Posted by Richard Robbins on November 03, 2015
If you've been doing home decor stuff over the last couple decades, you might remember a company called Home Interiors and Gifts, a direct sales company focused on craftsy stuff that women love. The former giant player in the home decor industry saw its growth peak in 2003, when it reached $615 million in sales on products that ranged from tea pots to decorations for holidays and special events. Over the years that followed 2003, direct sales and the party environment quickly weakened for companies like Home Interiors and Gifts. The next several years saw decreases in sales for Home Interiors and Gifts, which served as an index of the overall home decor party direct sales market. By 2007, their sales had dropped to less than half of their peak. By 2008, the company declared bankruptcy. Home Interiors and most of its subsidiaries (its Canadian and Mexican affiliates along with one subsidiary, Dormistyle Inc., were excluded from the bankruptcy) were reeling, and the company would never recover.
So what happened to companies like Home Interior and Gifts and others who used the direct sales, home party format to promote their goods? The answer is pretty obvious. eBay happened. Amazon happened. Etsy happened. As these and other forums for selling products, especially hand made home decor products, became popular, the demand for direct sales parties quickly tapered off. It is common that home decor products (as with other MLM models) sold at direct sales parties are overpriced. When there were not abundant alternatives for finding that perfect centerpiece or that quaint rug available through direct sales channels, people were willing to overpay. However, as the general population became progressively accustomed to purchasing online, even niche products, it became harder for people to justify spending 30%,40%, even double the retail price at parties for products similar to ones they could find on one of the retail, auction, or niche shopping websites.
If the once-titanic home party market couldn't survive the move to online purchasing habits, what about retail stores? Are they next?
Many retailers have had to adjust their strategies to compete with online offerings. However, brick-and-mortar retail have generally operated very different from home party networks. Prices at retailers have been kept competitive with other local retail stores. Home decor purchases made at home parties were often influenced by emotional impulses and peer pressure. Retail store purchases, although still generally more expensive than online purchases, are still often considered to be fair.
My wife has come direct sales home parties with a $50 pair of earrings, for example, that were probably worth half that much. Why? Because she felt empathy for the neighbor or friend who threw the party and invited her, and because she couldn't eat the cheesecake and drink the hot chocolate served at the party and feel justified not purchasing something in return. There was a feeling of being "shamed" into spending more money than desired on products that at least filled some kind of jewelry or home decor need.
At some point in the early 2000's, the balance of purchasing influence moved away from the void being filled by home parties and towards the easy, private, less-pressure environment involved with purchasing online.
Retail stores still have their advantages, including satisfying the impulse buy, need-it-now niche as well as fulfilling the demand for the local shopping "experience".