The home remodeling market is set to explode in coming years, presenting a US$1 trillion opportunity for home retailers by 2024, up from
US$ 714 billion in 2017. But taking advantage of this is not without its challenges. With margins being squeezed by intense competition and ever changing customer demands, home retailers can only grow if they adopt technology to differentiate and add value to the shopping experience.
As a result, many leading home retailers either already offer or are considering a do-it-yourself 3D design solution through their own website, to caters to modern consumers’ DIY research and shopping preferences. However, the investment needed, especially during the onboarding stage, can lead to questions over the return (ROI) of adopting such a solution.
The truth is, a 3D planning solution is far more than just a piece of marketing collateral or online gimmick. It is proven to increase engagement rates and stickiness of the retailer’s web presence, while driving online as well as in-store sales. Additionally, there are many benefits outside of sales that result in financial gain, either through reduced costs or increased revenue. The solution can typically add an estimated 5% growth to annualized revenue, with contributions from factors including:
Accelerated sales process
Today’s home remodeling customers want freedom, flexibility and control over the buying experience. From design, visualization, proposal generation, item selection and purchase, choices at their fingertips are essential to refining designs without encountering delays, issues or additional costs. An online 3D planning solution delivers on these needs 24×7, maximizing every possible opportunity for a sale.
Customers use an average of six touchpoints during their purchase journey, and so an ‘always on’ solution that can engage customers, regardless of device or location, is key. Designing a room online gives users the ability to change products seamlessly through a drag-and-drop interface and refine their selections at speed. The solution also provides accurate live pricing configurations and multiple price lists, with a total estimated project cost on display at all times.
Using the cloud-based solution, consumers can create their own design variations autonomously and benefit from shared access with in-store sales staff. This reduces the number of in-store visits required before sale completion and provides a seamless omnichannel customer experience. Strong omnichannel customer engagement strategies are estimated to yield annual revenue increases of approximately 9.5 percent, with omnichannel customers carrying a 30 percent higher lifetime value than single channel customers.
Reduced cost of sales
A 3D planning solution significantly reduces the overall cost of retail sales. Qualified leads are created faster, store returns reduced and overheads slashed. Automatic updates to the live online catalog significantly reduce the resources needed for range management, too.
By supporting customer autonomy, 3D planning solutions require minimal staff resources and in-store sales consultants spend less time engaging consumers in the early stages of their purchase process. 3D design solutions can also produce high-quality, photo-like renderings that encourage faster decision-making, with customers able to pop in-store with a sales ready design they can discuss with the professionals.
In addition, online product catalogs decrease the number of inventories that need to be maintained in-store. This allows retail outlets to be reimagined as concept stores that carry lower stock levels and occupy a smaller footprint, further reducing the cost of sales.
Cutting down on reverse logistics
Reverse logistics is a significant component of operating costs. For one thing, custom-made items cannot be resold, placing a heavy burden on home retailers – in the US alone, returns cost retailers more than US$ 260 billion in lost sales.
Consumers who have designed their living spaces through a 3D planning solution are far more likely to have engaged with a room, viewed it from different perspectives, rectified any design errors and even shared it socially to gain other opinions. As a result, consumers are far more convinced about their purchases and less likely to return products for replacements or refunds.
Improved customer intimacy
A 3D planning solution generates a rich mine of data that enables home retailers to gain an in-depth understanding of consumer demographics, preferences and behaviors. Retailers can identify the most popular product lines and collections, as well as products commonly purchased together, preferred designs and styles. This helps retailers to better map products to customer needs, maximizing potential revenue.
With crucial buyer insights such as where in the design process customers normally abandon their efforts, home retailers can fine-tune their offerings and improve conversion rates in the process. Retailers can also accurately track the customer journey from initial website visit, through to planner use, project creation and transactions, giving a full picture of that customer’s experience.
Increased customer satisfaction
Customers have more faith in the entire buying process when using a 3D buying solution. They are more invested in it from start to finish, with more control over their project and the design process. A successful home improvement project results in high levels of satisfaction, with 65 percent of homeowners saying they have increased enjoyment in their home. The result is a greater customer satisfaction and advocacy.
Parameters of brand preference, such as net promoter scores or retention rates, also tend to increase when consumers have more control and autonomy over high-value decisions like home improvement. Companies that adopt omnichannel strategies are reported to achieve 91 percent more year-over-year customer retention rates compared to those that do not.
A solution worth the investment
Home retailers looking to profit from the explosive growth of the home remodeling market must adopt the right technology to continue adding value to the home shopping experience. A 3D planning solution will deliver ROI through a combination of reduced operating costs and increased revenue – the sum of aggregated marginal gains from across all areas of the home retail business. In an industry typically operating on single digit profit margins, this can have a significant overall impact on the bottom line.