Age Shift Impacts Furniture

February 16, 2015  by in Economic News, Industry   

Major shifts are occurring in the populations and purchasing habits of the four prime purchasing age groups for the furniture industry.

The two older groups—ages 45 to 54 and ages 55 to 64—are quickly surpassing the younger generations in size.  Households ages 35 to 44 (Gen X), traditionally the core of the furniture industry, are in sharp decline. While the youngest age group tracked, ages 25 to 34 (Gen Y), has shown little growth since 2000, it does show great potential for the industry. As the second-highest birth rate generation, the numbers will be impressive as the group ages into the furniture buying segment.

Traditionally, furniture industry households have been divided into four age groups: 25 to 34 years, 35 to 44, 45 to 54, and 55 to 64.  Consisting of more than 50 percent of the furniture buying population, the Baby Boomers (currently ages 49 to 68) have begun to exit out of the prime furniture purchasing years. Challenges face the industry as the group ages; especially in the next 5 to 10 years, as household formations slow. 

 

The Rise of the Boomers

Since 2000, the rise in households has rapidly grown 68 percent due the successes of the Baby Boomers. In 2013, people aged 55 to 64, accounted for 26 percent of the furniture buying population. That’s up from 18 percent in 2000. People aged 45 to 54, currently including the younger portion of Baby Boomers, have increased in numbers by 15 percent since 2000.

While holding the greatest share of the furniture buying population in 2000, the Gen Xers, people between 35 and 44, dropped 11 percent to 24 percent in 2013. When compared with the Baby Boomers, Generation Y, those aged 25 to 34, have shown minimal growth since 2000. Gen Y grew 7.5 percent and made up 23 percent of total furniture buying households. 

 

In 2007, the recession was hitting its stride and the older age groups surpassed the younger generations in numbers. Currently totaling 22.8 million households, ages 55 to 64 became the second largest group in 2011—a meager 5 percent lower than ages 45 to 54. As a combined group, predominately made up of Baby Boomers, it represents more than half of the furniture buying population.

Gen X households, which dominated the industry’s record growth in the late 1990s and early 2000s, are in sharp decline. In 2004, this prime family age group fell to second place in the race for the largest age segment, and in 2011 it dropped to third. The youngest group, Gen Y, holds the least number of households in the furniture buying population and has had consistently slow growth since 2000.

 

Spending vs. Age

Although Gen X is declining in numbers, it continues to lead the industry with an average annual expenditure of $527 in 2013, the most recent data available. On the flip side, the Boomers have grown in numbers, but their purchasing is 15.6 percent below Gen X furniture buyers with an average of $456 in annual furniture spending in 2013.

Table C illustrates annual expenditures by age group.

 

10-Year Historic Spending

Since the recession bottomed out in 2009, expenditures in most age groups have been steadily increasing to meet or surpass the average annual furniture purchase of 2002. Only one age group—45 to 54—in 2013, however, has come close to its spending levels from 2005.

The following four charts break down the historical furniture spending daty by age group.

While ages 55 to 64, the older Boomers, have made promising growth in spending since 2009 with an increase of 38 percent, the group spent 16 percent less per household on furniture than Gen Xers. The average spending is still down 14 percent to $456 per household for the Boomers from 2005 when they spend $527 on furniture.

Furniture spending trends by the largest age group — 45 to 54 — are shown in Table E. This group, split between the younger Boomers and the older Gen Xers, spent the lowest amount on furniture per household most recently. This group spent $422 on furniture in 2013.

That amounts represents a 6.8 percent drop from 2002 when the group was spending $453 on furniture and a slight 0.2 percent shy of its 2005 spending level of $423.

While sleeping in numbers, the 35-to-44 group, Gen X, has traditional spent the most per household on furniture. That trend continues, and Gen Xers have shown a 35 percent spending increase above their 2009 spending levels.

In the second quarter of 2013, the average Gen X household spend $527 on home furnishings, as shown in Table F.

The youngest group in among our furniture buyers, Gen Y encompassing those aged 25 to 34, is also the smallest in number. The group still spent on average $420 on furniture per household in 2013.

Gen Y appeared to be the least sensitive than older households in its spending habits during the recession. See Table G.

 

Future of Furniture Buying

Looking ahead into the next seven years, households in the age segment of 55 to 64 will continue to increase at a staggering rate. With an estimated 77 percent from 2000 to 2020, this segment will make up the majority of the furniture buyers.

Ages 25 to 34 are projected to increase 15 percent over the 20-year span, and those between ages 35 to 44—the prime furniture buyers—are expected to fall by 7.5 percent during the same period. The age group of 45 to 54 will have flat growth in 2020.

In 2020, age group 55 to 64 is projected to make up 19 percent of the furniture buying population, while the three younger generations will each account for about 16 percent.