The giftware industry is growing, as is our appetite for self-indulgence.
When it comes to gift-giving, it's the thought that counts, and today, more of us are thinking of ourselves. Consumers are pampering themselves with more gifts and home decorative accessories than ever, a trend that is fueling the giftware industry. In 1999, retail sales reached $55.3 billion, an increase of 9 percent over 1998 ($50.9 billion).
According to a recent report by Unity Marketing, of the 96 percent of adult Americans who purchased gifts in the past year, only one-third agreed with the statement: "I usually only buy gifts and decorative accessories to give to others." Says Pat Danziger, president of Unity Marketing, a research and consulting firm in Stevens, Pennsylvania: "We are seeing consumers returning to the home, craving products to enhance the quality of their own busy, stressed lives. They want products that provide comfort to them, products they don't necessarily need, but ones they `have to have.'"
"The Gifts & Decorative Accessories Report: The Market, The Industry, The Trends 2000," surveyed 371 manufacturers, 199 specialty gift retailers, and 1,017 adult consumers. In 1999, home decorative accessories was the top-selling segment in the giftware industry - which also includes stationery and paper products, collectibles, seasonal decorations, and general gifts - garnering $14.9 billion in retail sales, a 13 percent increase from 1998.
Among the fastest growing categories within the segment were frames (up 97 percent to $1.9 billion); tabletop gifts (up 32 percent to $1.2 billion); vases/urns/pots (up 32 percent to $1 billion); and decorative boxes and tins (up 19 percent to $912 million). Candles, the dominant category in the segment, reached $2.2 billion, a rise of 7 percent from the previous year. Buyers spent an average of $500 per year on one or more gifts.
Driving sales is consumer reaction against an increasingly technology-focused culture, says Danziger. "As their lives become more `virtual' and dependent upon computers and technology, consumers will seek out products, services, and experiences that help ground them in the `real' world." Consumers will increasingly look for items with multi-sensory appeal, such as aromatherapy and scented candles. And, their homes will be decorated with more natural fibers and materials, especially wood, with a movement away from artificial materials, like plastics and chrome metal, according to the report.
Interestingly, both sexes are being affected by the trend. While 98 percent of women made a gift purchase in 1999, 93 percent of men did as well. In 1998, just 56 percent bought a gift or decorative accessory product, either for themselves or for others. Much of this may be the result of the rise in e-commerce which now allows men to browse from home, without ever having to set foot in a Pottery Barn or Bath and Body Works. In fact, the Internet experienced the largest sales gain of all retail distributors - from $6.2 million in 1998 to $2.9 billion in 1999, a growth of 369 percent.
Technology has affected the other areas of the giftware industry as well. The stationery, greeting cards, and paper products category, the second largest segment of the giftware market, reached $13.3 billion in sales for 1999, up 10 percent from 1998. But greeting card sales were flat in 1999, due to an increased use of e-mail greeting cards. Yet social stationery grew 72 percent since 1998, to $797 million. "Social stationery is on the rise as consumers start to swing back to communicating with friends and family the old-fashioned way once again - on paper," says Danziger.
Unity predicts steady growth for the giftware industry through 2005. By then, retail sales are expected to top $78 billion. "The consumer desire for `quality-of-life' enhancing products will not go away," says Danziger. "The trend toward more and greater personal extravagances is destined to rise, as more Americans begin to believe that they deserve such indulgences."
BUILT-TO-ORDER CARS FUEL CONSUMER INTEREST In the near future, custom-ordering your car could become as common as having a Whopper your way. The days of making a simple choice between automatic and standard transmissions, AM/FM radio, or car color are fading in the rearview mirror, as automakers dream up new devices and options for us to choose from. In August, for instance, Ford Motor Company entered into a deal with Qualcomm to bring telephone, entertainment, and Internet services to vehicles. With all of these new gadgets, it's not surprising that the number of consumers who say they'd like to have a new car custom-built is projected to increase.
Seventy percent of consumers had at least considered purchasing a built-to-order (BTO) vehicle in 1999, according to a recent report from J.D. Power and Associates, based in Agoura Hills, California. However, just 7 percent of new-car buyers had actually purchased one. J.D. Power found that 16 percent of consumers say that they would have their next set of wheels made-to-order if they could buy it for about the same price as one from the dealer's lot and have it delivered in eight weeks or less. If the automotive industry can figure out how to get both the price and delivery time right, the percentage of consumers who custom-order their cars could triple over the next year. At that point, J.D. Power predicts that the demographics of the custom-made car consumer will change. Today, 73 percent of consumers who purchase BTO vehicles are male. By 2004, the research company expects that 54 percent of custom-built car buyers will be women.
The custom-order craze is a natural outgrowth of consumerism inspired by the Internet, says Charles Mills, director of e-commerce strategy at J.D. Power's business-to-business analysis and consulting division. "Automotive consumers - perhaps all consumers - are showing greater activism in their desire to design, configure, and order their products the way they want them," he says. "This activism on the product design side mirrors the activism that has been occurring in the sales and service process areas. Consumers are leveraging the aggregation and searching capabilities of the Net to conveniently take action on how they buy, and now, how they build their products."
But Internet-inspired doesn't mean Internet-exclusive. J.D. Power found that just 2 percent of new vehicle purchasers said they'd like to custom-order their car online. No matter how customized the car, consumers still want to kick the tires at a dealership. At least that's true for now. Over the next four years, the Internet will become a far more important stop on the road to a new set of wheels. J.D. Power expects that the total number of vehicles purchased online - of the custom-made and assembly line variety - will increase to 15 percent in 2004, up from an anemic 3 percent today. And even if the deal isn't consummated online, consumers' Web-enabled information searches should influence 22 percent of all domestic new-car sales by 2004, according to Internet analysts at Jupiter Communications in New York City.
For at least one car manufacturer, the future is now. Currently, about 10 percent of General Motors vehicles are BTO says David Barnas, news media relations manager at GM, in Detroit, Michigan. GM is in the process of enhancing order-to-deliver capabilities to meet the needs of the marketplace, says Barnas. While GM vehicles can be custom-ordered today, consumers must wait 50 to 80 days for their vehicle and cannot be given an accurately pinpointed delivery time. GM is developing an internal system that will eliminate these hindrances. "The world is changing from mass marketing products to customer-personalized products," says Barnas. "As people become more attuned to ordering custom vehicles, we feel this trend will grow." It will also spread to products far beyond the showroom floor.
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