Monthly Issue
From Home Furnishing Business
September 9,
2016 by Jane Chero in Business Strategy, Industry, Internet 
Mention furniture and home furnishings sales sold via the internet, and the focus immediately turns to B2C retailing (business-to-consumer). So it may be surprising to learn that it’s the e-commerce (e-shipments) B2B platform (business-to-business) that has been exploding and generating buzz in the furniture industry.
A recently released report from the Census Bureau shows B2B e-shipments within the furniture and related products manufacturing segment (NAICS code 337) is now approaching 51 percent of the value of total shipments or $35.2 billion dollars in 2014. (Source: U.S. Census Bureau E-Commerce Report 2002 to 2014, June 7, 2016). The Census Bureau defines manufacturers’ shipments to include “orders accepted for manufactured products from customers, including shipments to other domestic plants”. While this appears to be double counting in some instances, it does little to diminish e-commerce’s impact on the wholesale furniture industry. (See Methodology and Definitions box for additional information). B2B e-commerce is changing the way manufacturers market and sell their products to both retail brick and mortar customers and online furniture retailers creating increased sales on one hand and distribution channel crises on the other.
E-Commerce across Vertical Furniture Industry Segments
The product categories included in data published by the Census Bureau may differ somewhat between furniture manufacturing shipments, merchant wholesaler shipments, and retail sales; however, the trend in e-commerce is the same. (See Methodology and Definitions box.) As of 2014, e-commerce accounts for over half (50.6 percent) of all furniture and related product shipments – up from 14.4 percent in 2004 (Table A). During the same time period, e-commerce sales of furniture and home furnishings within the retail trade sector increased 503 percent – representing 15.3 percent of total retail dollars. While e-commerce among the merchant wholesale trade of furniture and home furnishings increased steadily since 2004, the share of overall sales have remained stagnant since 2009 – increasing from 14.3 to 14.4 percent.
Manufacturing Shipments
As Table B shows, the total value of manufacturing shipments in the furniture industry took a downturn alongside the economy during the recession. The 2014 value at $69.6 is still 9.9 percent below 2002. E-commerce shipments on the other hand kept an upward trajectory through the recession – increasing a total of 335.9 percent over 12 years. While total furniture and related products manufacturing increased by 15.4 percent since 2009, e-commerce shipments jumped another 70.3 percent to finish 2014 at $35.2 billion.
The percentage of total dollar shipments via e-commerce has climbed from 10.5 percent in 2002 to 50.6 percent in 2014 with the vast majority of growth (313 percent) occurring between 2002 and 2011 (Table C). From 2011 to 2013, increases of e-commerce as a percentage of total shipments tapered off. However, an 11 percent jump in 2014 pushed e-commerce to over half of furniture and related products shipment dollars.
E-Shipments: Furniture Manufacturing vs. Total Manufacturing
While e-shipments have grown at a rapid pace, furniture and related products manufacturers are still lagging slightly behind all manufacturing in the percentage of e-commerce shipments to total (Table D). In 2014, total e-shipments in all industries were 60.9 percent of total manufacturing compared to furniture e-shipments at 50.6 percent. Both total manufacturing e-shipment dollars and furniture e-shipment dollars increased an annual average of 14 percent from 2004 to 2014.
Merchant Wholesalers and MSBO’s
Merchant Wholesalers are wholesalers who sell goods on their own account such as distributors, jobbers, drop shippers, import/export merchants, and MSBOs. Manufacturers’ Sales Branches and Offices (MSBOs) are establishments maintained by manufacturing, refining, or mining enterprises apart from their plants or mines for the purpose of marketing their products. Sales branches will typically carry inventories, while sales offices typically do not. – U.S. Census Bureau
Since the turn of the century, e-commerce has slowly climbed its way into the furniture and home furnishings merchant wholesale trade. Merchant wholesalers weathered the recession well growing 43.8 percent in sales 2002 to 2014 to $76.9 billion while the e-commerce portion of those sales jumped 113 percent to $11.1 billion. MSBOs total shipments at $21.0 billion in 2014 grew more slowly -- 17.3 percent 2002 to 2014. E-commerce shipments from merchant wholesalers alone have increased a yearly average of 7 percent, while furniture MSBO’s have increased by 3 percent.
Although increasing just 30 percent in e-commerce sales from furniture MSBOs over 12 years, e-commerce accounts for 21 percent of furniture and home furnishings MSBOs (Table F) compared to other merchant wholesalers at 14 percent. As a percent of total shipments, e-shipment sales of both merchant wholesalers and MSBO’s have declined since 2011.
With more advanced websites and ordering portals that make it easier for a business to make purchases online, e-commerce should continue to grow as a key part of the furniture industry. Manufacturers look to e-commerce to increase sales and broaden its customer base. This approach, however, presents a challenge to manufacturers in terms of personalized customer service and maintaining that sales rep relationship.
June 7,
2016 by in Furniture Retailing, Industry
BY Trisha McBride Ferguson
While cocktail ottomans are gaining popularity as the place of choice for consumers to prop their feet or lay the remote, there’s no shortage of growth in the occasional table marketplace. From traditional to modern to farmhouse, today’s table styles help tie a room together while offering both fashion and function. No longer limited to identically matched sets of cocktail, end and sofa tables—consumers and designers are creating curated looks using carefully chosen tables to set a unique design aesthetic.
In 2015, occasional tables accounted for $3.3 billion in sales, a 5 percent increase when compared to sales of $3.17 billion in 2014. Sales growth in the category from 2013 to 2014 was notably lower at just 2.8 percent. In the overall home furnishings market, the occasional category accounted for 18.1% of total industry sales last year.
Greenington’s Rosemary Coffee Table
Edgy and eco-friendly, this coffee table is crafted of 100-percent solid bamboo. Its sophisticated lines reflect Mid-Century Modern influences. Suggested retail is $672.50.
Ferris Coffee Table NBWY-007 from Four Hands
The clever interplay of thick peroba wood slabs creates a modern take on the modular cocktail table. Its thoughtful design allows expansion from 48” to 76” wide. Suggested retail is $1,930.
Vanguard Furniture’s G231C Norma Cocktail Table
Part of its Barry Goralnick Collection, the Norma Cocktail Table features a metal base crafted in a French Brass finish. Its inlaid Agaria Marble Top adds both luxury and organic appeal. Suggested retail is $2,997.
Magnussen Home’s Bellamy T2491
Modern meets traditional in this stylish cocktail table crafted of pine solids and featuring brass hardware with a pewter overlay. Its classic scroll design gives it a timeless quality. Suggested retail is $
Stein World’s Vincent Cocktail Table 331
A table with a point to make, Stein World’s Vincent occasional group features a solid, inverted triangle-shaped base. It’s crafted in a mahogany tone finish and has a wood-framed glass shelf.
Ashley Furniture’s Traxmore Table T766-1
Wood and metal combine to create this unique cocktail table. Casual, medium-brown pine table tops feature removable wood serving trays and are supported by a slanted black metal base crafted from tubular steel and finished in a dark, textured, powder-coated finish.
Circles Cocktail Table from Hickory Chair
Inspired by an artifact on display in the collections of the New Mexico History Museum, this Made to Measure cocktail table is rich with historic influences. Its straight lines and clean silhouette give a nod to Arts & Crafts styling. Suggested retail is $3,225.
Klaussner’s Shoal Creek Cocktail Table
This multifunctional cocktail table is all about keeping clutter contained. It features a lift-top storage feature on one side and drawer storage on the other. Antique pewter metal legs and an “X” metal stretcher complement a light gray, ash finish and U-shaped drop bail pull hardware. Suggested retail is $
Jofran’s Beacon Street Cocktail Table 1649-1
Offering a new twist on a classic shape, this slatted-shelf cocktail table boasts a warm, multi-toned finish over solid acacia. It’s complemented by coordinating end, sofa, and chairside tables. Suggested retail is $199.99
Stickley Furniture’s 2016 Collector Edition Console
Equally at home in the foyer, living room or dining room, this console boasts dark copper hardware and three inlays made with sycamore, maple, cherry, makore, magnolia, and bird’s eye maple. Also includes back panel wire access cutouts and a power strip.
A.R.T. Furniture’s Epicenters Williamsburg Single Dresser
Featuring unique artwork created by a local artist and inspired by Brooklyn street art, this distinctive chest delivers plenty of charisma. Suggested retail is $2,079.
Borkholder Furniture’s Sienna Bench
Scaled for today’s living, this multifunctional bench features distinctive architectural elements. American-made and solid-wood, it’s shown in a brown maple finish. Suggested retail is $1,499.
April 4,
2016 by in Industry
After a long uphill battle for the furniture industry, furniture and bedding sales have finally met and exceeded the pre-recession peak sales of 2007.
The majority of this positive growth in 2015 has occurred in large Metropolitan Statistical Areas (MSAs), while many Micropolitan Statistical Areas (Micro SAs) and Rural Areas are still struggling to make a full recovery.
The furniture market trudged through eight years of recession and slow growth to finally dig out and surpass its performance in 2007. As shown in Table A, the industry plummeted 17.4 percent in two years, but it took another six years to recover and grow 24.4 percent to sales of $92.2 billion last year.
In both 2007 and 2015, MSAs controled 90.6 percent of industry sales with smaller Micropolitan Statistical Areas totaling 6.2 percent and the remaining 3.2 percent spread among the rural areas (Table B). All three market types are now above 2007 levels. MSAs took a nosedive in 2009 – dropping 17.7 percent as Micro SAs and Rural Areas decreased 14.4 and 13.6 percent.
While the larger markets had the greatest declines, they have also made the biggest comeback – growing 24.8 percent in comparison to 20.4 percent and 20.9 percent in the smaller markets and rural areas.
Number of Markets
In 2015, the industry as a whole finally exceeded 2007 peak sales, but many markets are yet to fully recover. Out of 937 total markets, 533 have surpassed 2007 sales, and 404 are still fighting their way back (Table C). Forty-two percent of MSAs fell short of 2007 levels, and Micro SAs have similar numbers with 43.7 percent below the peak sales of eight years before.
Sales by Markets
Table D shows the percent of industry sales in markets that are thriving versus the markets that are still playing catch-up. The markets exceeding 2007 peak levels account for more than 61 percent of industry sales with MSAs and Micros holding similar outcomes.
MSAs by Region
Breaking up the MSA markets by region, Table E shows the Northeast struggling to return. It is the only region in which the majority of the MSAs are falling short of pre-recession sales.
While more than 50 percent of MSAs in the Midwest and South have recovered in industry sales, the West is topping the country with more than 70 percent of MSAs exceeding 2007 peak sales.
MSA Sales by Region
The percent of markets by region exceeding 2007 sales does not exactly correlate with the percent of region sales by market type as shown in Table F.
Despite the fact that fewer than half of MSAs in the Northeast had sales in 2015 that exceeded 2007, the New York-Jersey City-White Plains MSA (a division of the broader New York CBSA) helped pushed percent of sales in 2015 past the 2007 level for the region. Likewise in the Midwest, the Chicago-Naperville-Arlington Heights MSA division has yet to fully recover impacting the poorer sales performance of its region.
MSAs by industry Sales Range
Segmenting MSAs by industry sales range gives another perspective of market performance. Not surprisingly, the MSAs with industry sales of more than $1 billion are having the highest percent of sales exceeding 2007 levels in 2015 (Tables G and H). With only 14 of the 401 total MSAs, the highest sales bracket exceeded pre-recession sales in 10 of those markets which accounted for 73.7 percent of those industry sales.
MSAs in the top two industry ranges (more than $500 million) were responsible for roughly 63 percent of total sales surpassing pre-recession levels in 2015. All in all, the MSAs within the largest industry sales ranges have pushed the furniture and bedding industry out of the recession.
A sampling of performance of the top and bottom three MSAs by size range is shown in Table I. Texas was clearly regionally among the least impacted during the recession, and Florida among the worst.
Editor’s Note: Sales analysis is provided by Atlanta-based Impact Consulting Services, parent company of Home Furnishings Business. The data is part of a proprietary model that tracks retail furniture and bedding sales at the market level. Sales include bedding, upholstery, bedroom, dining room, occasional, outdoor, and other miscellaneous furniture items. Sales tax is excluded. Data for all years is calculated based on current market geographical boundaries.
April 4,
2016 by in Industry
Area rugs can give bare floors a quick and easy makeover, and they can also be a great anchor for a well-designed living space.
In today’s home furnishings world, a great selection of rugs give retail sales associates a better opportunity for add-on sales. According to the most recent Home Furnishings Business survey of consumers, that’s just how people shop for area rugs—first, they buy new furniture; then, they buy the rug.
Nearly 75 percent of consumers said they chose their furniture first. Each of the consumers had bought a rug within the last 18 months. Another 17 percent said they reversed the purchases and bought the rug first. The other 8 percent bought furniture and the rug at the same time.
Perhaps the most concerning part of the survey for furniture stores is that consumers are bypassing the traditional furniture retailers when buying rugs and turning their attention and money to mass merchants like Walmart and Target.
Thirty-four percent of those surveyed made their most recent rug purchase at a mass merchant. Another 23.3 percent opted to buy from the nearby home improvement center—Lowe’s or Home Depot, for example. Even the Internet wooed a higher percentage of rug buyers at 13.8 percent compared to traditional furniture stores where only 11.3 percent of surveyed consumers recently bought their new rug.
When asked where they shopped for their rugs prior to purchasing, 16 percent said they’d looked for rugs at a traditional furniture store. The mass merchants garnered 29.7 percent of consumers shopping for their purchase, and the home improvement stores were cited by 20.5 percent of rug consumers.
Price sensitivity could have driven many consumers into non-traditional furniture channels for their purchase.
More than 42 percent said they spent between $100 and $399 for their most recent rug purchase. Another 35.2 percent reported they spent less than $100 for their rug. Another 12 percent spent between $400 and $799.
Consumers in the survey seemed clustered around a few trends. Neutral colors—beige, white, black, for example—were bought nearly six times as more frequently than other colors with 66 percent opting for neutral hues. On-trend blues, one of the more popular colors in home furnishings, came in a distant second at 11.3 percent, and greens followed at 10.7 percent.
A myriad of designs and patterns exist in rugs, but the largest segment of our consumer group, 29.6 percent, opted for solid rugs. Geometric designs followed at a distant second with 18.9 percent buying those patterns. Floral designs at 15.1 percent and traditional prints at 12.6 percent followed in third and fourth places.
Want More?
A more in-depth report on the rug category is available for purchase by e-mailing Laura McHan at Laura@FurnitureCore.com
5.7%
Percentage of 2015 industry sales attributed to rugs
$5.29 Billion
2015 rug sales
6.2%
2015 sales growth for rugs
What Suppliers Say
Kas Rugs’ Harbor
Hand hooked in China of polypropylene, Harbor works indoors or out. Suggested retail is $250 for a 5 x 8.
Surya’s Banshee
This hand-tufted rug is crafted of wool and viscose features shimmer. The abstract painterly motif in a soothing palette of neutrals and trending blues makes the rug very versatile and well suited for a variety of spaces. Suggested retail is $877 for a 5 x 8.
Jaipur’s Murray by kate spade new york
Retailers appreciate the ombré effect and the unique look of the hand-knotted rug. The rug is made of wool and eco-friendly bamboo.
Barrister by Capel Rugs
The menswear deign of the rug give it the chops to hold the focal point of a room. Its versatility allows it to fade into the background when paired with patterned décor.
Feizy's Brixton
Shown in Atlantic, the rug is inspired by the paintings of Tobias Tovera, making it an instant fan favorite. Power-loomed durability and a timeless design make this rug perfect for any room. Suggested retail is $422 for 5 x 8.
Loloi’s Fable Collection
The collection, designed by Justina Blakeney, offers chunky texture and vivid colors. The rug has generated interest as not only a floor covering, but also as a wall hanging and other unique uses. Suggested retail on a 5 x8 is $1,019.
nuLoom’s Felicity
Crafted of polyester, the blended soft corals and blues pop in the intricate design. Suggested retail is $179 for a 5 x 8.
Company C’s Passionflower
An all-over drawing of a bursting bloom makes a bold statement in wool. A classic drawing in updated colors. Suggested retail for 5 x 8 is $680.
April 4,
2016 by in Industry
This issue continues our annual focus on the competitive battleground within the furniture industry. In the October 2014 issue, we explored the impact of the expansion of regional furniture chains. Many were moving beyond their state boundaries and challenging other large independent retailers.
Last year, we addressed the larger regional chains that were marching westward in a move to establish a national presence. This month, we focus more closely on the independent dealers—those mom-and-pop stores that have been the backbone of the industry. Today, however, independent retailers represent less than 10 percent of all furniture sold.
The Great Recession led to the demise of many stores; many of them impacted by family succession. There is no one to pick up the reins of the store. The strategy for many of these family businesses was to let the store support the family and the real estate provide for retirement. Unfortunately, today the promise of retirement has not been fulfilled when much of the retail has moved to creating shopping experiences close to the malls. Many family-owned retailers have the burden of high lease rates to support the first generation. The result is an unprofitable financial model. The struggle is similar to agriculture in the early 1900s when the family farm could no longer support two families.
The refrain I hear most often is—say it isn’t so. Folks are curious whether small, independent furniture stores will disappear.
Not necessarily so. The hope may lie in with manufacturer’s retail verticals. We are talking specifically about Ashley HomeStores, Ethan Allen, and Thomasville stores. Yes, many are corporate stores, but there are also multiple units owned by individuals.
I am not pushing any of these, but it is time to redefine the business model. Perhaps, suppliers should assume responsibility for delivery to the consumer after the sale similar La-Z-Boy’s current strategy. Yes, this does mean more of the margin goes to the suppliers’ side, but perhaps they can be more efficient. One-source product supply, another alternative, is like an Ashley store with virtually no inventory at retail. This means significant risk for the supplier, but less markdown loss for the retailer. Assuming responsibility for consumer advertising on a national basis for the retailer is another change that could be considered.
I could go on, but the bottom line is that there is a 60 percent to 70 percent gross margin in the distribution channel. Which entity can accomplish the transfer from the end of the production line to the consumer’s home? It is time to think in a different way. Who is ready to sit down with a whiteboard and diagram the process?