How Can Home Improvement and Furnishings Retailers Work Around Gen Z’s Lack of Homeownership?

In a lengthy report for Forbes, contributor Greg Petro laid out the evidence for a significant shift in demand for certain retail products coming from Gen Z — most notably, those in the home improvement and home furnishings categories.

“An American aspiration for generations since at least the end of World War II, home ownership has become a luxury that most people under the age of 30, Gen Z, can only dream about – if they even do. Evidence is mounting that many in this emerging generation of consumers are content to rent and spend their spare money on themselves – on looking and feeling good and having authentic experiences,” Petro began.

“This trend is a looming challenge for retailers in the home improvement and furnishing industries whose fortunes ebb and flow with real estate cycles. Everyone seems to agree that, for most, shelter has become unaffordable. Given all the circumstances at home and abroad, no one seems to think there will be a turnaround anytime soon,” he added, pivoting to add that sales volumes of existing homes had tumbled by a whopping 40% since 2020 and 2021, the last time the aforementioned retail segments boomed.

Describing the current situation as a definite retrenchment period, and drawing comparisons to the housing market crash of nearly two decades ago in 2008, Petro outlined a few data points supporting the claimed downturn:

• Wayfair has fallen from its “overnight sensation” highs of 2020 to having posted revenue declines in four of five of the past years, with $4.8 billion in losses attached.
• Lowe’s has seen its yearly revenue tumble by 10% over the past four years, while Home Depot has held the line — although its profit margins have fallen by a notable 20%.
• Even IKEA, showing relatively strength, has seen sales growth dip during half of the past six years.

Gen Z Appear Locked Out of Homeownership, At Least For Now: How Can Retailers Serve This Demographic?

Another point of distinction for Petro — while millennials eventually drove something of a turnaround when it came to homeownership, the keys seem farther out of reach for Gen Z, and they’re simply buying less “stuff,” favoring experiences and wellness products.

“That was then. This time is very different. Gen Z will not be rescuing the housing industry anytime soon. For starters, either by choice or necessity, close to half are still living with their parents, according to U.S. Census Bureau data from 2024. The kinds of living-wage jobs their parents were able to get in the 2010s are gone or going, courtesy of AI,” Petro wrote, adding that zoomers were more likely to buy their “nesting stuff” from thrift shops, online resale platforms, or a Habitat for Humanity Re-Store.

One approach? Move like IKEA — per YouGov data supporting its popularity among Gen Z — by focusing on assortment aimed at renters. With boomers now making up fully 40% of first-time home buyers, and the expectation that the vast majority of older Americans plan to leave their estate to their children, this may be at least one short-term option for retailers in the home furnishings and home improvement game.