Making the Connection Between HGTV and Downtown Revitalization
A convergence of renewed interest in urban downtowns, attractive retail rents, and the popularity of do-it-yourself home improvement and interior decorating could result in downtown being tomorrow's hot "furniture row," writes Michael Stumpf.
Give HGTV some credit. They did not invent the home improvement show, but they have built it into an enormously popular entertainment venue, reaching 89 million households and capturing over 800,000 nightly prime time viewers. It has been called one of the most widely copied formats on the television landscape, giving rise to such shows as Trading Spaces and Extreme Makeover on other channels.
HGTV’s goal is “to provide ideas, information, and inspiration” for decorating and home improvement. And its viewers have been inspired. Between 1995 and 2005, sales of furniture have grown by 75%, outstripping the 67% rate of overall retail sales. Sales of home furnishings – items from carpets and linens to lamps and kitchenware – have grown by 97%. People are spending more time at home and spending more to decorate their homes.
Home furnishings is one of only a few retail categories not dominated by a relatively small number of firms, and also exhibiting growth in overall store counts. The fifty largest home furnishings retailers capture 29.3% of all sales in the category. While this may seem like a lot, in 14 of 24 categories, just eight retail firms capture more than 30% of all sales. At the same time, home furnishings stores had the fifth-highest change in store counts from 1997 to 2002, adding about 300 new stores per year.
So what does all of this have to do with downtown revitalization? Downtowns have certainly reaped some of the benefits of these trends. In places as diverse as Appleton, Wisconsin and Idaho Springs, Colorado, home furnishings and related businesses line the downtown main street, where shoppers may find home décor, tableware, ornate staircases, art, custom kitchens, interior design services, and more. In the retail industry, new shopping centers adopting this leasing strategy – placing shops with a specific targeted customer next to each other – are known as lifestyle centers. By understanding the strengths of these centers and the motivations of lifestyle shoppers, cities may help to create a competitive advantage for their business districts.
The typical HGTV viewer is between 35 and 64 years old. Seventy percent of them are women. These demographics parallel those of the typical lifestyle consumer. On average, these consumers shop more often, visit more stores than average during their shopping trips, and spend more than the typical shopper. Best of all for downtowns, a significant number of these consumers do not like visiting malls. They value the experience they get in shopping unique venues. For this same reason, online sales have not had much impact on in-store home furnishings sales.
Downtowns can cater to these preferences by creating an attractive environment and providing both convenience and safety. It is definitely an upscale market and appearances should reflect that. Quality dining options can help to extend the shopping trip. Entertainment should be geared to adults. Informational and “hands-on” interior design, art, cooking, and related workshops can be an ideal compliment to the sidewalk sales, craft fairs, and other community events often held in downtowns.
Most people will recognize names such as Pottery Barn, Crate & Barrel, and Restoration Hardware. Chains like these make up the bulk of all home furnishings stores. While they will locate in larger and distinctive downtowns and neighborhood business districts, their usual choice is a mall or lifestyle center. The more likely candidate for a downtown location is an independent retailer or small regional chain.
About a quarter of all home furnishings stores are either sole proprietorships or partnerships. Averaging about $350,000 in annual sales, sole proprietorships most likely resemble a store which would be found in the downtown of a small- or medium-sized city. Two-thirds of these stores earn a profit, averaging 13.1% of sales. While the cost of goods sold is the largest expense they may have, these stores are most sensitive to lease costs. Rent consumes an average of 28.6% of potential profits, the seventh-highest percentage of any industry.
The lower rents usually found in central business districts are a strong incentive for home furnishings businesses to choose a downtown location. Knowing this sensitivity, cities can establish marketing campaigns and target incentive programs to attract home furnishings retailers by addressing this key cost sector. Retail incubators, rent reduction programs, and renovation loan programs are some possible tools for cities to consider.
Trends change. Will the slowdown in residential real estate impact the industry? Recent home buyers spend more than anyone – over $3,000 – on home related purchases within the first year in a new home. Or will higher interest rates cause people to spend more to remodel and expand their existing homes? Bob Vila has been on television for over two decades, Martha Stewart recently signed a deal to put her merchandise in Macy’s, and Ty Pennington will be marketing products for Sears. For now, it appears that home furnishings will continue to be one of the hottest prospects for downtowns.
Michael Stumpf, AICP, CEcD, is a Senior Community Planner / Project Manager with R.A. Smith & Associates, Inc., based in Brookfield, Wisconsin.
(http://www.rasmith.com)
© Michael Stumpf 2006. Cyburbia retains compilation copyright for this web site.
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Well, for center cities, I attribute a good deal of the increased interest to the tv shows Friends, mostly, and Seinfeld some. At the National Trust luncheon last year featuring HGTV--the Nat. Trust for Historic Preservation has a cause marketing sponsorship relationship with them--one of the people in the audience raised the point that the programming too often promotes new stuff, and not preservation. I thought she was pretty gutsy for saying so.
This is a very intresting observation... and analysis. And if the downtown is suffering, which it must be to have the whole process called 'revitalization' then it's most likely a great thing. Unfortunately, it's not in keeping with current trends for upscale shops and such, but it would be nice to see these downtowns also incorporate some everyday needs type shops - grocery stores, dry cleaners, shoe repair, post office... yes, like the main streets of yesteryear.
also - i'm glad you mentioned the real estate market, because i do believe that is what's driving much of this renovation hysteria. housing prices where i live have, on average, increased $300,000 since 2000... which is just about the time Trading Spaces started popping up every 20 seconds on TLC. real estate will continue to shrink, homes will stay on the market longer, prices will fall... spec buyers will suffer (and with them all of the 'flip that house' shows, ha!)... i believe this will change the face of furniture sales & renovation. martha & bob have been at it for a long time, you're right... but for many years those were just shows/magazines you would read (like architectural digest) to look at the pretty pictures... for the past 10 years it's been something folks have had the capital (through re-fi's on their rapidly increasing home values) to actually act on. but we will see in the near future what will happen when it becomes apparent that the jump in home prices was just like the jump in the nasdaq in 99.
What will happen, well, the cycle will repeat itself. It will bust, may it be a hard or soft landing we don't know. It will then stagnant and then eventually gravitate towards expansion and boom again.
Great article! I am glad to see such an outstanding effort as the debut for Cyburbia's "Voices."