January 27,
2024 by HFBusiness Staff in Business Strategy, Industry 
The opportunity to tie mattress sales to health benefits is top-of-mind for today’s mattress manufacturers and suppliers. From new yarns and fibers to innovative adjustable bases, product features are being developed and marketed to entice consumers with health benefits. At Therapedic, these advancements are in the form of copper yarns and copper-powered fabrics proven to be absorbable by the skin for wellness benefits. “Our Immunity collection contains the highest copper content of any mattress made for consumers; it consists of copper woven into the fabric cover and infused in the mattress foam,” says CEO and president Gerry Borreggine. “Research shows that copper is anti-bacterial, anti-microbial, reduces inflammation, and may increase circulation, all benefits that appeal to consumers.”
At top price points, luxury models continue to benefit from this wellnessdriven market dynamic. “The consumer’s quest for a healthier sleep experience elevates the importance of the luxury mattress segment,” says Bill Hammer, president of Shifman Mattresses.
For Norway-based Stressless, its newest model—Sky—reflects decades of product knowledge and innovation. “At Ekornes we are not new to the mattress category,” says Peter Bjerregaard, president. We’ve been producing mattresses since 1937 and have a deep understanding of the factors that account for good sleep, and why it is essential for a healthy life. We have combined our extensive sleep insights with the Nordic lifestyle, which promotes good health in harmony with nature, to create the Stressless Sky.”
According to industry research and estimates from the FurnitureCore model developed by Impact Consulting Services, parent company to Home Furnishings Business magazine—sales in the bedding category declined in 2022. At year end, 2022 finished at $17.8 billion compared to $18.51 at the close of 2021. This 3.8% decline contrasts with the preceding 21.6% annual growth of the segment from 2020 to 2021.
Mattress sales in 2022 appear to be lost to other home furnishings categories as bedding’s percentage of total furniture industry sales also declined from 12.9% in 2021 to 11.8% in 2022. The downward trend continued in 2023, with sales down 3.5% year to date at the close of third quarter, with $13.44 billion in sales compared to $13.93 for the period in 2022.
January 27,
2024 by HFBusiness Staff in Business Strategy, Industry
How Manufacturing Performed in 2023 Figure 2 summarizes the more current data from last year through October. This data highlights two time periods: (1) the first 10 months of 2023 compared to the same period in 2022, and (2) the most recent month-to-month comparison of October 2023 to September 2023 (one month). Shown are shipments, new orders, inventories, and unfilled orders for the two time periods. Also included are import numbers.
Over the last year, manufacturer’s shipments, new orders and inventories have slowed, and growth has been flat. Meanwhile over the year, unfilled orders are down 6.4%. This is against a backdrop of U.S. imports that were down 22.8% during the first 10 months of 2023 over the same time period in 2023. Data month-overmonth for the most current month (October versus September 2023) shows a similar picture with shipments and inventories down, but only slightly, and new orders up 1%. Unfilled orders growth is also flat. Meanwhile imports for October rebounded to grow 11.1% over September. Consumer spending has slowed, but for how long? And when it picks back up, will the consumer be forced to return to long wait times.” The road getting here has been interesting, with furniture manufacturers enjoying the backlog of consumer demand created during the pandemic. Table A shows that quarterly furniture and related products shipments peaked in the fourth quarter of 2022 at $20.78 billion but really began to slow in the second half of 2023, (down 2.9% by the end of the third quarter).
Along the way, U.S. manufacturers caught a break as foreign imports, Chinese in particular, struggled to keep supply chains up and running. Available data through the first three quarters of last year show foreign imports peaking at $15.4 billion in the second quarter of 2022 then ultimately falling over 30% to $11.01 billion in Q3 of 2023.
Monthly data in Table B details furniture shipments and imports December 2022 through October 2023, adding the extra month into the fourth quarter. For U.S. manufacturers, the final dip began in February of 2023 and has not yet recovered. Between January and October of last year, U.S. shipments fell 3.7%. Meanwhile, imports continued to struggle, falling 14.5% January to September last year, but rebounded 11.1% in October over September 2023.
Over the last 10 years, domestic manufacturers’ shipments of furniture and related products peaked in 2022 at $82.1 billion and are expected to be down less than ½ of 1% in 2023 (Table C).
The value of shipments began to decline in 2019 by 3.6% and fell further in 2020 by 5.8%. Shipments began to rebound in 2021 by 7.5% as shutdowns continued in China, and grew further by 8.5% in 2022. At the end of last year, domestic shipments were down 0.04% through the third quarter (Table D).
Also detailed in Table D is a comparison of the growth in manufacturers’ shipments to the growth in the producer price index for furniture 2014 to 2023 October. This graphic shows that until 2019, when inflation was low, manufacturers’ shipments grew faster than price increases/ inflation. However, the pandemic upended that trend somewhat. In 2021, when inflation surged, demand stayed high and ahead of price increases. Since that time, inflation has outpaced the growth in shipments, especially in 2023 when producer prices/inflation for furniture grew 4.5% while shipments have shown no growth October year-to-date.
Table D shows the annual dollar shipments since 2014 with preliminary estimates of $82.07 billion for 2023 yearend. Although not an exact apples-to-apples product comparison, the tables have turned for manufacturers and retailers when it comes to inventory levels. Throughout 2022 and the first half of 2023, furniture and related product manufacturers carried a much higher ratio of inventoryto-shipments compared to retailers’ inventory-to-sales ratios (furniture and home furnishings products) (Table E).
But by the summer of last year, retailers’ inventories stayed stable as manufacturers declined, with consumer demand eating into manufacturer’s inventories as imports dropped sharply. By October of last year, the ratio of inventories to dollar shipments for manufacturers was similar, 1.56X for manufacturers compared to retailers at 1.53X.
After unfilled orders increased consistently month-to-month throughout most of 2021, manufacturers began to whittle down the sizable backlog in 2022 and picked up more steam in the second half of last year. Coming out of the plant shutdowns in 2020, unfilled orders grew a total of 27.9% in 2021 and 3.8% in 2022 before going negative by 8% in the first 10 months of 2023. Table F details the reduction in unfilled orders.
In the years leading up to the pandemic (2018 – 2019), manufacturers’ monthly unfilled orders/backlog was mostly consistent at 130% of the value of shipments (ratio 1.3X). The ratio peaked in December of last year at 1.87X as unfilled orders approached double the shipment volume. In May of 2022, the backlog ratio dropped to 1.66X before popping up slightly to 1.69X in June (Table G).
New orders, the life blood of manufacturing, grew throughout 2022 finally peaking in January 2023 to a onemonth high of $7.01 billion. Then between January to July, new orders fell to $6.48 billion before rebounding in August of last year and growing monthly to $6.74 billion in October, the most available data at press time (Table H).
While manufacturers’ shipments grew consistently coming out of the Great Recession, the number of manufacturing establishments declined rapidly (Table I).
In 2011 the number of companies manufacturing furniture and related products totaled 18,985 before falling 7.2% over the next five years to a low 17,623 in 2016. A small two-year uptick that began in 2017 didn’t hold through 2019 and 2020 during the pandemic. But since 2020 the number of manufacturing establishments grew to 18,346 by 2023 Q2, an increase of 14% (Table I).
But while the number of stablishments was falling, employment was growing by 12.2% by 2012 to 2017 peaking at 93,100 employees. But by the end of 2018, employment was declining and has not recovered, even with the growth in establishments. Between the peak of 2017 and June of 2023, the most recent data, employment fell to 360,900 which is 8.2% below the 2017 peak.
Annual hourly wages for all furniture manufacturing and related product employees have increased every year over the last decade but the biggest gains were made in 2020, 2021, and 2022 growing 4.6%, 4.3%, and 4.8% respectively. In June of last year, average annual wages totaled $54,549 an increase of 1.35% over 2022. Wages last year were 39% higher than 2012. (Figure 3).
One of the major problems facing many U.S. industries is the slowing of worker productivity. And this is true as well for furniture manufacturers. (See Figure 4 for a definition.) The productivity index shown in Table K, indexed to 2015, indicates that over the seven years ending 2022, the most recent data, productivity has declined 10.5%. Meanwhile wages increased 26.8%.
In December of last year, the Feds announced that inflation was cooling and promised to reduce interest rates in several stages this year. Election years are usually stable for the economy. Yet with the turmoil of a contentious election coupled with international conflicts and a crisis deepening on our border, there could be surprises in store for the year. American Furniture manufacturers may also be sitting on pins and needles wondering if China will get its act together with imports and begin to take sizable share of the market away from U.S. manufacturers again.
December 29,
2023 by HFBusiness Staff in Business Strategy, Industry
Figure 1 summarizes all factors. As you can see, many of the factors are POSITIVE and few are NEGATIVE. However, much of the recent comments in the industry are about the impact of housing starts and inflation on the current performance.
For example, do you remember what happened when Reagan was elected? After Carter, inflation came down and mortgage rates declined. Yes, the industry accelerated. However, it began with Carter and only accelerated Table A.
The point is that the industry must recognize what drives it. If we recognize those factors that impact the industry and adjust our plans accordingly, performance will be maximized. Easy to say, but hard to do. Company management goes through distinct phases; DENIAL – It is just a temporary blip; ANGER – It’s the supply chain; ACTION – I must do something; and finally, RESOLVE – I will wait it out. The alternative is to have a fact-based plan. While the industry, at least the traditional industry, is experiencing a downturn, the TOTAL industry including furniture and bedding sold through all distribution channels is holding steady as can be seen in Table B.
Something’s Happening Here – What It Is Ain’t Exactly Clear However, we have a conundrum. While the industry appears to be stable if not improving as illustrated in Table C, the reality is that the TRADITIONAL furniture industry is faltering. It is not a typical industry rumbling, but a fact that since April TRAFFIC has plummeted. However, increased CLOSE RATES and maintained AVERAGE SALES have minimized the impact to written sales. The key performance indicators from top quartile retailers from FurnitureCore, a sister company of Home Furnishings Business, illustrate’s the trends below.
The question is, what caused the deviation in 2023, as illustrated by the furniture store results (retailers that derive at least 70% of revenue from furniture) and the KPIs of FurnitureCore’s top quartile? To understand, we must go to the consumer, the foundation of all retailing efforts. The following section examines TRADITIONAL retailers focus on the generational shift that is occurring; specifically, where they want to shop and what styles they desire, but most importantly, how do they perceive furniture in their priorities?
FURNITURE CONSUMERS – WHO ARE THEY? Times, they are a-changin’ It couldn’t last forever. The United States market has enjoyed the consumer consumption driven by the Baby Boomers. The population expansion that occurred after WWII resulted in one of the largest groups of consumers that wanted to spend. Without the constraints of wartime memories of their parents, and the “depression” of their grandparents, they were ready to consume, and they did. The HOUSEHOLD FORMATIONS is one of the prime drivers of the furniture industry. Table E presents the historical statistics. Each generation has different characteristics that influenced HOW THEY SHOPPED and WHAT THEY PURCHASED. And with each generational shift, retailers had to change the way they “retailed.” With each generational shift came different distribution channels that served the demands of this new generation. Table F illustrates the transitioning. It would obviously be easier if retailers could stop one generation and begin another. However, the transitions are the most difficult. Now we have a trifecta with three generations almost equally spending at the same time. The graphic below illustrates the expenditures and households.
This issue’s STATISTICALLY SPEAKING article provides additional information on the generations and their impact on the industry. The most important understanding is the consumers attitude toward decorating/home furnishings. As with other consumer products, the differentiation between “need” and “want” has shifted from a few product categories to many, especially among generation segments. When we asked the question, “WHICH OF THE FOLLOWING STATEMENTS BEST DESCRIBES YOUR ATTITUDE TOWARD DECORATING/HOME FURNISHINGS?” Figure 2 provides the response. The industry should be delighted to see that the coming generation is positive about our product and services. However, both retailers and manufacturers must interpret this attitude. The industry must gradually move away from “price” as a motivator to QUALITY and STYLE. The consumer does not want to communicate cheap and practical, but UNIQUE, STYLISH AND SUSTAINABLE. The marketing message must convey the same with quality visuals. Please note the caution related to the word gradually mentioned above. While the desire is there, the pocketbook may be reluctant to follow. When we analyze the survey results by income, we see the hesitation as shown in Figure 3.
This purchasing (expenditure) barrier is reflected when the purchase, by age/income of the majority of independent furniture retailers as well as regional chains. Figure 4 below presents the industry statistics for the past 12 months.
As can be seen in Figure 4, while traditional furniture retailers sell all demographics, their sweet spot is above $75K in income. The challenge is to return to communicating “Furniture is an investment – that will last for many years” and stand by that promise. Now traditional furniture retailing is focused on less than a third of the nation’s households.
There are distribution channels – value retailers, such as Big Lots, which are targeting the middle-income demographics, $35K - $75K. The use of retailer credit cards and revolving credit at the department stores can address a need and build loyalty. How has the purchasing process changed from the Baby Boomers to their children?
As can be seen in Table G, the initial shopping is NOT a family outing with partners on a shopping expedition. The impact of dual income families creating busy weekends, along with additional research on the Internet has led to delegation. Also, home furnishings are no longer the domain of the female with the male participating. However, the female/spouse is 3x more likely to take the lead.
When the consumer shops for furniture, what are they looking for? Interestingly, there is no significant variance between generations, as can be seen in Figure 5.
Now for the actual process of purchasing. With the limitations of the pandemic, you would expect a significant change, however not as much as expected. Figure 6 compares the length of the shopping prepandemic and post-pandemic. The table compares the shopping time by generation currently.
As can be seen from the graphic the shopping process is not savored as it was in the single income family time period (1980 – 1990) when the decorating project was a timeconsuming project. Figure 7 shows, the number of retailers shopped did not vary significantly by generation. Rest assured that the United States will remain a “shopping” nation.
During the pandemic, consumers were reluctant to travel great distances to shop or travel at all. However, furniture retail shopping has returned to normal with the majority of consumers driving 10-24 miles to shop. Table H presents the pre/post pandemic comparison.
As can be seen, there is no generational differences as to willingness to travel. This is important for future expansion plans to determine the number of stores in a market (Table H).
And finally, was the consumer satisfied with their shopping experience and if not, why not? When we solicited the consumers input, we got the following results as shown in Figure 8.
For the most part (30-40%) of consumers were extremely pleased with their experience. The most negative area was “good decorating advice from the retail sales associate.” This finding caused us to reflect on the growth of designers/personal shoppers.
In the last decade, the traditional furniture retailer has been under significant pressure with the disruption caused by the deterioration of the national chains; Montgomery Ward, JCPenny, Sears, Levitz, Helig, and Myers. While the decade, beginning with the year 2000, saw the decline of the national chains with many bankruptcies, other retailers that continued as more shadows of the concept of a national furniture chain also vanished. However, this disruption gave rise to the next generation of the family to expand the single-store independent to regional chains, such as ROOMS TO GO, RAYMOUR AND FLANIGAN, and HAVERTY’S, and later BOB’S DISCOUNT. Again, financial difficulties, often fueled by venture capitalists, led to the failure of ART VAN, FURNITURE FAMILY OUTLETS (FFO), and others. Furniture retailing is a tough business impacted by the ever-changing consumer purchasing and style preference. One furniture retail solution, after the deterioration of the national chains was the opening of dedicated manufacturer brand stores such as THOMASVILLE, LANE and BROYHILL driven by the conglomerate FURNITURE BRANDS. Most of this distribution channel has disappeared except for the ASHLEY brand that is now the largest furniture manufacturer/ retailer with more than 1,000 stores in 60 nations. There are other manufacturers that have pursued a combination of retail and wholesale such as LA-Z-BOY and BASSETT INDUSTRIES to name some of the larger retailers pursuing this manufacturer direct strategy.
Larger general retailers such as COSTCO and TARGET and more recently BIG LOTS attracted by the high margins embraced the furniture product. With the creation of offshore manufacturers capabilities new retailers collapsed the channel and began to design and produce their own product line. Led by entrepreneurs CRATE AND BARREL, RESTORATION HARDWARE, and POTTERY BARN, these major players developed product and a retail experience focused on a specific consumer group. And finally, the most recent retail challenge is the move to ecommerce in 2010 with WAYFAIR who after an experimental beginning as CNN STORES in 2002, became a threat to traditional retailers. Wayfair has been joined by general retailers and other ecommerce players such as AMAZON. The digital retail presence for furniture is here to stay. In fact, furniture manufacturers following their sister manufacturers in bedding, are beginning to sell direct to consumers (DTC). As always entrepreneurs are filling the space with no prior furniture experience and launching successful companies such as MAIDEN, BURROW and ROVE CONCEPTS.
This is the challenge for traditional retailers – can they change the product they merchandise and the buying experience to maintain their market share. Table I presents the historical transitions: The pandemic caused disruption in the furniture industry distribution channels with many furniture stores being declared “non-essential retailing” while other retailers continued to sell furniture along with other products. Retailers such as home improvement stores gained market shares.
Figure 9A and B compares distribution channel preferences before and after the pandemic. While ecommerce experienced an initial bump it was short lived. The major recipient was other alternative distribution channels such as home improvement stores and value retailers. While this temporary change in purchasing habits, driven by demand, many returned to their pre-pandemic preferences. A recent national survey shows the results. Driven by demand, long term consumers will return to their preference based upon lifestyle. A recent national survey measured this preference by generation.
Currently (2023), the traditional furniture retail distribution channels have just over half of the market share (62.1%). The Internet market share does not include those online sales in mass merchants and catalog chains such as Amazon. We estimate total online furniture and bedding sales to be about 18%. The next question is, “why are these various distribution channels preferred by consumers?” A recent national survey of consumers ranked specific retailers as #1, which we then attributed to specific distribution channels. As can be seen only in the valuation of the physical plant – exterior/interior—are regional chains found lacking.
What Does the Consumer Want?
As was previously mentioned, the Baby Boomer was easy to satisfy as long as it was traditional.
Yes, there were variations; CHIPPENDALE, LOUIE THE FOURTEENTH, or to the extreme SHAKER, but it was traditional. While not as exacting as their parents as to the finer styling details, the transition from craftsmen in small shops to manufacturing plants went well. Overtime the distinct design points were lost in each manufacturer’s interpretation of the style. With the next transition in the industry – moving to offshore manufacturing – more details were lost in the quest for manufacturing efficiency or just the ability to get something produced. The thoughts of dove-tailed drawers and 10-step finishes were traded in for the pursuit of margin. With this transition came a change in the consumer attitudes toward furniture from being an investment to a disposable item. As was discussed previously, the youngest generation’s attitudes especially in the upper incomes are returning to appreciate style and design. However, this return is not to the “Brown Furniture” of their parents and grandparents but a style that is uniquely their own.
Using visuals in a recent national survey, FurnitureCore asked consumers to identify their current style and then their dream style from the following visuals. The responses are shown in Figures 10 A, B, and C.
As would be expected, the American furniture consumer has not totally abandoned the traditional styling, but they have started in that direction as can be seen from the graphic below. Leading that direction is the Millennials and Generation Z as indicated in Figure 10A, when the findings were segmented by generation.
Styles changes slowly, especially in durables that are purchased less frequently. Style changes are influenced by what the consumer is exposed to. Before we moved away from stay-at-home moms, “soaps” were big influencers. Social Media has filled that role as shelter magazines have declined as well in content/ advertising for furniture in the magazines that remain.
Manufacturers observe the trends and hope to strike a chord with the consumers. In this issue of the magazine, Style Directions presents animal motiffs as one of these trends.
The consumer has a vision of what their personal design style would be. In the same national survey, the consumer was asked, “What is your DREAM STYLE,” and this was their input along with the variance from their current style: As with the current styles, the generations influence the style direction. Figure 10B presents the dream styles by generation.
As can be seen from the table, midcentury has lost its luster with the younger generation, but modern is more in favor with this emerging furniture buyer. Analyzing this same input by income range, the results are shown below in Figure 10C.
The major challenge related to style with furniture manufacturers and retailers is not identifying incoming style trends, but how to communicate both externally to its customers and internally to the staff that will sell the product to the consumer. To accomplish this requires that the retailer develop its own unique naming process for a style using a series of fun questions that require less than five minutes. DesignCliq identifies the consumers styles with a 90% concurrence. An output is shown below in Figure 11. This process, while informing, can be utilized to market with direct email and the website.
It is difficult to incorporate generational and style preference into the execution of a strategy. The use of the old standard of a war room with pictures and notecards posted to a conference room wall has served retailers for years. Transforming this concept to a digital format can provide a demographic and style preference to merchandising. Figure 12 illustrates.
December 29,
2023 by HFBusiness Staff in Business Strategy, Industry
Home office furniture sales continue to grow, despite many households purchasing the necessary pieces as working from home became mandatory in recent years. Whether they’re adding to existing setups or creating new workspaces in the home, consumers continue to search terms such as #desk and #bookcase on social media, Houzz and Pinterest. Manufacturers are responding by providing a constant stream of fresh designs—with a growing number of collections designed with modular pieces that work together to accommodate a variety of floorplans. AICO credits product design as the route to customer satisfaction in the home office arena, according to president David Koehler. Describing AICO’s fashionable Belmont Place desk, Kohler explains:
“The success of this desk lies in its exquisite pairing of the ethereal allure of white anigre veneer coupled with the deep richness of espresso, beautifully accentuated by gold touches. Consumer sentiment echoes our belief: this desk is a statement, ensuring the home office reflects the luxury of the rest of the home.”
In addition to dedicated home offices wellsuited for a desk, console, bookcase, and file storage pieces, desks are being used throughout the home as multifunctional solutions. Today’s open floorplans offer numerous spots to integrate a desk. Desks placed behind the sofa take the place of console tables and are perfect for finishing up work, paying bills or doing homework. Adding a desk to an open wall or nook creates a focal point and can be styled with a mirror and accessories to look decorative while providing a worksurface and smart storage to keep clutter out of sight.
Modular furniture designs are an essential element of Stickley’s home office strategy. “Our Origins By Stickley line represents tremendous value as the opening price point for Stickley; it brings customers functional furniture options that are fully customizable and well-constructed as well as affordable,” explains Edward Audi, president, L. & J.G. Stickley. “The Dwyer style has become especially popular among our home office products. Its modular storage components offer incredible versatility, and a choice of ten finishes and nine hardware styles means that Dwyer will work beautifully in any setting.”
As Americans spend more time working from home, the home office category has benefited. Industry research—from the FurnitureCore model developed by Impact Consulting Services, parent company to Home Furnishings Business magazine— estimates the home office furniture category grew a solid 8.1% from 2021 to 2022. While impressive, last year’s growth pales in comparison to the pandemic-fueled growth of 21.3% growth documented from 2020 to 2021. So far in 2023, the home office category is tracking 2.4% above last year through second quarter. In 2022, home office sales finished at $6.88 billion up from $6.36 billion the previous year. As of Q2 year to date, sales in the home office category are estimated at $3.38 billion.
Occasional Tables
As functional as they are fashionable, occasional tables are design essentials. Creating a seating area without them leaves a room looking and feeling empty—and without the ability to support a beverage or TV remote. Gone are the days where a well-designed room boasted a matching ensemble of two end tables, a cocktail table and a console table. Today’s interior design directions highlight tables (and ottomans, benches, etc.) that complement rather than match each other. Notable features in this category include eclectic mixes of wood, metal, glass and stone; durable, cleanable surfaces; and multifunctional design. “Our Anaheim cocktail ottoman is one of our best sellers because of its versatility and mixed media,” explains Jim Telleysh, president of Spectra Home. “It’s a great accent piece with a gunmetal-gray base made of aluminum. The upholstered top is stocked in our Data Cream performance fabric or a rich charcoal Nubuck leather and is available for 48-hour delivery. You can also choose from our extended selection of performance fabrics, bleach-cleanable acrylics and more leather options by ordering through our custom design program.”
Home Entertainment
While consumers continue to spend more time at home streaming their favorite shows, the need for home entertainment furnishings grows. From minimalist to modern farmhouse styles, there are looks available to meet every consumer’s style preference and budget. The most desirable features include open and closed storage, adjustable shelves, powerstrips, cord management, and open or glass-front component compartments.
FurnitureCore research estimates the entertainment furniture category grew 8.1% from 2021 to 2022; down from the 21% growth recorded the previous year. In 2022, the entertainment furniture group finished at $8.29 billion in sales, surpassing 2021’s stellar sales of $7.67 billion. At the close of the second quarter this year, home entertainment is tracking at $4.08 billion in sales, up slightly over last year where 2022 sales closed at $3.98 billion during the same period.
