“We’ve seen some unprecedented times,” says Tsoncheva, speaking about the market in general. “Specifically in how we understand the home. The home has been completely redefined by COVID. Some of us had to stay at home and work remotely. We also had to become teachers and babysitters. We really had to make the home this central place where we do so many more functions than just live in it. You need to have an office. You need to have an entertainment place. You need to have your gym. You need to have a place to live, of course. We just added so many more functions to the home. It was a huge time for us because everybody was doing some projects. Whether it was just a small refresh or I’m making my office space a little bit more convenient or I’m building a whole new deck.”
With that assessment of the past from a business perspective, it raises some questions about the present and beyond. Yet, now in this moment, what is that consumer telling you?
Tsoncheva notes, “What’s happening is what we call pull forward. So all of these projects that they were thinking of maybe doing in the future, they put it forward and did it earlier during the COVID years. Now, what’s happening is that we’re seeing consumers focusing on smaller projects. A lot of people still work from home. This is still a dynamic. I need to still maintain and make my home my sanctuary, but at the same time, I’ve done the big things. So I’m going to be transitioning to smaller projects. This is a trend that we’re seeing right now.”
The present time still seems a bit uncertain, with macroeconomic factors. Inflation. Consumer confidence. Unemployment. The housing market. How can you possibly separate the signal from the noise?
“It’s a very challenging task,” she says. “And it’s not just for the Home Depot or the home improvement industry or us as insights professionals. Tell me what’s going to happen in three months, six months, a year down the road. It’s very difficult to forecast now, not just from a financial standpoint. But consumer behavior. We thought that consumers were kind of stable when we could predict their behavior before COVID. Now everything has changed. The economy has become outside of COVID, and become a really big factor. You have conflicting signals in terms of inflation, mortgage rates, interest rates, everything is moving up or down. It’s very difficult to update all of these models that we’ve had in the past that were used to certain economic and consumer behavior.”
Speaking of data and analytics models, how does AI come into play now? Has the research aspect changed since the housing marketplace and other economic indicators have also changed so dynamically?
Tsoncheva points out, “We implement machine learning in almost all of our models. We’re using AI. We’re using more innovative methodologies, really tapping into the subconscious with system one but also system two methodologies. To really understand not just what people are telling us, what they are going to do, but what they really feel and think. We’re connecting all of these methodologies to try to predict what’s going to happen. And it’s still extremely hard because it all depends on what’s going to happen with the economy.”
Check out the video for more on Seth Adler’s conversation with Daniella Tsoncheva, as they discuss the outlook for the rest of this year of uncertainty, building the foundation, supporting environmental and social governance initiatives and more.