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From Home Furnishing Business

What Sells: SUPPORTING CAST A look at the trends in Home Office, Entertainment and Occasional furnishings.

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.

Statistically Speaking: Generation X Dominates the Furniture Industry as Millennials Make Their Move

Gen Xers households (ages 42 to 57) averaged $1,014 in furniture expenditures in 2022 followed by $770 for Millennials, $679 for Baby Boomers and $430 for Gen Z (adults 25 and under) (Table B). Our 2023 consumer spending article will focus on these generational households, quantify their spending and shed some light on what may be ahead for the furniture industry. A future article will look at each generation’s shopping choices and outlets and explore how each furniture channel can attract them to theirs.

In preparing this article, we have borrowed a quote from the Pew Research Center, a leader in generational studies, which says, “Generational signals can sometimes be lasting, but youth itself is not a permanent state.

Generational Influences Generational spending is sometimes a difficult concept to grasp as it follows the same groups through time who shared similar economic, domestic and world events during their coming of age. Generations get older together with the shared experiences and events shaping them throughout life. This approach is opposite to the traditional method of analyzing spending, and that is by looking at age and income at a moment in time. For example, traditionally, one might ask how much were 35- to 44-year-olds with incomes between $50,000 - $70,000 spending 15 years ago compared to today. In this example, the age group would have been from two different generations. The shared generational experiences can be wars, economic recessions, terrorist attacks, pandemics, medical discoveries, (i.e., birth control pills) or technological advancements, like the personal computer, cellphones or the Internet. Usually, the beginning of a generational identity (birth year) often begins with the adoption of a new technology.

Figure 1 gives an overview of each generational cohort and the cultural experiences and events that influenced them.

Demographics Millennials (ages 26 to 41) are now the largest generation alive numbering 72.3 million, which is 21.7% of the population and 27.7% of adults 18 and over (Figure 2). Immigration is expected to swell their ranks further. But not all Millennials have formed households, and are thus second to the Baby Boomers (ages 58 to 76) in consumer units/households. Boomers comprise 26.3% of the population 18 and over and are still the largest group of households at 32.4%. The smaller generation sandwiched between Baby Boomer and Millennials, Generation X (ages 42 to 57), represents 25.1% of the population over 18 and over 27% of households. Younger Generation Z (ages 10 to 25) comprise only 5.5% of consumer units, but their ranks will grow rapidly as more age into adulthood. Figure 2 shows the demographic detail followed by Table C which compares percent of adult population versus consumer units.

The growth rates in household formations for each generation prepandemic (2019) and post-pandemic (2022) were varied (Table D). Before the pandemic, very few Gen Zers (ages 10 to 25 in 2022) were out of college. But between 2019 and 2002, their numbers almost doubled. Millennial households (ages 26 to 41 in 2022) grew 5.7% over three years, which is a significant amount considering their already large numbers before the pandemic. Generation X (ages 42 to 57) grew less than 2% over the three-year period, and Baby Boomers less than 1%. The toll the pandemic took on the Silent Generation was wide spread with households declining 27.7% 2019 to 2022.

Income by Generation Generation X (ages 42 to 57) has by far the highest incomes averaging $126,892 per households in 2022, followed by Millennials (ages 26 to 41) at $100,315 and Baby Boomers (ages 58 to 76), $81,827 (Table E). But the higher the income bracket, the higher the taxes paid. In this case, Gen Xers paid 16.8% of income in taxes, Millennials 11.9%, Baby Boomers 11.6%, and young Gen Zers just starting out 5.3%.

One of the outcomes of the pandemic, was the explosion of incomes in the midst of a very tight labor market (Figure 3). Pandemic monetary assistance was also a factor. Millennials that had been crying the blues were all of a sudden getting higher paying jobs. Salaries for Millennials (ages 26 to 41 in 2022) who were three years older in 2022 than 2019, grew 27%. For Generation X (ages 42 to 57 in 2022) salaries grew 19.4%. Baby Boomer income rose only slightly by 1.2%. The average Gen Xer (ages 42 to 57) had 21.1% more disposable income than the average Millennial (ages 26 to 41) and 48.6% more than the average Baby Boomer.

Expenditures by Generation
So how did the different generations spend their money in 2022? With Gen Xers (ages 42 to 57) having the highest incomes, they in turn spent the most, $91,382, followed by Millennials at $74,782, and Baby Boomers averaging $66,362. Newly forming households by adult Gen Zer households (25 and under) spent on average $47,975 (Table B and Figure 4).

For all consumers, over one-third of their expenditures was spent on their homes, which included paying for the actual structure (rent/mortgage), utilities, household furnishings and equipment (including furniture), and household operation and supplies. And even though Gen Xers (ages 42 to 57) still spent more actual dollars on average on household furnishings and equipment, as a percent of their total spending, this generation also spent the lowest at 31.2%. The general rule for spending on the actual housing structure, either rent or mortgage payments, property taxes, etc., was that the younger the generation, the higher percentage of expenditures on basic housing. For example, Generation Z (adult ages 25 and under) averaged 25% of expenditures for rent or mortgages, Millennials 21.6%, Generation X 18.6%, and Baby Boomers 18.8%. However, the opposite was true for utilities. The younger the generation, the less they paid as a percent of expenditures. The same applies for household furnishing and equipment. Baby Boomers spent more of their income, 3.9%, on household furnishings. Figure 4 shows the total percentages of expenditures, including transportation, housing, food, healthcare, entertainment, education, and contribution to retirement accounts.

Household Furnishing and Equipment
Like many other consumer products, spending on household furnishings and equipment grew rapidly between 2019 through 2022. This category includes furniture, floor coverings, major appliances, small appliances/miscellaneous housewares, household textiles, and miscellaneous household equipment. Spending by Generation X (ages 42 to 57) for household furnishings totaled $3,355 on average per household (Figure 5), which was over 30% more than Millennials or Baby Boomers. In fact, Gen Xers (ages 42 to 57) outspent Millennials and Boomers in every household furnishing product area, except small appliances and miscellaneous housewares, and that difference was very small.

Table F shows the dominance of Generation X in household furnishings spending. In average household spending on furniture, Gen Xers outspent Millennials by 31.7% and Baby Boomers by a significant 49.3%. For major appliances, the difference was less than 20%. In the popular household textiles category, Gen Xers (42 to 57) outspent Millennials by 96.1% and Baby Boomers by 54.2%

In 2019 just before the pandemic, Gen Xers (ages 42 to 57) were leading all other generations in spending on household furnishings, but not by a lot compared to Millennials (ages 26 to 41) (Table G). But throughout the pandemic and beyond, the Gen Xer gap widened significantly. Bear in mind that all generations were three years younger in 2019.

Furniture Expenditures
Coming out of 2019, furniture sales were increasing across all generations but some took different sending paths in the immediate pandemic of 2020. Table H graphically shows the spending, while Figure 6 presents the detail. In 2020, during the worst of Covid fears, spending cooled among Generation X (ages 42 to 57) to 3.4% and more so with Baby Boomers where furniture spending was down 13% for the average household. All the while, younger generations, Millennials and Gen Zers (25 and under) were posting doubledigit increases in furniture spending in 2020 as pandemic money flowed in and a moratorium was placed on student loans. The spending craze for Generation Z (25 and under) and Millennials (ages 26 to 41) continued through 2021, and then slowed in 2022 as inflation set in. Gen Xers (ages 42 to 57) and Baby Boomers were a different story. While conservative during the heart of the pandemic in 2020, in 2021 and continuing through last year spending grew over 35% in 2021 and over 11% in 2022 for both Gen Xers and Baby Boomers.

As shown in Table I, when it came to buying furniture, in 2022, the average Generation X (ages 42 to 57) household outspent Millennial households by 31.7% and Baby Boomers by 49.3%.

Gen Xers (ages 42 to 57) will continue to dominate the furniture industry through 2025 as their affluence continues to grow. Some older Gen Xers are inheriting money from the quickly declining Silent Generation parents. However, Millennials will get the biggest boost for years to come inheriting billions from their Baby Boomer parents. Younger Generation Z (under 25) is also bursting on the scene, better educated, more ambitious and some say learning from the mistakes of Millennials.

A future installment of Stat Speaking will explore where they are spending their money, and how each furniture and home furnishings channel can lure them their way.

Editors Note: CAN I GET OFF THIS ROLLER COASTER?

To the top, we welcome a break from the double digit declines and increases. It is unbelievable that the quarterly year over year decline of .8% in Q2 could provide a sense of relief. The roller coaster is still moving slowly, and looking at the graphic below has the potential to repeat the same terror filled path down.
What will happen next?

Cover Story: STATE OF THE INDUSTRY: “What Industry Are You Referring To?”

Change has always been a fact of business. The key to survival for both manufacturers and retailers is to recognize it is happening and plan for it as you deal with the everyday challenges of running the business. The history of the industry is replete with examples of manufacturers that did not react to the movement of production to the south or the subsequent move offshore (Table A).

Or, small mom & pop retailers that did not foresee the expansion of their once competitors to become regional chains, filling the void left by the failure of the national chains such as Montgomery Ward, Sears and JCPenney.

All these strategic shifts occurred in the backdrop of the impact of economic conditions as illustrated in Table B.

As a result of the pandemic, many of the small independents are closing their doors. The reason? It’s not because of financial distress, but rather the lack of successors to pass down to, or the inability to find a buyer. But for many, the real reason is the owners are tired of dealing with the pressure of executing a long term strategy. Simply put, they are tired of trying to anticipate “where the puck is going.”

Our forecast, as always, will be for the TOTAL FURNITURE AND BEDDING INDUSTRY. However, our focus has been the traditional furniture retailers and the suppliers that serve them. As can be seen from Table C, this marketshare after the pandemic, has settled in at about 35% - 40%. What are we saying? Simply put, traditional retailer’s competition may not be who they think. The competitor may not be the family-owned store down the street or the regional chain that just moved in last year, but the other retailers that “dabble” in furniture.

How can traditional retailers compete with these alternative channels while satisfying the consumers and their retail preferences? For decades, the baby boomer and to some extent, the silent generation, has been the focus of the traditional retailer (Figure 1).

While this generation segment(s) is still purchasing a significant amount of furniture as they downsize and move to the next stage of life, the coming force is their children (Generation X) and their grandchildren (Millennials). Where do they purchase? Findings from a recent national survey of furniture purchasers, are shown in Figure 2.

While the Baby Boomer has remained loyal to the independent retailer, the attraction of the more focused MANUFACTURER OWNED store and the value priced experience of the WAREHOUSE CLUBS has made inroads. The younger Generation X consumer has definitely been attracted to the alternative channels. Attracted by style to the more LIFESTYLE RETAILER (Crate & Barrel, Pottery Barn, Restoration Hardware) as well as convenience (INTERIOR DESIGNER, INTERNET) and also price and finance. The younger Generation X and the Millennials are shopping all distribution channels.

From the same survey, the analysis by income presents another perspective (Figure 3). The focus for the traditional retailer has become the consumer household earning above $50,000. For groups below this income level, they recognize there is a strain on discretionary spending after securing the basics, which makes furniture a deferrable purchase.

To summarize, to furniture consumers in total and the emerging furniture consumer, the distribution choice is a very eclectic choice as shown in Figure 4. But what do they want in a retail experience? FurnitureCore has identified what is important. It is everything as can be shown in Figure 5.

To conclude, the forecast that follows is for the total Furniture/Bedding industry. You will see that while challenging, it is a positive growth for the upcoming year, but for traditional retailers, the challenge will be to stop the erosion to the other distribution channels.

What Sells: UPHOLSTERY: Star of the Show

Today’s leading upholstery designs address modern living requirements. Life stage continues to dictate consumer shopping patterns, particularly when it comes to sofa size. Sofas with a smaller footprint appeal to young adults just starting out as well as retirement-age generations downsizing to condominiums and smaller houses. Conversely, bigger is often better for growing families and multigenerational living where everyone wants a place to put their feet up. Mega sectionals and plush, oversized models offering deep comfort appeal to all ages. Post-pandemic, the sofa is no longer just where consumers watch TV. With travel still tracking lower than previous years, home is where Americans hang out. The rise of working from home and online learning translates to the sofa’s additional roles as office and classroom. Together, these factors are driving greater requirements for comfort, functionality and versatility in upholstered furniture.

“The consumer today wants and deserves to have it all,” says Anthony Teague, executive vice president of Jackson Furniture. “Not only do they want furniture that is fashionable, but they expect comfort..and we deliver on both ends of that spectrum every day.”

At Luxfort Home, models such as the Jolliet CloudPower zero-wall clearance motion sectional are successful for their ability to deliver form and function. “The Jolliet CloudPower sectional is a trifecta combination of the best seating comfort, best-looking stationary style and new power motion functionality,” says president Lee Boone.

Style continues to be a major factor influencing upholstery purchases. In covers, retail floors previously covered in gray and greige are beginning to show hints of color–particularly with warmer neutrals such as camel and tan reemerging. White and off-white have replaced gray in the modern farmhouse/ cottage lifestyle look– making the durability and cleanability of performance fabrics even more desirable as white covers dominate the style scene. Interior design directions illustrate how solid fabrics (versus prints) prevail– but not just any solid fabrics. Whether they prefer updated traditional, transitional, cottage, coastal, BoHo or soft modern looks–consumers are gravitating to touchably soft constructions. Solids with texture are in-demand, with boucle, chenille, velvets and teddy bear-inspired textured constructions trending across all style categories. “The Lisbon chair is a beautiful bridge between fashion and lifestyle, connecting the elegance of what you wear to the grace of where you live,” says AICO president David Koehler. “With its balance of texture and contrast, it resonates with style-conscious consumers.”

Based on the FurnitureCore Model developed by Impact Consulting Services, parent company to Home Furnishings Business, research shows the upholstery category has maintained its steady climb, finishing 2022 with $64.58 billion in sales, up from $59.77 billion in 2021–an increase of 8.0%. Although demand across all durable goods is slowing, upholstery sales in the second quarter of 2023 were 2.5% higher than the previous quarter.

With sales of $32.77 in 2023 Q2 year-todate, the upholstery category accounts for approximately 35.2% of total furniture industry sales.

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