The New Home Furnishings Business

Americans’ vision of the homes they live in is changing, as are the roles and functions they want their homes to play in their lives. Home has become a reflection of their personalities and values, which increasingly lean toward a simpler, functional and practical style personalized to support the way they live today.

Better Homes & Gardens magazine recently surveyed 1,600 female homeowners. The study found that 63 percent of Millennial respondents believe that having a home customized to their tastes and needs is a top priority. Sixty percent of this group, the next big generation of home-buying consumers, also said that having a home that is “a reflection of me” is more important to them than to their parents’ generation.

Democratic Design

A whole new range of retailers, many of which traditional furniture stores haven’t viewed as direct competitors, are answering a need for home furnishings customized to younger consumers’ tastes and lifestyles. “Democratic Design” has become the umbrella under which these emerging brands market.

The phrase “democratic design” was originally coined by designer Philippe Starck as “design that provides quality pieces at accessible prices.” IKEA was one of the first brands to whole-heartedly embrace the idea. It expanded the definition to include five key principles: form, function, sustainability, quality and low price. Target has just launched a new line of furnishings under the same “democratic design” banner, called Made By Design.

This idea of “democratic design” is poised to disrupt the traditional home furnishings and furniture market in much the same way “fast fashion” did to the traditional fashion business. Along with its grounding principles of form, function, sustainability, quality and low price, democratic design is also fast and fashionable.

Furniture Retail Disrupted

As of yet, disruption of traditional furniture retail is measurable, but has not yet progressed as rapidly as in other consumer goods categories, such as grocery and fashion. But that is sure to change. At the macro level, consumer expenditures on furniture and home furnishings has grown 42 percent, from $144.6 billion in 2009 to $204.8 billion in 2017. But during that time, furniture and home furnishings stores’ share of those sales has declined, from nearly 59 percent in 2009 to 56.5 percent in 2017. Making up the difference is online retailers’ and other retailers’ share, i.e. general merchandise stores like Target and Walmart, and big box building materials stores like Home Depot which is expanding its furniture selections.

“Democratic Design is poised to disrupt the traditional home furnishings and furniture market in much the same way as ‘fast fashion’ did to the traditional fashion business.”

Traditional furniture stores are also losing share. While sales in furniture stores grew 25.4 percent from 2010 to 2017, the overall share of the combined furniture and home furnishings store sales has declined from 54.8 percent to 53 percent over that time. In other words, stores that sell a broader range of home furnishings, including furniture, housewares and decorative accessories advanced much more rapidly, 34.7 percent.
Given the break-neck pace at which the consumer market is evolving in so many different categories, traditional furniture retailers are in danger of being left behind unless they take steps now to reverse the decline and remain relevant to the needs of today’s home-hungry consumers.

New Industry Study

Furniture World magazine and Unity Marketing worked together to assess the state of furniture retail today and look to its future. In a survey conducted among 350+ furniture retailers and manufacturers, we found that furniture retailers underestimate the fierce competitive pressures they face.

While they widely recognize the threat online furniture retailers represent, with nearly two-thirds (63 percent) identifying e-commerce furniture brands like Wayfair, One Kings Lane and as competitors, they are far less concerned about encroachment of national mass market home furnishings retailers, like IKEA, Pottery Barn, and West Elm (27 percent) and major mass-market retailers that also offer furniture and home furnishings (15 percent), like Target, Walmart, TJ Maxx, and Kohl’s.

Further, Amazon is only viewed as a threat by 40 percent of furniture retailers, a major oversight. Amazon has over 100 million Prime members who pay a premium price for a subscription to the service, and it is now offering two furniture house brand offerings, Rivet and Stone & Beam.

The picture that emerges from this study is that traditional furniture stores believe they have a secure place in the furniture market. But, a growing body of faster, more adaptable competitors are responding to consumers’ need for speed, style and affordable price. Disruptive competitors are nipping at their heels and could well overtake traditional furniture retailers as they scale in the furniture space.

“Our biggest challenge is how to reach clients who have the means to purchase our high-end furniture. They still exist but it is really hard to find the right media that we can afford,” commented a furniture retailer in the survey.

I would add that the problem for this retailer is not just finding the right media to reach their best furniture prospects, but also finding the right message.