Statistically Speaking: Furniture and Home Furnishings Stores Face Marketing Challenges

June 15, 2023  by HFBusiness Staff in Business Strategy, Industry   

Furniture stores rapidly increased sales beginning in mid 2020 during the pandemic and accelerated quickly during the consumer demand that followed. Since 2019, store sales have grown 23%. That growth, however, came in spurts with 3.1% decrease in 2020, 25.6% increase in 2021 and 1% growth last year. The paradox is that at the same time furniture store sales were growing, their share of total consumer spending on furniture fell at a rapid rate. Other furniture channels charged ahead further widening their gap. Table A shows that in 2022, the 1% increase in furniture store sales produced $78.96 billion, while consumer spending grew 6.3% to $213.45 billion.

Figure 1 details the growth for all products for the key furniture and home furnishings sales channels. Last year sales growth for both furniture and home furnishings stores was near the bottom of the list of other retailers marketing furniture products. However in 2021, the year before, as demand exploded, furniture and home furnishings stores growth was among the highest. At the top of the list in 2022 is e-commerce players with growth of 75.8% between 2019 and 2022 and 10.4% 2021 to 2022 in all products. All other channels except e-commerce fell below double-digit growth in last year.

Home furnishings store sales jumped coming out of the pandemic then flattened in 2022 to less than 1% growth (0.9%) (Table B). Home furnishings stores posted sales of $64.37 billion last year, unable to make a dent in the consumer spending total of $131.35 billion. Figure 2 details the primary home furnishings product categories.

The historical percent annual growth over the last five years 2018 to 2022 for furniture and home furnishings stores compared to consumer spending shows the slow growth of these channels heading into 2020 (Figure 3). Also shown are preliminary estimates for the first quarter of this year discussed in more detail below.

The ups and downs of the quarterly sales for both furniture stores and home furnishings stores are depicted in Table C. Advance March data from the Census Bureau suggests that sales in the first quarter of this year will be be up 2.3% for furniture stores compared to Q1 of 2021 and up 1.5% for home furnishings stores.

Over the last 10 years, the compound annual growth rate shows furniture store sales have grown at an annual rate of 4.7% versus consumer spending increasing at twice the rate at 9.8% annually (Table D).

Home furnishings store sales in the same 10-year period grew at a CAGR rate of 4.4% compared to 7.4% for consumer spending on lamps, floor coverings, window treatments, tabletop and cookware. But much of that growth occurred before 2017 after which e-commerce ramped up rapidly (Table E).

Growth in Stores
The competitive pressure on furniture stores began in earnest just before the start of the Great Recession in 2007. Although regional chains were also hit, mom and pop stores, especially, began closing, and that downward spiral continues for these small independents. Since 2012, 4.6% of furniture stores have closed. In 2021 there were 22,300 furniture stores in the U.S., down from 2007’s peak of 27,600, a difference of 19.4% (Table F).

Furniture stores with multiple locations appeared to stabilized around 2018, and the vast majority have survived. Many have either added locations or additions are planned. Table F below compares the number of corporate firms (in thousands) with the number of stores (establishments) since 2001.

Note that there have been some closing announcements during and following the pandemic. In the second quarter of 2020, Art Van closed all 85 of its stores in Michigan. A few large independents and regional chains announced closings last year, with many of the independents citing retiring family owners as the reason. Independents going out of business in 2022 include N.E. Liebman, Mechanicsburg, PA; Whitley Furniture Galleries, Zebulon, NC; Larrabee’s Furniture, Littleton, CO; Lastick Furniture, Pottstown, PA and Rotman’s, Worcester, MA (announced at the start of this year). Regional chain Weekends Only (eight stores in Missouri and Indiana) also announced it was shutting down.

Home furnishings stores have battled to say open, with 10.3% closing since 2012. And while they tend to be one-store locations, between 2018 and 2022 big chains have either shut down completely, like Pier 1 and Tuesday Morning, or suffered significant store closings, like Bed Bath and Beyond. In 2021 there were 23,100 home furnishings stores, compared to 33,200 at their peak in 2007, a difference of 30.5%.

The decline of the mom and pop independent furniture and home furnishings stores is evident in Table H which shows that the ratio of number of store locations to corporate entities. For furniture stores, the average number of stores per corporate firm up to 1.8 in 2020 (the most current data available). For home furnishings stores that tend to be more independently owned single stores, that ratio is 1.47, not significantly different in almost 20 years.

Employment
As the number of furniture and home furnishings stores closed, so with them went employees. Over the years, the actual average number of employees per store fluctuated more because of economic downturns and upturns than anything else. In the early 2,000s employment tended be a bit higher when furniture stores carried more employees in warehouse and delivery jobs that are now outsourced or no longer needed. Table H shows that especially for furniture stores, employment per store grew to an average of 10.2 employees in the years following the Great Recession before falling during the pandemic. This increase in average employees per store can be attributed to the demise of smaller mom and pop furniture stores who carried fewer employees. In the recovery following 2020, employment grew quickly to a current average of 9.9 employees per furniture store location. Home furnishings stores have taken a similar path with current average employees per store at 9.7. Table J shows the total industry employees since 2002. In terms of total shakeout of stores and employees, furniture store employment fell 3.6% in the four-year period 2018 to 2022 from 228,800 employees to 221,700. At the start of this year, February employment is down .05%, which is typical coming out of the holiday season.

Home furnishings store employment fell 11% from 2018 to 2022 with big hits from store closing, some scattered over years by Pier 1, Bed Bath and Beyond, and Tuesday Morning, to name a few. Home furnishing store employment fell from 267,200 employees in 2018 to 236,800 in 2022. Employment is down 4.6% in February this year, which is also typical of employment seasonality.