Statistically Speaking: Furniture Stores Continue to Slowly Lose Retail Presence

May 31, 2021  by HFBusiness Staff in Business Strategy, Industry   

This decade began in the thick of what many refer to as the “Retail Apocalypse,” with a sharp decline of stores happening each year. While the pandemic has produced a surge in furniture purchases, many analysts predict online penetration will increase with no indications that retail store closures will slow. The number of brick-and-mortar retail stores (establishments) for all consumer products peaked for most entities between 1988 and 1991. As bigger corporations evolved, translating to fewer owners and bigger stores — coupled with rapid internet technology advancements — retail began to change and hasn’t looked back. Furniture and home furnishings stores are among the big casualties.

This article picks up from Statistically Speaking’s September 2019 article “Charting the Progress of Survival: Furniture and Home Furnishings Stores.” The heaviest decline in both furniture and home furnishings retail locations occurred between 2005 and 2010, which coincided with the Great Recession. The number of furniture store establishments dropped 12.1% in those five years, alongside a huge 21.7% drop in the number of firms (Graphic A) as smaller independent retailers were hard hit.

Following 2010, the number of furniture store establishments decreased an additional 18.0% over the next 10 years, finishing 2020 with 21,703 stores. The most recent data on firms (ownership) from 2018 show the number of firms recorded a 17.8% decline, down to 12,365, since 2010. While the number of furniture stores has continued to fall for the last 30+ years, home furnishings stores grew steadily until 2005. Economic pressure during the Great Recession, coupled with the rapid rise of electronic shopping, has taken its toll on brick-and-mortar home furnishings stores even more than furniture stores. Between 1990 and 2005, the number of establishments grew 15.1% but dropped by 18.5% down to 28,056 from 2005 to 2010. Over the last decade, the number of home furnishings stores fell another 13.2% to 24,348 (Graphic B).

The decline in the number of home furnishings store firms also began in 2005, decreasing by 19.6% in 2010, followed by an additional loss of 3,170 firms by 2018. The primary signal for the decline of independent furniture stores, with ownership of generally one or more local stores, is when data show the loss of furniture store firms (ownership) falls faster than net growth in store counts. Over less than 20 years, the number of furniture companies with primary operating ownership of one or more stores fell 37.6% and the number of brick-and-mortar stores declined by 21.3%. In 2014 and 2015, furniture store firms were hitting negative growth between 1.1% and 1.4%, respectively, while establishments showed slight increases. However, in 2016, stores started to decline alongside ownership by 1.7%.

Not surprisingly, employee growth began to decline by 2017 – decreasing 0.5% in 2017 and 1.1% in 2019 before the dramatic drop of 12.8% brought on by the pandemic in 2020 (Graphic C).

The pandemic has had a mixed impact among furniture stores, with federal stimulus propping up much of the brickand-mortar industry in the third quarter of last year and beyond. For 2019 through 2020 Q2, the industry had a net decline in stores five out of the six quarters (Graphic D).

The largest decline hit from 2019 Q2 to Q3, marking a net decrease of 255 stores. But with the consumer’s renewed interest in furniture and home furnishings during the pandemic, the third quarter of last year saw a net increase of 538 furniture establishments over the second quarter of 2020 and an increase of 380 stores over the third quarter of 2019. As shown in Graphic E, the pandemic was especially hard for home furnishings stores. Already faced with a steady net decline of store closings each year, last year resulted in a net decrease of 579 home furnishings establishments, preceded by 454 in 2019.

Furniture establishments fared slightly better after overcoming the hit in 2018 of a net decline of 387 stores. In comparison, 2020 only produced a net decrease of 86 furniture establishments. The furniture and home furnishing stores picture comes into focus when compared to other types of retail brick-andmortar stores also selling furniture. While furniture and home furnishings stores have continued to lose establishments, warehouse price clubs/supercenters and pure electronic shopping retailers have maintained positive growth rates. These average annual growth rates in five-year segments since 2000 is shown for select furniture retailers in Graphic F-1.

Other key brick-and-mortar retail stores have also been in decline for decades, feeling the pressure from warehouse price clubs and supercenters, but especially from electronic shopping retailers. Table F-2 shows a select group, with office supplies/ stationary/gift stores and department stores experiencing the largest net declines. Smaller independent furniture stores have felt a majority of the brunt from retail consolidation, but larger chains have also gone by the wayside. The rapid growth of electronic shopping and online retailers throughout the last 20 years has added significantly to the brick-andmortar crisis.

And it seems the pandemic may have further strengthened the relationship between the consumer and the internet. Brick-and-mortar furniture stores celebrated record sales in the third and fourth quarters of last year. And for the first two months of 2021 sales are up 13.1% over 2020 (Graphic G).

The rain cloud that persists is that while consumer spending for furniture has catapulted to 23.8% in January/February over the same two months last year, furniture stores have increased sales but lost market share. The gap between furniture store sales and total consumer spending on furniture has continued to widened. In 2014, furniture store sales of $53 billion represented about 57.5% of total consumer spending on furniture. Last year, that ratio had fallen to 42.5% (Graphic H). The Census Bureau and Department of Commerce reported $60 billion in furniture store sales last year compared to $141 billion total consumer spending on furniture and bedding.

As shown in Graphic I, the annual growth of furniture store sales began to decline in 2019 (-0.2%), followed by a 2.4% decrease in 2020. Meanwhile, consumer spending on furniture has continually shown positive growth every year since the end of the Great Recession and finished 2020 with an annual growth of 7.9%. What remains to be seen for the future of brick-and-mortar furniture stores is whether the momentum of the consumer’s interest in their homes can help furniture stores counteract the internet’s pull and last long enough to keep these stores and other furniture and home furnishings establishments in business.