Key research trends we spotted in 2019
As the year - and indeed decade - draws to a close, it appears customary to reflect and draw conclusions from the preceding twelve months. Our Eureka! highlights of the year shine a light on five key themes we have observed during 2019:
The ever-changing landscape in the DIY sector
The evolving tastes of the beer and cider drinker
Homeowners continuing to invest in their homes, rather than move
The importance of New Production Development (NPD)
Innovation in the Spirits market
1. MERGING BOUNDARIES IN DIY
In 2019, the DIY and home improvement sector continued to be in a state of flux. Retailers are continuing to transform their businesses and striving to meet the needs adequately of both the consumer and tradesperson. Reassuringly, a Travis Perkins group report earlier this year stated that the home improvement sector still represents a market of £25bn and is growing at 2.5% p.a.
The disastrous Wesfarmers takeover over of Homebase is well documented with the Bunnings warehouse brand failing to cut through in the UK market. This year has seen the remaining Homebase stores also struggling against increased DIY competition from discounters B&M, Home Bargains and The Range. Those brands are particularly attractive to female shoppers. And it is indeed ironic that B&M have this year been taking units from recently closed Homebase stores.
One of the Travis Perkins brands, Wickes, provides a very interesting case study of the underlying market forces in this sector and this is made clear in their Mission to “be the partner of choice for Home Improvers and Local Trade”. Wickes have a clear strategy to focus on delivering product and service to trade, DIFM market and the DIY consumer which it sees as being quite distinct.
A key part of the Wickes strategy is to more fully embed digital channels. They state that at least half of their customer journeys involve digital as customers demand. We have seen from other Eureka! work that homeowners and tradespeople are increasingly using Amazon and Amazon Prime for certain types of home improvement products. Screwfix and their great digital offer are now a staple part of most tradesmen’s purchasing activity.
To help track these fundamental shifts across the sector, this year Eureka! launched a unique ‘basket of goods’, including showering, taps, and sanitaryware amongst other home improvement items. Our data show that 4 out of 5 households in the UK would now potentially look at buying at least one of these products themselves, a dramatic shift in just half a decade.
You can read our full paper here which explains our bespoke 4 stage hierarchy for understanding the growth of consumer confidence.
2. WHAT ARE DRINKERS LOOKING FOR NEXT?
We have written before about the growth of craft beer and debated some of the conceptual and definition issues around the term. The consensus now seems to have been reached that Craft is clearly more of a concept and can mean very different things to different drinkers.
What is clearly not up for debate is that the consumer fully brought into craft, both literally and emotionally. Even in the context of lager, we released data last year that showed that 80% of drinkers in that category had trialled craft, and around half of these were now drinking craft beer (either regularly or just starting to).
Earlier this year Pete Brown talked about industry stakeholders – across the UK, Australia and the US – now showing a desire to move the radar away from craft, as “multiple lines start to blur between successful craft brewers and craft-leaning multinationals”. In other words, too many brands have jumped on the bandwagon, so to speak. Craft begins to feel too mainstream for the niche-seeking drinker.
Pete writes about a greater emphasis on ‘independence’ moving forward. This will be intuitively appealing to the true craft drinker and has the added advantage of being more easy to define. The challenge for the sector in coming years therefore will be to “articulate the importance of independent ownership … in a way that offers a clear benefit to drinkers, many of whom are currently perfectly happy drinking macro brews.”
At Eureka! we have also been wondering how clarity around the independence of a brewer could play-out against the drive to make a brand premium. To what extent can ‘premiumisation’ be correlated with set of ‘independent’ attributes? And how does this debate change if we start to consider other categories such as lager or cider?
In fact, we released data this year that show one third of Cider drinker now see the category as Premium. There is clearly a need to drive premiumisation further in Cider. We know that whilst the ‘big hitters’ still dominate the Cider category, there is good knowledge and growing appetite in alternative brands that offer something different. Does craft and independence help or hinder this process we wonder?
3. IMPROVE DON’T MOVE IS HERE TO STAY?
I think we were all pretty fed up with hearing the word Brexit by the end of 2019. It has also clearly had a depressing impact on the housing market. A few years ago, the Council of Mortgage lenders dubbed the term “missing movers” to describe the shortfall of mortgaged home-owners choosing to not move up the housing ladder.
According to Which? the economic uncertainty caused by Brexit has undoubtedly affected the housing market, with property prices falling in some areas and fewer sales having taken place so far in 2019 compared to the same time last year.
Although housing transactions have traditionally been a key trigger for domestic/renovation projects, there is still much for the home improvement market to be cheery about. According to Hiscox, the ‘improve, don’t move’ trend has grown steadily over the last five years, from 3% of households to 15% – representing more than four million UK households investing in their homes.
Local Authorities have also seen a 29% rise in the number of planning permission requests made by homeowners over the last decade.
Whilst conducting a nationwide mystery shopping exercise in showrooms for a sanitaryware brand this year, we spotted many signature pieces for the bathroom or kitchen. What better symbol of this than the TOTO flotation bathtub launched last year which provides “a gravity-less, bathing position just like an astronaut in space”, and retailing at just under £30k?
Whilst this product is clearly beyond the budget of most renovators, there is clearly a trend we have seen towards investing in bathing spaces that homeowners can show off and retreat to for some quality relaxation time.
Many of the consumers we have engaged in focus groups this year talked about deriving inspiration from Instagram or Houzz. Infact research findings from the Houzz community confirm that bathrooms were one of the most renovated rooms in the UK last year. There is definitely a move away from all-white bathrooms and furniture.
Next year, Houzz expects to see more luxury finishes, statement tiles and bold colours in bathrooms. For homeowners looking to make a bigger statement, they predict we will start seeing more pastel-coloured sanitaryware, in soft pinks, greens and blues.
The Home Builders Federation claim that, unlike the broader housing market where transactions have dropped considerably from the historical norm, the new-build market has remained relatively strong in recent months. Our work for Urban & Civic this Autumn demonstrates that when new-build purchasers are looking to move house, they are seeking much more than the bricks and mortar. This acts as a useful reminder that places are just as important than products.
4. IN TIMES OF UNCERTAINTY – TEST BEFORE YOU INVEST
If the housing market suffers then this typically has a knock-on effect to other parts of the construction sector. We have noticed this year that New Product Development (NPD) enquiries and projects have actually increased in the Buildings, Construction and Home Improvement sectors. Stereotypically, those working in this industry would confess that they often make big investment decision based on ‘gut instinct’ or ‘intuition’.
But at a time when every bit of capital expenditure is key, 2019 finally seemed to be the year where early market research testing came to the fore. We have been asked to undertake NPD projects on both a large scale (covering many iterations of prototypes over a period of time) and a more modest scale (a small number of focus groups with the trade).
At the start of the year we were also asked to undertake independent market research as part of the Due Diligence process of a major acquisition in the field. We're sworn to secrecy about that one for now!
The logic to ‘test before you invest’ has extended to many part of the trade sector. For instance, in the Summer, Supertouch asked us to conduct qualitative testing of a new range of premium workwear ideas they have – seeking to exploit the space currently held by brands such as Snickers, Scruffs and Dickies.
And it’s not just about investment in product innovation. The Marketing Team at Polypipe Building Services asked Eureka! to conduct research into how professionals in commercial drainage specification roles use information and media channels in their jobs. We consulted with architects, engineers, and M&E consultations and that feedback will directly influence a new digital Technical Hub for specifiers in that sector.
Read more here about our approaches to NPD.
5. THE SPIRIT OF GOING OUT IS STILL ALIVE
All this economic doom and gloom clearly hasn’t stopped us going out in 2019 however! The Night Time Industries Association claim that the sector is now the fifth biggest sector with annual revenues of £66bn. Overall, 59% of people in the UK go on a night out at least once a week, up from 54% last year.
On average, consumers spend around £70 per night out, £2.59 more than they were this time last year, according to the quarterly survey of over 2,000 people. Unfortunately, for the on-trade drinks industry, this rise is not necessarily on alcohol spend, as many of these nights out include cinema or other forms of entertainment not involving a drink.
Qualitatively, consumers who like the premium end of the market, have often told us that they are always looking for something “a little bit different”. They want a unique and exciting experience. 48% of respondents in our exclusive drinkers survey this year said that they considered Spirits to now be the most innovative alcoholic drinks category at the moment.
Respondents will of course have been reflecting on the range of flavours, ingredients, packaging, promotions across the spirits category this year. The Diageo Drinks Report 2019 says that while gin has been the shining star of the category other drinks like rum and whisky are fast growing.
So, if our data show 5 in 10 consumers see it as a ‘innovative drink type’ at the moment – can the industry continue to keep up and deliver? We think to do this it’s not just about finding the next ‘pink gin’ pantone colour, it will also be about investing in interesting glassware, local ingredients, packaging, novel tastes – in sum, the whole brand experience.
A final post-script to Guinness who made us giggle on social media this year. Visitors to the Guinness Storehouse can now experience “The Stoutie” a pint of Guinness with your own selfie printed onto the head. A gimmick perhaps but a wonderful example of personalisation and innovation in the sector. Just think of the queues it could create at your local pub though!