From Home Furnishing Business
Cover Story: Merchandising in a Pandemic Market
The industry sector believed to be a beneficiary of the COVID-19 pandemic is home furnishings. Forced to stay at home, the consumers time in their home environment increased ten-fold. While the critical “shelter in place” orders and “non-essential retail” designation dampened consumer expenditures for furniture, consumers pent up demand surged back recapturing and surpassing lost sales. What is driving this increased demand for furniture?
The most obvious explanation is increased disposable income as was discussed in last month’s installment of Statistically Speaking in the November/December 2020 issue of Home Furnishings Business and supported in the table to the right. Free from expenditures for outside entertainment, vacations, and sports activities, the consumer directed their attention to their homes. The first step in discussing this new consumer demand is to understand their change in attitude about home furnishings. History has shown that society uses possessions as a way to communicate. Whether success, security or values, the individuals’ surroundings are an important part of their “status”. It was interesting to measure the shift in the consumers attitude toward redecorating and home furnishings as can be seen in Graphic C.
As can be seen from the graphic the importance of home furnishings surged in how important the consumer perceived themselves.
This is where merchandising begins, tapping into the very intangible consumer attitude of communicating the individual’s sense of style and success. Drilling down to the next level of understanding, the consumer was asked of the product purchased what brought the product to their attention. After COVID, the importance of quality, comfort, and functionality came to the forefront.
Moving forward in the buying process from being attracted to what finally motivated the consumer to purchase, we compared purchase motivations after COVID to preCOVID. Interestingly, the reputation of the manufacturer has become more important. In the furniture industry manufacturer' brand has declined over the past 40 years. The remaining brands such as La-Z-Boy and Bassett have survived but have been enhanced by their own retail presence. Brands such as Ekornes and Abbyson have invested in creating a consumer awareness.
During the mandated shut down of “non-essential” retail traditional furniture stores, those that derive 70% of their revenue from furniture and bedding lost market share to e-commerce. We estimate e-commerce gained 5-8% market share points during the pandemic. Graphic F illustrates the rebound of furniture stores but not to the level of consumer expenditures.
As disastrous as the forced loss of revenue was, the retailer’s long-term loss of customers during this shutdown period, Wayfair gained 40,000 new first-time customers and this was only one of the online retailers. Additionally, general merchandisers such as Big Lots, with its just acquired Broyhill Brand, captured significant revenue.
For e-commerce retailers that tout “endless aisles” with unlimited selection as a significant advantage, this is where the impact of MERCHANDISING by the traditional furniture retailer emerges as a potential advantage. Does the consumer want to navigate those endless aisles, or do they want to shop a merchandise line-up curated just for them? How often have you heard “This store has just what I want” on the floor? From our research we believe that is what the consumer is looking for and that is the traditional brick and mortar retailer’s strategic advantage. Consumers have specific ideas of what they want their homes to look like. Those ideas driven by the new generation of current buyers Generation X are moving away from the traditional style of their parents. Graphic G illustrates.
As can be seen from the comparison compared to 2019 consumers moved to embrace the comfort food of decorating indicating cottage casual (20.4%) (can’t read words) (6.42%) as their dream styles, moving away from traditional and contemporary. The opportunity for furniture stores is to compare how the same consumers view their current style.
What influences the consumer as they pursue redecorating? While the actual retail store influences 17% ± of consumers who are redecorating, the Internet remains 2x more influential increasing during the pandemic. Shelter magazines continue to decline in importance.
The consumer wants their furnishings to have a certain look to reflect “how they want their rooms to be”. Most important was comfort. The graphic presents the comparison before and after COVID.