The furniture industry has recently witnessed a surge in the sale of premium products across a number of product categories. Defined by Nielsen as those products selling for at least 20 percent more than the average price in a given category, the premium market is experiencing historic growth following a lengthy slump, mirroring changes in the broader global economy. Here’s what you should know about the renewed popularity of high-end furniture.
The luxury furniture market thrived during the late 20th century, with a diverse array of high-end retailers based in nearly every major American city offering premium furnishings at major showrooms across the country. This period of prosperity all but came to a halt during and in the years following the 2008 financial crisis, with no signs of returning to its previous activity. That is, until now.
In a recent survey, Furniture World magazine found that 80 percent of polled industry executives expect purchasing volume within the premium sector to grow in 2017. Their predictions align with recent data from Market Research, which projected that the international luxury furniture market will grow at a compound annual growth rate exceeding 4 percent between 2015 and 2019. In response to this trend, 61 percent of furniture retailers surveyed by Furniture World plan to expand their high-end furniture selections over the next 12 months.
The specific product categories impacted by the increased demand for high-end items reflect larger trends in the furniture industry. This growth extends to individual product categories including the outdoor furniture sector, which is poised to grow at a rate of 3.95 percent per year between 2017 and 2021. It also includes luxury furnishings designed for smaller urban spaces and versatile needs, such as modular kitchen furniture and multifunctional pieces for the living room, bedroom, and office. Additionally, researchers expect the lighting category to grow even faster than other luxury categories in the coming years, projecting a compound annual growth rate of 8.3 percent.
The surging popularity of premium home furnishings stems largely from the improving global economic climate. In a recent research report, Nielsen attributed the sector’s growth to increasing consumer spending and buying power worldwide. This applies to both large purchases such as furniture, as well as smaller purchases in the burgeoning markets for premium personal care items, foods and beverages, beauty products, and more. A Nielsen survey found that exceptional quality and superior performance are the top two most commonly referenced features of premium products, and consumers are now feeling financially secure enough to seek out this heightened value.
The resurgence of the luxury market also has geographic roots. Europe currently leads all other international markets in the sale of luxury home furnishings, but a number of countries in the Asia-Pacific region—including China and India—are also seeing a surge in high-end purchases for the home. The Asia Pacific market, along with Latin America and the Middle East and Africa, are significant drivers of the growing global demand for luxury furniture—in part due to their thriving hospitality sectors. In the coming years, new upscale hotels in key locations like Dubai, United Arab Emirates, and Doha, Qatar, will have a need for the finest luxury pieces.
The growing demand for luxury furniture from the hospitality sector is influencing design trends. While wood has been the most popular building material in recent years, the hospitality sector is expected to make glass one of the fastest-growing materials by 2020. The rapid growth of the high-end hospitality sector is also driving the popularity of luxury lighting.
Environmental and social consciousness
In addition to offering impressive quality, a number of premium products are made by manufacturers committed to responsible sourcing and sustainable design. In many cases sustainability is the core feature on which a company bases a product’s premium price point. And according to research by Nielsen, 42 percent of consumers are willing to pay this premium cost for products containing organic or all-natural ingredients or materials. Some 39 percent of respondents said the same for products made from sustainable or environmentally friendly materials, while 31 percent felt the same for products demonstrating social responsibility.
The environmentally sustainable or socially conscious nature of a product is one of many qualities that may engage a customer’s desire to connect with his or her purchases. As customers seek out premium products for their enhanced quality and, oftentimes, reduced environmental impact, they also seek furnishings that offer unique experiences. More and more, furniture shoppers are basing their purchases on how products make them feel, and the specialized and exclusive feel of premium home furnishings is perhaps one of the sector’s most significant draws. The return of the premium category poses new challenges and opportunities for furniture retailer marketing teams, as they work to sell not only materials and designs, but unique feelings and experiences to shoppers seeking the finest products for their homes.