The Dangers of Applying Industry Data to Your Retail Store

Sometimes industry-wide data can be a little deceiving. The trends seen in this macro look at your entire industry may not be applicable to your particular store. So, you need to look at your own data or data of similar stores before you decide to act.

This was the case recently in a Furniture Today article proclaiming Millennials had become the largest furniture buying group. They reported in their 2015 Consumer Buying Trends that their research showed a big shift in sales coming from Millennials (the group aged 18 – 34) was now, based on end-of-year data, responsible for 37% of buyers and 28% of revenue. This was a huge jump from 14% and 12% respectively just two years earlier. This didn't seem to track with what I'd seen for the furniture retailers we manage data for. So, I took a closer look.

As it turns out, the Millennial group does not have a significant impact on our client's sales. An average of 13% of revenue comes from this group, while 72% of the customers are 45+ and 66% of their sales come from households in the 35 – 65 years old range. While the Millennials don't have as much impact on our clients' sales as in the Furniture Today study, it's worth noting that the youngest age cell (18 – 24) did have an average increase of 33%. But, that huge increase is because of the small numbers to begin with, because none of our clients have more than 2% of their sales coming from that group.

In the infographic below, you can see how the data from Furniture Today's industry-wide study compares with the data aggregated from our clients, along with some conclusions we've drawn from the differences.

What could cause this difference in data? My educated guess is that the 18 – 34 year-olds in the FT study are buying at non-traditional furniture stores like Target and other discount department stores. It could also be that our clients aren't currently appealing to Millennials because they aren't merchandising their stores to appeal to them. As they move into the age range where households have historically spent the most on home furnishings (35 – 44), it's important to be positioning your store in ways that will appeal to them as they grow into their peak buying years.

All this goes to show that a wider industry look at trends can guide your decisions, but you need to look at your own data trends and/or those of retailers similar to you, regardless of what retail vertical you're in. For now, I'm telling our clients to continue doing what they do best and stay the course. However, with the national study highlighting the potential, now might be the time to use our data insights to identify what Millennials are buying.

As a future initiative, retailers might also want to gain the insight to actually know what their customer looks like at a macro-level or better yet, at the merchandise or SKU level. This will help you hone in on your best mass marketing target for TV and would help you understand what the Millennial and other cohorts are actually buying, so you can narrowly target them with merchandise that appeals to their fashion sensibility. And you can still market to them, but with tighter targeting media, such as digital, social and other direct marketing mediums.