Cover Story: Today’s Furniture Consumer: What’s the New Normal?

November 30, 2022  by HFBusiness Staff in Business Strategy, Industry   

While consumer spending on furniture grew 33% between 2019 and the end of 2021, sales began to slow by mid-2022 as the housing market cooled, furniture demand leveled and inventories swelled. Yet this fall’s mood is buoyed by supply chain improvements, dramatic reductions in transportation costs and the assurance that – for the first time in a couple of years – new products ordered are expected to arrive within a few months.

As retailers express an appetite for fresh new products and producers introduce expansive collections, the burning questions that remain revolve around the furniture consumer. Will the consumer’s new-found love for their homes be enduring? Have they changed their preferences about where they are buying furniture and why? How will the volatile housing market impact furniture purchases? Will the consumer continue to be willing to pay more for furniture? And will furniture continue to enjoy a larger share of consumers’ discretionary spending?

Survey of 1,000 Furniture-Purchasing Households Compares 2019 and 2022 These questions and more were the focus of a comprehensive Home Furnishings Business survey of 1,000 households who have purchased furniture in the last 18 months. As we compare today’s furniture consumer with the pre-pandemic benchmark of the 2019 consumer, some compelling and distinct changes are apparent. Many of the most interesting are highlighted here.

1. TODAY’S FURNITURE CONSUMER IS MORE ASPIRATIONAL. When asked, “What best describes your attitude towards decorating/ home furnishing?” the response, ‘My home furnishings must communicate who I am and reflect a sense of current style’ jumped over 11 points from 34.8% of responses in October 2019 to 46% in September 2022. (Table A)

While style and personal expression soared as a motivator, more practical attitudes toward furniture decreased. For example, those who said home furnishings should be “functional” and that furniture is mainly for “now” decreased from 13% to 11.8%, and those motivated mainly by comfort decreased from 21% in 2019 to 18% in 2022.

INTERNET PROVIDES STYLE INSPIRATION

Today’s more aspirational furniture consumer is getting her inspiration from the Internet. When asked where they find style inspiration, “Internet” is the top source, named by 38%. That’s nearly 20 points higher than the next source of inspiration, HGTV. As a source of inspiration, retail stores are next at 18%, followed by Magazines at 13% and Antiquing at 11%. (Table B)

“The stay-at-home dynamic in the early stages of the pandemic opened peoples’ eyes to what was possible for their homes as they used the web to do research,” observed Peter Keith, a senior research analyst for the furniture and mattress retail sector for investment firm Piper Sandler. “Consumers were able to see a much broader array of styles and items, rather than being limited by in-store assortments. While the initial market share shift toward online buying has now shifted back to the in-store experience, what has remained is that online research is a more integral part of the shopping process,” he said. “Consumers are coming into stores more informed with a vision of what they want for their home, which is helping to drive a higherticket sales and higher conversion rates.” What does a more expressive, aspirational and informed consumer mean to retailers and producers? No doubt, these shoppers have higher expectations for fashion, design and an elevated in-store presentation.

And, since the consumers are operating from a higher level on the hierarchy of needs, furniture merchants should be able to maintain pricing and margins, especially in the upper medium to high-end price points. 2. TODAY’S MALE FURNITURE SHOPPER IS DRAMATICALLY MORE ENGAGED THAN 3 YEARS AGO.

For years, the female consumer has been by far the dominant player when it comes to furniture shopping and home decorating. That dynamic has flipped on its head in the last 3 years. In October of 2019, 58% of respondents reported that the female in their household was the one who most frequently made the decision to purchase furnishings, while 26% said the male did and 16% reported a joint decision. (Table C)

This year, the percentage of households reporting the male as the one making the decision to purchase furniture rose over 20 points to 47%.

That’s a full 10 points higher than those reporting that the female makes the furniture-purchasing decision. Again, 16% report a joint decision. In a related question, respondents were asked who in their household was the first to mention a need to buy furniture. Females dominated in 2019, with 59%, while males were the first to mention buying furniture in 29% of households. This year, males and females pulled even at approximately 43% each. (Table D)

3. FURNITURE IS STANDING TALL AMONG CONSUMER DURABLES AND NON-DURABLES.

In both 2019 and 2020, households were given a list of five possible areas in which they might make a major purchase. These included leisure travel, home computer/laptop, communications/smart phone, furniture and a car. (Table E)

This year, furniture ranked overall as the highest priority for a major purchase. Furniture’s ranking improved from 2019, when cars were at the top of the list. As the number one spending priority, leisure dropped as a first choice for household spending by more than 10 points from 31% to 21% in . Furniture as the first choice for spending went up from 16% in 2019 to over 22% this year. Meanwhile, communications spending as the top priority almost doubled as 16% of respondents cited it as their number one choice for spending.

Leading industry analyst Jerry Epperson, managing director at Mann, Armistead & Epperson Ltd., believes furniture will maintain and even strengthen its clout as a contender for the consumer’s discretionary dollar.

“Over the last two-plus years, consumers have increasingly realized the value of their homes, become more willing to invest in them, and they have learned a lot about all the functionality and styles available in furnishings,” Epperson said. “As we head into the new year, many of the retail inventory imbalances will improve, and retailers are going to be bringing in a lot of fresh new product that will draw consumers back into stores.” While perishable and nondurables will continue to experience some inflation and product availability problems in 2023, furniture pricing in comparison will be stable, and our product availability will be the best in a few years. This dynamic, enhanced by exciting new products and promotions from retailers will put furniture in an advantaged position relative to other goods,” he believes.

4. CATALOG MERCHANTS, HOME IMPROVEMENT STORES AND MASS MERCHANTS GAINED AS DESTINATIONS FOR FURNITURE BUYING COMPARED TO 2019, WHILE REGIONAL FURNITURE CHAINS AND MANUFACTURER-OWNED STORES DECLINED AS DESTINATIONS. When asked, “What type of retailer did you make your most recent purchase,” the biggest gainers were:
• Catalogs of a retailer or manufacturer, up 4 points to nearly 9% of total responses.
• Home improvement stores (Lowes, Home Depot), up 5 points to around 5% of the total responses.
• Mass merchants, up 3 points to over 6% of the total responses. (Table F)

Remaining largely flat compared to 2019 were:
• Independent furniture stores at about 21% of the total.
• National chains also remained flat at 6% of the total.
• Internet/online outlets as a source for furniture stayed about the same over the period at 13%.
• Both interior designers and warehouse clubs stayed even at around 1% of the total. • Department stores made a slight gain to 9%.
Retailers who had the most decline compared to 2019 included:
• Regional furniture chains were down 6 points to 16% of the total.
• Manufacturer-owned stores like Ethan Allen and Ashley Furniture Home Store were down 3 points to 11%.
• “Manufactured by the retailer” stores like Pottery Barn or Crate & Barrell went down a point to 1.5%.
5. CONSUMERS BECAME FAR MORE COMFORTABLE PURCHASING FURNITURE ONLINE, ESPECIALLY AT OMNICHANNEL RETAILERS WITH BOTH BRICK AND MORTAR AND INTERNET SALES VENUES.
When asked “Have you ever purchased furniture online?” affirmative answers grew significantly from 59% in 2019 to 72% in , a 13-point jump. (Table G)

The growth area for online purchases of furniture is clearly omnichannel retailers, or brick & mortar retailers who have both a store and an online selling site – the best of both worlds.

Forty-six percent of consumers reported in that they purchased furniture online from an omnichannel retailer, growing nearly 6 points from 40.5% in 2019. Those buying from manufacturer websites also grew from 22.6% in 2019 to 27% in 2022. (Table H)

The decline in Internet furniture purchases during the period came for online-only retailers. While 37% reported buying from pure ecommerce players in 2019, that number dropped 10 points to 27% reporting that they purchased from a pureplay ecomm dealer in 2022. 6. SECOND HOMES GREW AS A PRIMARY REASON FOR BUYING FURNITURE.

When asked what the main reason for buying furniture was, “second homes” stood out by rising 4 points to 5% of the total. As the trend to remote work “from anywhere” took off during the pandemic, many consumers moved to their vacation/ second home and ended up staying there some or most of the time. While companies have returned to the office full-time, many others have adopted a hybrid model of having their employees work both in the office and at home. (Table I)

The number one reason for purchase in both 2019 and is furniture replacement, although it was down slightly to 26% in . “Desire new furniture” and “Redecorating” were tied at 18% each. Remodeling and recent move were next at 14% and 13%, respectively. Marriage was up 3 points to 5% of the total.

7. COASTAL COTTAGE AND GLOBAL ECLECTIC ARE GROWING AS “DREAM DÉCOR” STYLES.

The rise of second homes as a motivator for purchase could partially explain why “Cottage/Coastal” rose 3 points from 2019 to as the look consumers describe as their “dream style,” to 16.5% citing it as their ideal décor. The other look that grew in popularity as a dream look is “Global/Eclectic,” which was up 4 points to 15.4% of the total calling it dreamy.

Meanwhile, both contemporary/modern and traditional/classic decreased as a dream look. Contemporary fell in the dream category from 24% of the total to 21%, while traditional/ classic fell from 33% to 28%.

8. FURNITURE SHOPPERS’ RATINGS OF AND ENGAGEMENT WITH RETAIL SALESPEOPLE IMPROVED FROM 2019 TO TODAY.

Consumers were given a list of attributes on which to rate the professionalism, knowledge and helpfulness of retail salespeople. In every category, the overall ratings of salespeople improved from 2019 to, including:
• Appreciation for the helpfulness of the salespeople
• Salesperson’s greeting
• Remembering the names of salespeople
• Professionalism of the salespeople
• Their knowledge of furniture design and production
• Their decorating advice
• The salesperson made them feel special and more inclined to return to the store for future purchases.

9. AMONG FURNITURE CATEGORIES, BEDROOM AND DINING HAD THE MOST GROWTH IN PURCHASES FOR RESPONDENTS, WHILE UPHOLSTERED SOFAS AND CHAIRS BOTH DECLINED.

When asked about their most recent furniture purchase, bedroom furniture made the most gains from 2019 to , with about 31% citing bedroom this year compared to 26% in 2019. Youth bedroom and infant bedroom also grew. Youth bedroom grew 3 points to 9.3% of responses, and infant bedroom great about 1.5 points to 3.1%.

Another growth area was home office, increasing 1.5 points to 3% of respondents citing it as their most recent purchase. Compared to 2019, those citing their most recent purchase as an upholstered sofa fell 7 points to 17%, and those citing an entertainment center/armoire fell about 2 points to 1%. (Table J)

10. PURCHASERS REPORTED MAKING FASTER DECISIONS TO BUY FURNITURE COMPARED TO 2019. IN BOTH YEARS, VISITING 3 RETAILERS BEFORE MAKING THEIR DECISION WAS THE MOST POPULAR PRACTICE.

Compared to 2019, furniture shoppers are making faster decisions to buy. The biggest increase over the period was for those saying they made their decision in 1 to 2 weeks, which gained 5 points at over 32% of respondents.

At the same time, those reporting that it took them two weeks to a month to decide went down 2 points to 28%. (Table K) As for how many retailers purchasers shopped before making their most recent home furnishings purchase, that remained largely unchanged over the period. In both 2019 and , the greatest number – about 38% -- reported shopping in 3 stores before buying. (Table L)

Furniture Consumers Keep Looking Homeward Red-hot Housing Market Cools; Poised to Grow Again in 2023

Beginning with the safer-at-home practices early in the 2020 pandemic, consumers have rediscovered their homes and home furnishings, causing the housing industry and residential furniture to be among the stars of the U.S. economy.

In August of 2020, over one million new homes were sold at an annualized rate, the largest number in 18 years. Housing activity continued strong through around spring of 2022, when the ongoing shortage of homes, double-digit housing inflation and rising interest rates sent existing home sales down an estimated 13% in the second half. New single-family homes were down even more at 17% in the same period.

As most forecasters expect a recovery in housing in 2023 (Housing starts are forecast to grow nearly 8% for single-family units and 3.5% for multi-family units), we asked 1,000 furniture-purchasing households if they had recently purchased a home, what kind of home they purchased, how large it was and what furniture they bought to furnish it. If they had been sidelined from buying a home, we asked them why.

Here’s a look at the housing landscape among furniture purchasers: Nearly 60% of Furniture Purchasers Have Recently Bought or are Buying a Home When asked, “During the last 6 months to one year, have you purchased or are you in the process of purchasing a home,” 38% of respondents reported buying a home, and 18% reported they were in the process of buying a home, for a combined total of 56.6%.

On the other side of the coin, 43% said they have not purchased and are not in the process of purchasing a home. What type of homes are being purchased? Sixty-eight percent report buying a house. A combined 24% report buying multi-family housing such as an apartment, townhome or condo. According to the {U.S. Department of Commerce}, multi-family housing starts have been on fire, up significantly in Q1 and Q2 of this year, at 20% and 18% respectively.

During the last 6 months to a year, have you purchased or were you in the process of purchasing a home?

Housing square footage has stayed stable from 2019 to 2022 in most categories. The area of largest growth is in larger houses from 2,500 to 2,999 square feet.

In both 2019 and 2022, 27% of respondents reported their homes are 1,000 to 1,499 square feet, and approximately 20% reported their homes are 2,000 to 2,499 square feet both years. Those reporting their homes are 2,500 to 2,999 square feet went up 5 points during the period, from 6% then to 11% today.

The other area of change during the three years was a negative one. Homes of 3,000-plus square feet went down from 8% of respondents in 2019 to 5% in 2022 . Rising Prices + Interest Rates, Housing Shortage Sideline Home Buyers Especially in the second half of 2022, a number of consumers have left the active market for a home due to a myriad of reasons including the ongoing housing shortage and rising mortgage rates. We asked furniture purchasers, “In recent months, if you have delayed the purchase of a home or made offers on a home but have not had offers accepted, what was the reason you were unable to buy a home as desired?” The top four reasons in order are: 36% The rising prices of homes make them cost prohibitive for my budget 33% Lack of available homes in my area/price range 16% Rising interest/mortgage rates… 12% Unable to compete or have offer accepted during bidding wars over properties…

To those who had been sidelined, when do they anticipate re-entering the market for a home or being about to buy a home?

The greatest number of respondents – 42% -- anticipate re-entering the market for a home in 2023. Another 26% anticipate continuing their home search later in , while 19% expect to re-enter the market in 2024. About 4% say they don’t see the possibility of buying a home in the foreseeable future. Living Room Upholstery, Tables, Motion on Top of Buying Lists for New Movers For those who recently moved into a new home, we asked what kind of furniture they had purchased just before or just after moving.

Here, in order, are the top choices: 30% Sofa, sectional chair
15.5% Living room tables, consoles, shelves
11% Reclining chair/furniture
8.3% Entertainment center
5% Dining/kitchen table/chairs
3.3% Office furniture

As natural disasters, severe temperatures and shrinking waterways become alarmingly more frequent, climate change and environmental issues have become a top concern for corporations, state and federal lawmakers and voters.

But what about furniture shoppers? Do furniture shoppers have environmental and sustainability concerns top of mind, and are they willing to pay somewhat more for products sold by brands and retailers who tell a sustainability story? In the Home Furnishings Business survey of 1,000 households who have purchased furniture in the last 18 months, we asked purchasers what they are concerned about in the environment and their attitudes toward “buying green.”

Areas of concern that rated lower but still of some concern to purchasers include overloading of landfills, hazardous indoor air quality and unfair labor and trade practices.

Are shoppers willing to invest in their concerns? Nearly 86% of all shoppers said they would be willing to pay “moderately more” for a furnishings product made with sustainable, ecologically friendly materials, or materials contributing to healthy indoor air quality.

The willingness to pay moderately more for sustainable furniture items broke down significantly by age. Those 44 and younger were almost unanimous in saying they would be willing to pay more for an ecologically friendly furnishings product: 95% of those aged 25 to 34 were affirmative in paying more, and 94% of those aged 35-44 report they are willing to pay more. Among those aged 45 to 54, 78% said they are willing to pay more, and among those aged 55 to 64, 72% report a willingness to pay more.

In all income ranges, at least 70% report a willingness to pay more. Beginning in the 50K to 75K annual income range, 84% report a willingness to pay more, and beginning at income ranges of at least 100K annual income, 94% to 96% report a willingness to pay more.

The survey asked recent purchasers to rate their concerns about the environment on a scale of 1 to 10, with 1 being the most concerned. These are the top areas of concern, in order:
1. Global warming
2. Deforestation/loss of rainforests
3. Using up natural resources
4. Extinction of species
5. Increases in natural disasters

Overwhelmingly, consumers prefer to buy sustainable furnishings, all things being equal.

All other things being equal, with comparable style, quality and price, a dramatic 88% of shoppers said they would prefer to buy a furniture brand that uses sustainable materials and environmentally friendly business practices. How can brands and merchants best communicate a message of environmental stewardship in their products and business practices?

One key is to use the right terminology. The Home Furnishings Business survey asked furniture shoppers what their preference is for terms used to describe products that are good for the environment.

Their preference for terms in order is:

1. Eco-Friendly
2. Sustainable
3. Environmentally Safe
4. Green

When shopping for furniture, how interested are shoppers if a brand or product has an environmentally friendly story or materials? When we asked purchasers about their level of interest, the answers were all over the board. While the 20% who indicated a high level of interest represented the largest portion, other levels of interest were just under that percentage. Notably, those rating the importance of an environmental story when shopping for furniture as a 1, 2 or 3 in importance represented a combined 43%.

“Apparel and footwear are ahead in offering a lot of messaging around sustainability,” said Peter Keith, a senior research analyst for the furniture and mattress retail sector for investment firm Piper Sandler. “They talk about products made with recycled materials, and products having more durability, so they last longer and create less waste,” he said. “In fact, in recent years the idea of ‘fast fashion’ has really gone away. People don’t want to buy shirts that last only three to six months and create waste. By the same token, consumers are paying up for premium quality, not disposable furniture that wears out in a few years.”

Keith believes furniture is “starting to catch up” in the area of environmental practices, products and messaging. “There’s a ripe environment toward environmental and sustainability storytelling in the furniture and mattress industry,” he said.

Much Ado About Millennials Generation is Massive, but Home Ownership Rate & Wealth Lag Previous Generations

I t’s no wonder that furniture marketers spend lots of time and energy trying to figure out how to reach the Millennial Generation.

Today aged 26 to 41, they are the largest generation in America at over 72 million strong. As trend setters in everything from fashion to culture and from shopping to entertainment, many consider Millennials the most influential generation. That’s not only because of their size. They also have enormous impact on the next-largest generation: their 70-million-plus Baby Boomer parents.

All that said, as furniture retailers consider how to connect with generations in their sales, marketing, merchandising and customer service, two major principles should be considered.

1. Millennials command a lower portion of those who are purchasing from traditional furniture retailers today, compared to the other two major generations.

According to FurnitureCore, LLC., sister company of Home Furnishings Business, Millennials are currently overshadowed in buying furniture from traditional furniture stores by two other generations. As shown on the pie chart, while Millennials accounted for about 30% of all purchases from furniture stores in 2021, Generation X and the Boomers combined for over 70% of purchases. (Gen Z, meanwhile, or those aged 25 and under, did not quite account for 1% of purchases) Generation X, currently aged 42 to 57, are truly the “prime” generation. They’re in their prime earnings years and the life stage for buying furniture and homes. They accounted for over 30% of all furniture store purchases last year. The Baby Boomers, aged 58 to 76, represent a 40% share of furniture-store buying all by themselves, as they command the most wealth and buying power – both for homes and furniture. 2. Millennials’ path to wealth and homeownership has been fraught with pitfalls and false starts.

First it was the Great Recession of 2007- 2010. That’s when a large percentage of Millennials were graduating high school or college, entering a dismal job market that languished for years. When many were finally getting on their feet, the COVID Pandemic struck, throwing the economy – and then the housing market – into chaos and turbulence. Members of the Millennial generation – the oldest of whom are 41 – have less wealth than previous generations, have delayed life milestones like getting married and starting a family and have lived with their parents longer on average. While their dream of home ownership is intense, their outlook is still clouded because of a massive housing shortage, rising home costs over the last couple of years and now rising mortgage rates. In the related article Furniture Consumers Keep Looking Homeward, {see page 20}, we reported findings of a survey of 1,000 households who have purchased furniture in the last 18 months. Many of them reported leaving the active market for a home in recent months.

Thirty-six percent said the rising prices of home made them cost prohibitive, 33% said there are a lack of available homes in their price range or area, 16% cited rising interest/mortgage rates, and 12% said they were unable to compete or have an offer accepted during bidding wars over properties.

The good news is that around 60% anticipate re-entering the market for a home late this year or in 2023. Yes, Millennials are the largest and arguably most influential generation, and should continue to be a focus of furniture marketers. But right now, two other generations are equally important and are more in the “sweet spot” of furniture purchasing.

But we’re not betting against Millennials – the most educated and diverse generation in history. They will land on their feet professionally, economically and as homeowners.