Translating “FIRE-READY-AIM” to what to do will require “STRATEGY-TACTICAL PLANS-EXECUTE.” The first part of strategy is to address the unique trends after the pandemic, specifically: Industry Trends • The GENERATIONAL TRANSITION from the Baby Boomers to Generation X to Millennials (See our feature story from the Nov/Dec 2023 issue.) • NEW COMPETITION from new distribution channels that offer a different retail experience attracting the incoming generations (See the feature story in this issue.) • CHANGING STYLE PREFERENCE necessitating a balancing of both the retailer and manufacturer merchandising assortment (See our feature story from the Jan/Feb 2024 issue.) • The CHANGING BUSINESS MODEL from independent furniture retailer to direct to consumer and everything in between; What will define success in the next decade? What is Your Specific Strategy for Each? It is not a time to base your strategy on qualitative facts (opinions), but quantitative facts (data). Unfortunately, our industry has been oriented to past facts – what worked before. It is not the time to roll the dice. Watch for the incoming.
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It is difficult to watch as incoming manufacturers’ orders significantly fluctuate month-to-month impacting the ability to forecast production six months out. Exacerbating this is the long standing practice that retailers can cancel orders with little recourse. This, added to the manufacturers concern about the recent bankruptcies of industry icons such as RoomPlace and Ruby Gordon, creates a sense of something needs to be done. Likewise, retailers weekly see the very real downward trend of consumer traffic to the stores – down 14% 2019 – 2023. While revenue for the same period is up 10% (top 50% quartile), with net income remaining in the upper single digits due to increase in average unit prices and the impact of volume variances, it is still troubling.
In the eighties, management gurus led by Tom Peters, as documented by his book Search of Excellence, stresses a strategy with a “bias for action,” a preference for doing something, anything, rather than sending a question through cycles of analysis and committee reports. The results were good companies on the dust heaps of history. Our industry has many examples starting with manufacturers: Broyhill, Lane, furniture brands and continuing with retailers: Levitz, Wickes and more recently Klaussner, Art Van, Mitchell Gold and more.
The driving factor of this transition is the consumer and their desire for a different “RETAIL EXPERIENCE.” That is the challenge for the retailer. What is “retail experience?” In the past decade traditional furniture retailers have pursued a strategy of price reductions enhanced with attractive financing. While price is important, according to Home Furnishings Business’ sister company FurnitureCore’s most recent consumer survey, it is number three and declining (16.81% - 14.48%) in the consumer ranking of motivators. Table A compares pre-pandemic (2019) to postpandemic (2023). The rankings are especially different when we consider the emerging generations as shown in Figure 1. What is more important – QUALITY, MANUFACTURER’S REPUTATION or DESIGN (style)?
While these motivators are not the retail experience per se, they are what is expected as part of the experience. Where does the traditional furniture retailer stand on these motivators? With the first— QUALITY— there is a challenge. Quality has declined in the past two decades. The industry can blame the increase in imports, but it is the industry that designs and inspects the quality. The industry can blame the margin demands of the retailer and they, in turn, blame the consumer for price resistance. Nevertheless the consumer price indexes (CPIs) have declined for years compared to other consumer products. Only with the pandemic did we get a bump up. Graphic 2 provides the statistics.
This price increase has resulted in better margin for retailers that created a volume variance in their financials and a better bottom line. Financial Snapshot is shown below.
Unfortunately, this impact has not “trickled down” to the manufacturers. However this will change. This price increase has not impacted quality. However, the consumer will begin to demand change. It is not a fad that the emerging “vintage furniture flippers” are taking donated furniture from outlets such as Habitat’s RESTORE and providing quality to the emerging generation. It is ironic that the generation (Baby Boomers/Silent Generation) that appreciated quality and brand are recycling their furniture to a younger generation (Millennials) that embrace sustainability and are beginning to appreciate quality and brand.
At the retail level, the industry has lost the quality words that were used by retail sales associates such as “eight-way hand tied springs,” 12- step finish, great cherry wood, and so forth. In FurnitureCore’s, ongoing consumer survey only 30% of furniture purchasers knew what an eight-way hand tied spring meant, down from 65% two decades ago.
What about MANUFACTURER’S REPUTATION (brand)? The industry has lost the iconic brands of Broyhill, Lane, and Thomasville while others have been rescued by companies such as Century and Stickley. Why have brands disappeared? Simple. The lack of advertising to the consumer via shelter magazines. An immediate response is, What about digital? The furniture product needs more than a moment on the screen with a low-res image for a consumer to appreciate the quality/design and brand commitment. And finally, DESIGN (style). What the consumer wants. What they find when they visit the store. It is difficult for traditional furniture retailers to move away from the style of their old customers to the new customers that are becoming their prime target audience. Graphic 3 provides the top style preference from FurnitureCore’s consumer research.
The demand for a retail experience catering to consumers seeking a particular style has led to the emergence of new distribution channels. These channels target specific customer segments defined both demographically and psychologically. We refer to these channels as RETAIL VERTICALS, encompassing both manufacturing-based entities such as Arhaus and La-Z-Boy, as well as retail-focused companies such as Pottery Barn or RH. The key differentiator is their control over product offerings.
What else is included in the retail experience? When surveyed, consumers who had purchased furniture within the past 12 months were asked what was important to them in the retail experience, the answer was “everything.” Shown in Graphic 4 is the range of importance by generation (the range from 1-5 with 5 being the most important).
As can be seen, advertising becomes increasingly important with younger consumers. Likewise, the younger the consumer the more important financing options become. The older the consumer the more important value becomes. Likewise, the older the consumer the more important reputation becomes. Service is more important to older consumers, and finally the older the consumer, the more important the interior of the store becomes. There is a significant deviation in demographics between markets. The challenge of the retailer is to tailor the retail experience to the demographics of their market footprint by generation as shown in Figure 2.
The consumer has a choice of distribution channels in which to purchase their furniture. Because of the infrequency of furniture purchases, the choice is influenced by their past experiences, word of mouth or advertising. Based upon current research, the first step in the purchase process (52.5%). The consumer conducts Internet research and then goes to the store to see what is available (23.2%). Obviously, the path to purchase differs for each consumer. Additionally, there are influences along the way. Table C breaks down the process by generation.
Once the consumer has completed the research process, they start the shopping process. Currently that process is fast, with the majority taking less than two weeks. Gone are the days when decorating was like savoring a fine wine. The time -starved consumer wants to get it done. Table D presents the statistics.
Graphic 5 documents the shopping process from the short list to the final purchase. How did each distribution channel fare in the competition for the consumer’s furniture spend? Graphic 5 presents the composite of specific retailers across the nation assigned to distribution channels and shows how each distribution channel compared. Let’s discuss each of the steps in the process and how the various distribution channels performed INDIVIDUALLY.
Did Not Consider First, BRAND AWARENESS (considered). Brand awareness is achieved over the long term from customer experiences, word of mouth and consistent advertising. Graphic 6 compares each of the distribution channels.
The first observation is how aware the consumer is that furniture can be purchased at mass merchants (home improvement/value retailers/warehouse clubs). With. 80% of consumers using the Internet for research during the shopping process, it was only a matter of time before they started buying online. The emerging RETAIL VERTICALS whether manufacturing-based (manufacturing verticals) or retailbased (lifestyle/style verticals) are distinguish themselves by controlling their merchandising assortment and focusing on a narrow demographic segment. From the graphic it appears they have less brand awareness. However, when measured against their consumer target, the brand awareness improves to the 60-70% range. In terms of awareness, traditional furniture channels perform evenly, with independents holding a slight disadvantage.
Considered Not Shopped Moving to the LOYALTY or EFFECTIVENESS of CURRENT ADVERTISING of those that CONSIDERED BUT NOT SHOPPED we begin to see the competitive advantage emerge.
Shopped not bought/shopped and bought The next step in the process is to ENGAGE AND PURCHASE. It now becomes a measure of the effectiveness of SALES MANAGEMENT and the appeal of the MERCHANDISE ASSORTMENT. Graphic 7 presents the comparison by distribution channel. In summary, the alternative channels are more effective in achieving the sales. However, they are attracting only 28.8% of the purchase share as indicated in Graphic 8. In today’s furniture industry, the traditional furniture retailer and the manufacturers that support them are faced with two competitive threats. The normal competition between other independent retailers and regional chains and the new distribution channels focused on furniture (retail verticals) and the general merchandise retailers trying to capture a share of the furniture market (Graphic 9). A retailer must understand their performance in attracting consumers within their distribution channel as well as their performance in the market against other distribution channels.
FurnitureCore, the business intelligence arm of Home Furnishing Business, continuously conducts national surveys to measure the effectiveness of the individual retailer against its direct competitors as well as its secondary competitors from other distribution channels.
How did each distribution channel fare? First, how did they judge each channel by the experience factors listed earlier? All were important, but what channel received the most #1s? From the ongoing survey of consumer purchasers in 2023, Figure 3 shows the findings.
The traditional channels led by regional chains maintain the consumers preference with a third of all furniture purchasers ranking them number one in seven of the eleven factors. However, the RETAIL VERTICALS, which include manufacturers that have established their own retail presence, pose significant competition. Their commitment to continuously updating their physical presentation, including both the building exterior and interior, along with visual displays, greatly enhances the overall retail experience. Moreover, their small store footprint enables them to have multiple stores closer to the consumer compared to the larger destination stores of regional chains.
These consumer perceptions contribute to the consumer decision as they move through the purchase process.
[115 Pages Report] Global Home Furnishings Market report is a comprehensive analysis of the industry, market, and key players. The report has covered the market by demand and supply-side by segments. Home Furnishings Market is an invaluable resource for those looking to gain a competitive edge in a rapidly-evolving industry. The report also enhances the decision-making process by providing in-depth analysis of the market’s current trends, opportunities, and challenges. It also provides an extensive analysis of the market’s past performance, industry dynamics, and valuable forecasts for the future.
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The Home Furnishings Market Research by Companies covered (CAGR 2023 - 2031).
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Description of the Home Furnishings Market 2023-2031:
Home Furnishing refers to anything that is used to furnish a home, including both furniture and things used to decorate the home and make it more hospitable. Home Furnishing refers to anything that is used to furnish a home, including both furniture and things used to decorate the home and make it more hospitable. The market can be segmented into several broad groups: Home Furniture, Home Textile, Wall Decor and Others. Home Furniture is the biggest market share while Wall Décor is the fastest growing sector in recent years. Market Analysis and Insights: Global Home Furnishings Market The global Home Furnishings market size is projected to reach USD 1149970 million by 2026, from USD 853240 million in 2020, at a CAGR of 5.1% during 2021-2026. Global Home Furnishings Scope and Segment The global Home Furnishings market is segmented by company, region (country), by Type, and by Application. Players, stakeholders, and other participants in the global Home Furnishings market will be able to gain the upper hand as they use the report as a powerful resource. The segmental analysis focuses on revenue and forecast by region (country), by Type, and by Application for the period 2015-2026. The major regions covered in the report are North America, Europe, Asia-Pacific, South America, Middle East & Africa, etc. The report has specifically covered major countries including U.S., Canada, Germany, France, U.K., Italy, Russia, China, Japan, South Korea, India, Australia, Taiwan, Indonesia, Thailand, Malaysia, Philippines, Vietnam, Mexico, Brazil, Turkey, Saudi Arabia, U.A.E, etc. It includes revenue and volume analysis of each region and their respective countries for the forecast years. It also contains country-wise volume and revenue from the year 2015 to 2020. Additionally, it provides the reader with accurate data on volume sales according to the consumption for the same years.
Market Segmentation
We have studied the Home Furnishings Market in 360 degrees via. Both primary & secondary research methodologies. This helped us in building an understanding of the current market dynamics, supply-demand gap, pricing trends, product preferences, consumer patterns & so on. The findings were further validated through primary research with industry experts & opinion leaders across countries. The data is further compiled & validated through various market estimation & data validation methodologies. Further, we also have our in-house data forecasting model to predict market growth up to 2031.
The report contains qualitative and quantitative research on the Home Furnishings market, as well as detailed insights and development strategies employed by the leading competitors. The report also provides an in-depth analysis of the market's main competitors, as well as information on their competitiveness. The research also identifies and analyses important business strategies used by these main market players, such as mergers and acquisitions (M&A), affiliations, collaborations, and contracts.
Application list
Types list
In terms of Region, The Home Furnishings industry Players available by Region are:
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This report will prove useful to leading firms striving for new revenue pockets if they wish to better understand the industry and its underlying dynamics. It will be useful for companies that would like to expand into different industries or to expand their existing operations in a new region.
Key Profits for Industry Members and Stakeholders
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Detailed TOC of Global Home Furnishings Market Professional Industry Research Report (2022-2028) 1 Introduction to Research & Analysis Reports
1.1 Home Furnishings Market Definition 1.2 Market Segments 1.2.1 Market by Type 1.2.2 Market by Application 1.3 Global Home Furnishings Market Overview 1.4 Features & Benefits of This Report 1.5 Methodology & Sources of Information 1.5.1 Research Methodology 1.5.2 Research Process 1.5.3 Base Year 1.5.4 Report Assumptions & Caveats
2 Global Home Furnishings Overall Market Size2.1 Global Home Furnishings Market Size: 2021 VS 2031 2.2 Global Home Furnishings Revenue, Prospects & Forecasts: 2017-2031 2.3 Global Home Furnishings Sales: 2017-2031
3 Company Landscape3.1 Top Home Furnishings Players in Global Market 3.2 Top Global Home Furnishings Companies Ranked by Revenue 3.3 Global Home Furnishings Revenue by Companies 3.4 Global Home Furnishings Sales by Companies 3.5 Global Home Furnishings Price by Manufacturer (2017-2023) 3.6 Top 3 and Top 5 Home Furnishings Companies in Global Market, by Revenue in 2021 3.7 Global Manufacturers Home Furnishings Product Type 3.8 Tier 1, Tier 2 and Tier 3 Home Furnishings Players in Global Market 4 Sights by Product4.1 Overview 4.2 By Type - Global Home Furnishings Revenue & Forecasts 4.3 By Type - Global Home Furnishings Sales & Forecasts 4.4 By Type - Global Home Furnishings Price (Manufacturers Selling Prices), 2017-2031 5 Sights By Application
6 Sights by Region 6.1 By Region - Global Home Furnishings Market Size, 2021 & 2031 6.2 By Region - Global Home Furnishings Revenue & Forecasts 6.3 By Region - Global Home Furnishings Sales & Forecasts 6.4 North America 6.5 Europe
6.6 Asia 6.7 South America 6.8 Middle East & Africa 7 Manufacturers & Brands Profiles 8 Global Home Furnishings Production Capacities, Analysis
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