Market Trends March 2017
LABOR FORCE PARTICIPATION DROPS
A lower percentage of the population participates in the labor force today compared to a decade ago, according to an analysis by Barron’s. Looking at the civilian population ages 16 to 64, ten years ago, in January 2007, 75.7% of them were in the labor force, which means they were actively employed or looking for a job. By January 2017 the participation rate of 16 to 64 year olds had fallen to 73.2%. If the participation rate had remained the same, there would be 164.8 million people in the labor force today rather than the current 159.7 million, a difference of 5.1 million. That’s one reason why jobs are now harder to fill.
WHAT HOMEBUYERS WANT
Homebuyers today want large, open floor plans, something that few existing homes on the market provide, according to a survey from the National Association of Home Builders (NAHB). While more than half (51%) of buyers want properties larger than 2,000 square feet, just 41% of existing homes meet that criteria, compared to 70% of new single-family homes. The survey also found that 44% of buyers want more than two bathrooms, something just 31% of existing homes have, but 68% of new properties offer. In addition, 38% of buyers want partially open kitchen-to-family room transitions; only 30% of builders offer that option. Most builders (54%) design completely open plans linking the kitchen and family room; only 32% of buyers want a totally open plan.
AN END TO HOME PHONES?
Amazon Echo and Google Home are both exploring technology that will make it possible for people to make and receive phone calls through their home hubs. Amazon Echo could use a voice-over-internet protocol technology or partner with Microsoft to use Skype; Microsoft and Amazon already have a strong partnership. Google already has internet connected calling tools, Google Voice and Google Fiber. Technology analysts say that one of these home assistants could easily soon replace the home phone. Analysts estimate about 24 million home assistants will be sold this year.
Microsoft’s HoloLens technology allows users to see holograms, which are composed entirely of light, in the physical world around them. Global Construction says that mixed-reality technology has several implications for construction. By using mixed reality 3D models, people can walk around and explore the design in real 3D without needing an expert to guide them. With mixed reality, the user controls the “mix” and adjusts it according to task requirements. The ability to share 3D holograms with remote participants makes communication and collaboration easier. Almost every construction project is unique, site-specific and labor intensive; mixed reality allows construction teams to create the project as it will be built in the actual physical environment, allowing people to “walk” through their project, identifying and solving potential problems before actual construction begins.
SOME PEOPLE HATE SHOPPING
One-third of 6,000 consumers surveyed by Capgemini Consulting would rather clean dishes than visit a retail store. The report noted that consumers now expect the retail store to replicate what they experience online, from expecting goods to be in stock to being able to choose from multiple delivery options. A Tampa technology firm, Mad Mobile, has developed a technology called Concierge that gives sales associates instant access to product and customer data. Associates know the customer’s style preferences, what they’ve bought in the past, what’s in stock at their own store and what’s available at other stores. Associates can alert customers about new products they might like and set them aside or have them delivered. Books-A-Million, with 260 stores in 32 states, was an early adopter of the technology. The system is also used by Talbots.
As omnichannel retailing continues to mature, retailers’ attention has shifted to execution and profitability, according to CEO Viewpoint 2017 from JDA Software Group and PwC. Execution continues to lag in areas of order fulfillment. Profitability is also still a challenge, with only 10% of companies able to make a profit while fulfilling omnichannel demand. Similarly, only 12% of CEOs surveyed, down from 19% in 2014, say their company provides a seamless shopping experience across channels. These retailers are finding their omnichannel offerings to be too complex or expensive and are choosing to scale back, the study reported.
CEOs are increasing their investment in buy online, pick up in-store (BOPIS), with 51% of survey respondents saying they offer or plan to offer BOPIS in the next 12 months – up from 47% in 2016. BOPIS has picked up steam in the past year with 48% of retail CEOs investing in this service or planning to in the next 12 months.
CEOs are decreasing investments in fulfillment options that are becoming costlier and less profitable. These include same day delivery (offered by 33%, down from 43% in 2016), and providing specific delivery time slots (offered by 27% vs. 48% in 2016). The rising costs of order fulfillment are also pushing executives to make changes. In the next 12 months, 57% plan to increase charges for online orders, 62% plan to increase minimum order thresholds for free standard home delivery and 55% plan to raise the minimum order value for BOPIS.
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