Market Trends January 2020

Homebuyers Aging
Homebuyers are getting older. The median age of a US home buyer is 47, according to research from Deutsche Bank. In 1981, the median age was 31. Deutsche Bank economist Torsten Slok says that the big change is being driven by affordability, an aging population, higher student debt levels and tighter mortgage lending standards for young people and individuals with lower credit scores. Those factors have all contributed to lower levels of residential mobility. The median age of a homebuyer has not been below 40 since the financial crisis began in 2008. 
 
AI and Big Data Expo North America
Artificial Intelligence (AI) is transforming life at home. Conference keynote speaker Samuel Chang, CVP of LG’s Silicon Valley Lab, told attendees at the Expo that the goal of smart products should be to elevate the quality of life at home and beyond, so users can stay focused on what matters. He noted that smart devices should be easy, intuitive and effortless; they should never be complicated, and they should integrate easily into people’s lives and the technology they already have. One of the cornerstones of AI is learning, which theoretically means that the more someone uses their smart devices, the better they should operate. Devices use the data to learn your preferences and routines and create customized user experiences for you. The most intelligent devices on the market will actually alert people to issues before they turn into full-fledged problems. Some smart products now provide tips and alerts about keeping the product in top operating shape and send alerts when maintenance is needed.
 
Smart Home Connectivity Standards
As the number and type of smart devices proliferates, it becomes more important for manufacturers to figure out how to make it easy for people to simplify their smart life and network all their devices. The Zigbee Alliance is spearheading a smart home working group along with Amazon, Apple and Google, with the goal of developing a royalty-free connectivity standard. There was no mention of the Z-Wave platform, which has an installed base of more than 100 million devices and 2,400 smart home products on the market. Security will be a fundamental design tenet. Reportedly Samsung, Silicon Labs and a host of other industry players are on board. The project aims to make it easier for device manufacturers to build devices compatible with smart home and voice services, including Alexa, Siri, Google’s Assistant and others. The planned protocol will complement existing technologies. Conference organizers said that for the promise of the smart home to be realized, companies large and small must deliver a seamless, secure and ever-reliable experience for consumers.
 
Millennials OK with Holiday Debt
In a recent survey of millennials done by CreditCards.com, three in five respondents said they would be willing to go into debt to finance the holidays. Millennials are the first generation that has been saturated with targeted ads their entire lives. They entered the work force around the time the Great Recession began in 2008, when wages were stagnant and the demand for labor was weak, which led many millennials to take on debt to make everyday payments. In addition, analysts say that millennials are comfortable with debt and they are not as well financially educated as either the generation before them or Gen Z, the generation after them.
 
Worker Shortage Jeopardizes Expansion
In 39 states, there are more jobs available than there are people looking for jobs, according to a Stateline analysis of hiring and employment data from the Bureau of Labor Statistics. North Carolina had the highest jobs opening rate with 5.7% of all jobs unfilled. Missouri, North Dakota and Virginia were close behind, with 5.3%. In mid-2009, there were multiple people vying for jobs in every state. Some states are growing too quickly to keep up; others are hampered by slower population growth and a higher proportion of older residents. States are basically taking two approaches; one is making jobs more attractive by offering higher pay, and better benefits and perks. The other is aimed at creating a more skilled workforce. Tactics include teaching more job skills to students starting in middle school and making kids aware of good jobs available in fields like manufacturing, technology and healthcare and what they will need to do to qualify for them. Many companies are finding ways to retrain their existing work force so they can handle the technological aspects of job that used to be mostly manual or unskilled labor. Some states, including Missouri and North Dakota, are trying to find jobs for ex-prisoners by helping them prepare for the job market and handle interview questions. 
 
Organized Retail Crime an Epidemic
During The Home Depot’s investor’s conference call CEO Craig Menear blamed the opioid epidemic for a surge in shoplifters who have stolen millions in goods from stores and warehouses. THD said the heavy losses impacted profitability for the third quarter. Menear said they feel as if the opioid crisis is to blame, but do not have hard research to support their belief. The National Retail Federation says that retailers lose about $51 billion in profits from shrink annually and more than two-thirds of retailers saw an increase in “organized retail crime activity” in 2019 and dealing with this type of crime presents a serious challenge for the industry. Menear noted that during one bust they participated in there was $16.5 million in goods stolen from multiple retailers in one warehouse location. THD estimated that their goods accounted for about $1.4 million of that total. THD’s SVP Stores, Ann-Marie Campbell, said that THD is an attractive target because they have very strong, marketable brands and high-ticket products. However, if they make it much more difficult for people to steal from them, the thieves will go elsewhere. That’s why they are investing in technology and operational procedures that will “harden” the stores and make them more theft-resistant.
 
Night Owl Remodeling
US retailers remodel thousands of stores each year, a process that can be highly disruptive. Walmart remodels about 500 locations annually. Over the past year, they’ve quietly rolled out SWAT teams, small groups of remodeling specialists who go from store to store in big markets. They work at night and tackle jobs such as building fixtures to display apparel and moving counters so that new floors can be installed. Walmart employs general contractors to do more specialized work such as electrical and plumbing. There are 1,000 SWAT team members now, and Walmart plans to increase the squad to 1,700 by the end of 2020. Both Best Buy and Target already maintain project teams for work like remodels, relocations and store repairs that work the night shift so the changes are less disruptive to customers.
 
Federal Government Testing Online Shopping
A new method for federal agencies to buy office supplies and other goods online is currently being tested. If the government decides to move forward with it, it would give Amazon and other online sellers a foothold in a market worth as much as $50 billion a year. The GSA is expected to contract with privately run “emarketplace platforms” as it calls them, making them available to other federal agencies as an alternative to existing government-run purchasing websites. In addition to Amazon, Walmart and eBay have also shown interest. Meanwhile, government contractors at industrial supply companies are up in arms, saying they will be the big losers if this moves forward. Federal workers can already use government-issued purchase cards on sites, including Amazon, for open market purchases under $10,000.

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