A multibillion-dollar industry, American home furnishings generated in excess of $100 billion in 2013, a significant jump from an estimated $87 billion in 2011. To keep the momentum going, furniture store owners should keep the following trends in mind:
1. Consumers continue to purchase in-store.
While websites such as Wayfair and Ovestock.com offer consumer perks, such as free shipping, eMarketer expects the share of e-commerce sales in home furnishings to remain at 6.6 percent through 2018. The prediction stems from a 2014 PricewaterhouseCoopers survey that found that while consumers used the Internet as a research tool for furniture and housewares purchases, nearly a third still traveled to stores to buy their products. Forty-four percent of buyers surveyed shop and purchase in-store only, demonstrating a continuing need for brick-and-mortar home furniture stores.
2. Asian countries remain a major exporter.
China, the largest exporter of furniture and home goods, also leads the industry in case goods, ranging from dressers to bookshelves. Recently, the country has experienced some change in its number of manufacturers, as a portion of China-based manufacturers have relocated their operations to neighboring countries, including Vietnam and Indonesia. The move gives United States buyers more options in choosing from which Asian manufacturer to acquire goods.
If the idea is to save money, stateside buyers could purchase goods from manufacturers outside of China, thus forcing the country’s makers to reevaluate their pricing structure to stay competitive. Either way, manufacturers moving into other Asian countries keeps the continent at the top of the list of furniture exporters, allowing the United States to benefit from potential cost reductions.
3. On-shoring loses steam.
According to the southeast regional manager of CIT Commercial Services, the movement toward on-shoring has subsided. The idea of on-shoring, a process in which buyers from the states would invest in manufacturing products in North America rather than in China or other foreign countries, surfaced approximately a year ago. However, over the course of 12 months, cost of fuel has declined, making transporting furniture and home goods overseas more affordable. In the same respect, China has reduced labor costs as a result of devaluation. While on-shoring may still be considered by some, the southeast regional manager of CIT Commercial Services suggests further analysis will draw buyers back to traditional methods of purchasing from foreign exporters.
4. Interest rates will and will not impact sales.
Research has shown that interest rate hikes have little impact on consumers shopping for new furniture. Many furniture companies offset potential high rates by giving an interest-free period that spans 12 to 18 months. As a result, consumers are more willing to invest their money on the home furnishings they want, given they have more time to pay off the total cost before their interest-free term expires. Interest rate hikes in mortgages, however, can hinder people from buying new furnishings. Rate increases in the housing market lessens the number of homes sold for a period of time, and a lack of homes sold negatively impacts furniture sales.
5. There is less focus on “Made in America.”
Once a trend that many supported, the “Made in America” movement has trouble succeeding because there are limited items that actually contain materials produced solely in the states. With the exception of select manufacturers producing case goods and wood furniture from domestic products, nearly all furniture contains a piece from another country. For example, sourcing leather and fabric made from a US manufacturer is quite difficult. American furniture manufacturers are more likely to find the materials to create their sofa or chair from makers in China at a lower price point. For this reason, the idea of “Made in America” has faded, and furniture companies now focus their efforts on selling the product itself.
6. Mattress sales continue to grow.
While bedroom and dining room furniture sales indicate growth, mattresses sales are doing even better. In July 2015, mattress sales showed a 4.2 percent increase over the same month the previous year, according to the International Sleep Products Association. Signs point to new technology catering to different lifestyles, primarily active and sports, as being a driving factor. Additionally, furniture companies are now committed to selling the product itself rather than the warranty, and personnel have transitioned to sharing the health benefits of regularly updating to a good mattress.
7. New generations have more buying power.
In 2012 the shopping power of the baby boomer generation was outdone by Gen Xers and millennials, who now hold a majority of the purchasing power in home furnishings and goods. In fact, Gen Xers made up nearly a quarter of buyers in that same year, while millennials purchased more than a third of furniture and bedding in 2014.
Statistics show millennials comprise 31 percent of the population, just edging out the boomers’ 30 percent. Meanwhile, purchasing home furnishings is on the decline for the boomers—there was a 17 percent drop in dollars spent from 2012 to 2014.