and custom-made among others.

Replacement Cycles

	GENERATION Y	BABY BOOMERS
Percent of households replacing an area rug they currently own	29%	37%

Length of time households have owned the area rug being replaced			Length of time households plan to keep the new area rug
11%	12%	MORE THAN 10 YEARS	6%	22%
6%	28%	5 TO LESS THAN 10 YEARS	31%	33%
11%	27%	3 TO LESS THAN 5 YEARS	32%	19%
72%	33%	LESS THAN 3 YEARS	31%	26%
Source: Home Accents Today Consumer Buying Trends Shopping Attitudes Survey, 2005

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The Boomers' kids, Generation Y, are poised to take the reins

By Dana French -- Home Accents Today, 2/1/2006

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