Finns invest in their homes – also during the coronavirus crisis
A physical store plays a key role in the retail trade of home and living products, both with regard to seeking pre-purchase information and the actual purchase. Digital channels and mobile platforms in particular are increasingly important, with the coronavirus crisis accelerating the development. The place of purchase is often decided on based on price, but the selection of products and quality, among other factors, are also important selection criteria for many. The coronavirus is threatening the most important season of the hardware store sector, the largest sector within the specialty goods trade. An increase in the tax credit for household expenses would quickly help the sector.
A recent report by the Finnish Commerce Federation indicates that Finns are now investing in their homes. Especially during the coronavirus pandemic, with Finns spending more time home and at holiday homes, research-based information about the trading of home and living products is topical.
“A new grill, dining table or curtains can be ordered from China, for example, as online shopping is becoming more commonplace in these product categories as well. One of the biggest competitive advantages of the Finnish commerce sector is expertise of its customer base,” says Jaana Kurjenoja, Chief Economist at the Finnish Commerce Federation.
Mobile commerce is getting stronger
In a comparison of home and living product categories, the buyers of furniture and garden furniture were the most “digitalised”. Already, over one-fifth of the buyers of grills, terrace furniture, beds, sofas or other furniture make their purchases online. One in two of them place the order with a mobile device, i.e. a smart phone or a tablet. Buyers of garden furniture and furniture, in fact, make mobile purchases more actively compared to other home and living product categories.
Obtaining information using mobile devices before the purchase is still far more common than actually purchasing using a mobile device. Most commonly, mobile devices are used for comparing prices and checking the availability of the desired products, and both of these forms of obtaining information can be easily done with a mobile phone.
However, there are major product-specific differences in obtaining information. The buyers of interior design textiles and surface materials, such as wallpapers, paints, hardwood flooring and tiles, for example, are more likely to check tones in advance, and buyers of furniture to check different manufacturers and brands, while buyers of garden products look for information about the right to return or exchange goods.
“The better a shop can provide information to customers through digital channels, the bigger its competitive advantage,” Kurjenoja says.
However, the importance of a physical shop cannot be understated in obtaining information, on the contrary. The role of a shop in obtaining information is particularly emphasised in the purchase of furniture, surface materials and fixtures, such as kitchen cabinets and countertops. Even smoothly functioning digital channels cannot always substitute a physical shop from the customer’s point of view in these product categories.
Price determines the place of purchase – but not for everyone
In almost all home and living product categories, price is the most important selection criteria for the place of purchase for the majority. The buyers of furniture are the most price-driven home product category, but they are also very divided: well over one-half of customers choose the shop based on price above all things, but good customer service and the quality of products are also emphasised among the selection criteria above the average.
A similar division can also be seen with regard to the purchases of interior design textiles, for example, with more than one in five consumers choosing the shop on the basis of the quality of products and prior positive experience.
“It is no wonder that the top positions in lists of the most frequently used shops go to shops competing with low prices, but also specialty shops like Eurokangas, Finlayson, Marimekko and Iittala that have their own products, brands and special expertise,” Kurjenoja states.
In many product categories, the shops most used by consumers are markets with a large selection of goods and department store-like sellers of household goods, with selections covering almost everything from drill bits to kitchenettes.
Location and selection drive the choice of a hardware store, importance of services is increasing
More than 90 per cent of the consumer customers of renovation, construction and surface material product categories make their purchases in physical shops. Even though price is an important criteria for the choice of a hardware shop, too, the good location and selections of the shop are even more important. Compared with other home product categories, prior positive experience and good customer service are also emphasised in hardware store customers’ decision-making. This indicates how important it is for the consumer to get advice and guidance in their purchases.
It is surprising how few customers still choose the place of purchase on the basis of design and installation service provided by the shop; this is only done when purchasing fixtures. The result also indicates that Finland is still largely a do-it-yourself country. The Finnish Hardware Association RASI thinks, however, that advice and installation services will become increasingly important to consumers going forward.
“New virtual tools support the role of design and services offered and make the outcome visible to the customer,” Minna Liuksiala, Managing Director of RASI describes the development of the sector.
The pandemic is threatening all major home renovation and refurbishment projects. “The Finnish Commerce Federation and RASI deem that swiftly increasing the maximum tax credit for household expenses to EUR 5,000 and returning the amount of accepted expenses for work to 60 per cent would quickly help hardware stores, as well as other household services,” Liuksiala says.
Suomi satsaa kotiin study: Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja(at)kauppa.fi
Finnish Hardware Association RASI: Managing Director Minna Liuksiala, RASI, tel. +358 (0)50 383 4465, minna.liuksiala(at)rasi.net
Source: Suomi satsaa kotiin – Kuluttajan ostopolku ja vastuullisuus kodin ja asumisen tuoteryhmissä. Jaana Kurjenoja, Finnish Commerce Federation (member material).
The Finnish Commerce Federation represents commerce – the largest sector of economic life. Commerce employs around 300,000 people in Finland. The Federation has around 7,000 member companies and represents both retail and wholesale commerce in industry policy and labour market lobbying. Kauppa.fi/en