In 2015, the average American spent $92 each day, and 5.3 million homes sold. Wage growth — and the accompanying discretionary spending — and the steady boom in the housing market are anticipated to continue along their current trajectory in 2016. The extra earnings and home purchases are also expected to translate into continued success in the furniture industry, which is slated to surpass all other business sectors within the United States economy yet again this year at an estimated $10.6 billion.
An increase in the number of home owners and renters has led to an increase in the demand for furniture. As a result, furniture sellers such as Ashley HomeStore, the U.S. leader in overall sales and retail locations — at 462 —are reaping the benefits. Ashley HomeStore, along with the many smaller component companies in the furniture industry, has contributed to a market that has not only outpaced, but has performed nearly twice as well as the entire economy in overall performance. The rate of growth has averaged between 6 and 7 percent year-over-year since the housing crashed in 2007. Here are a few factors contributing to the success of the furniture industry:
Online furniture shopping: present and future
The increase in demand brought on by the booming housing market has been supplemented by ecommerce or online sales, which Ashley HomeStore and other furniture companies have implemented in their business models to create a sustainable revenue pipeline. Many of those looking for furniture fall into the Millennials demographic, which recently surpassed Baby Boomers as the largest population living and working in the United States. They also represent the biggest generation in the history of the nation.
The fundamental consumer trend among this group of potential buyers focuses on online shopping as opposed to traditional visits to brick-and-mortar retail centers. Retailers who embrace the online platform for buying and selling can expand the shopping experience with their company by offering the convenience of browsing products from their homes. In addition, this allows consumers to instantly compare and contrast their options in order to inform their ultimate decision.
While ecommerce offers convenience and the ability to quickly connect with customers, it still remains an underutilized tool by a majority of sellers. In fact, only 5 percent of revenue within the furniture industry comes from online sales. If more companies began to utilize ecommerce in their business models, then a platform that already significantly outperforms the rest of the marketplace could potentially and very easily achieve record-setting heights in subsequent years.
Whether through brick-and-mortar stores or online, the furniture market has seen two specific product areas emerge as big sellers: bedroom pieces and dining room sets.
Bedroom furniture: mattresses making a comeback
For years, the selling point for mattresses was a large, multi-year product warranty. Recent studies have shown that mattresses, regardless of their construction, will provide benefits to users for between five and seven years. Some children’s beds may last upwards of 10 years, but even that is half of the timeframe originally marketed by warranties.
Similar to running shoes, which athletes replace after a designated number of miles, mattresses now feature advertising on how to make the most of the product and when to move on to the next set. Research suggests that adults need between 7 and 9 hours of restful sleep each night, and once a mattress has too many “miles” on it, it no longer provides the same results. Data from one study showed that new bedding can improve the quality and comfort of one’s sleep by more than 60 percent, while simultaneously reducing back pain and stiffness.
Other factors accounting for the rise in mattress sales include a more competitive market, advancements in technology, and the development of customized bedding. Consumers have more options than ever before when looking for bedroom furniture, and they can search online and in-store for the best match for their demographic and lifestyle.
Dining room furniture: size and function are key
Due to the increase in home buying, more consumers need to furnish their dining rooms and bedrooms. The increase in purchases made by Millennials has further narrowed the trend of buying smaller dining room sets for downsized living spaces. The furniture pieces are also conducive to moving — a selling point for consumers who may not be looking to settle down in one home for an extended period.
As buyers no longer focus primarily on warranties when deciding whether to purchase a new mattress, they closely consider the design and functionality of dining room furniture, as well. One popular design is the transitional, or updated classic, which features elements of both the traditional and contemporary. The pieces allow owners to mix, match, and adapt to any living space.
A versatile choice for many buyers, transitional-style dining furniture can mix with other designs for a look that is unique to the owner. In fact, interior designers suggest focusing on variety in dining room tables in order to create a more relaxed environment for people and their dinner guests.