Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Working for The Millennial Market
Professional Remodeler interviews generational expert and author Neil Howe about what remodelers can expect from echo boomers and millennials
Concepts of home and attitudes about the value of homeownership are deeply rooted in a person's life experience. Historian, economist and demographer Neil Howe is one of the nation's leading authorities on generations. With his colleague, William Strauss, he coined the term "millennial generation" to describe the wave of young people born since 1982 who are beginning to buy and remodel their homes. He recently spoke to Professional Remodeler about the three generations of today's homeowners and what their attitudes mean for remodelers.
Q. Let's start out with some good working definitions of the buyer demographics: baby boomers, Generation X and the millennials. Who are these buyers generationally?
A. Today's living generations actually start with the GI generation, who came of age in the Great Depression and World War II. They're now in their 80s and older. The silent generation came of age in the presidencies of Truman, Eisenhower and Kennedy. They're the young-old; they're in their 60s and 70s. The boomers we define as those born from 1943 to 1960; they're today in the end of their 40s to mid-60s. Generation X we define as 1961 to 1981; today, they're in their late 20s to late 40s. The millennials are from 1982 to 2004. They're all the young people.
Q. As a generation, what are some of the life experiences of millennials that impact their attitudes toward their houses? What are their expectations of a remodel's pay off?
A. They're long-term planners. A lot of them have 10- to 15-year plans, even if they can't find an employer. That long-term focus means they look at projects that will age with them. They're into ownership and that has that long-term aspect to it. Ownership is no longer at all attached to a phase of life moment. That's an interesting shift. It used to be that marriage or moving in together and having a kid meant you needed to buy a home. Millennials just buy a home or find roommates. The idea of a single person buying a home was unusual earlier.
Their concept of finance is an extended family concept ... their family's budget. ... They're group oriented — they like the family room and kitchens that open up into entertaining spaces. Being sheltered is another big thing. They're not into risky lifestyles. They want their home to be safe.
Q. How does that compare with Gen Xers?
A. Gen Xers have a mix-and-match modular lifestyle. They have certain needs; they want their house to meet that need. They're apt to buy a place with a lot of unfinished space. They're an incredibly market-oriented, entrepreneurial generation; there are almost always some freelance or start-up aspects to their lives. They're either telecommuting or have some side business. They all have peculiar housing needs that are not at all defined by the suburban lifestyle.
... Their modular lifestyle is a huge opportunity. You need to show them as a remodeler that you're radically comfortable with anything they suggest. Don't go with an attitude that all you're going to do is accessorize a lifestyle home. Think that you can gut it and do anything. They're also very value-conscious, so you need to be able to document what they're getting. Because they're so market savvy, they want to know resale value.
Q. What do remodelers need to know about millennials for the sales process?
A. Millennials' lives are defined by their specialness. They're doted over; they were raised with all these child protection devices. During their lives there was an increase in books and movies for children; there was just a tremendous fixation on kids. The millennials are aware of that. You have to make this customer feel they're important in your life. It's not just a transaction with them. It's an experience. An Xer could say, "We all know what's going on here. It's a transaction." The millennial will say, "I'm special. Make this about how it will improve my life. Show me some special care. I want to be able to trust you." They want to be given some reason to trust the seller.
They stay very close to their parents; family and parents will be an important part of their lives when you're selling to them. You need to develop special materials to sell to the parents and be able to justify the purchase to them.
Q. How important are brands to millennials? Are they likely to use a remodeler because it's the same one their parents or their friends used?
A. This is a generation that is open to big brands and brand loyalty. Millennials want to bring back the middle class; they want to bring back a group center of gravity. What you want to do is to get on one of these blogs where people are reviewing you. You want to find interesting and creative ways to get good reviews and get linked up. They're very accustomed to going online and reading what people say.
Q. Speaking of going online, there's no question that millennials are extraordinarily comfortable with technology. How can remodelers use that to their advantage?
A. At the very least, customers should be able to go on the remodeler's site and see photos and video. I like the idea of doing video with a customer — show people their own age who wanted something neat done. ... They'll respond favorably because it's like something on YouTube.
Q. Is there anything that you'd say remodelers should never, ever do in their marketing to millennials?
A. The biggest mistake you can make is to try to be too X'y or too boomer-y. Avoid making the message too edgy, too bottom-lined focused or too survivalist. Millennials don't want that. Take a look at their Web sites; they're beautifully proportioned and balanced. All those damaged fonts and scattered random images are going out of fashion with the millennials. I'd have my look be like Target: clean, bright, happy and friendly. It says, "I think you're special; I want to win your trust."
Q. One of the most frequent comments about the millennial generation as consumers is that they really do their homework before they make a purchase. Is this a benefit to remodelers and, if so, how?
A. This generation is pretty structured. Life is a series of exams you prep for. They look things up, do the research, talk to Mom and talk to their friends. Before they buy, they already have ideas about how this purchase will work in their lives, how much they'll spend and what they'll use it for. This could be an advantage to remodelers who themselves do their homework. If there are credentials that would mean something, put those credentials on your Web site.
Q. What impact do you see on the remodeling industry from the current generational attitudes?
A. I believe this is the start of a golden age of home remodeling, driven by boomers wanting to stay where they are. We're seeing the rise of the NORC — naturally occurring retirement communities. You just age in place. Boomers like that; it allows them to keep the connections they have. What suits them better is to be able to call a company to come out and customize their house to bring services to them. Gen Xers will create companies to do that for them. Even if the boomers don't want to go to new communities because of feeling financially pressed, I think they'll ignite a terrific growth in customized, high-end home remodeling. They'll take what they've always lived in and make it even more their own. ... As boomers get older, millennials won't have any problem taking care of them. This re-embracing of multi-generational families could have enormous impact.