Monthly Issue
From Home Furnishing Business
February 16,
2015 by in Green, Industry 
By Sheila Long O'Mara
The greening of the industry is important, but consumers aren’t quite all in yet.
Let’s take a walk back in time. We in the furniture industry have been talking about the greening of the buisness for a while now.
The movement toward an industry that is more environmentally sensitive has been an up and down trail impacted by a number of things—the recession that hit, lack of consumer awareness and yes, even a bit of infighting among players in the industry. Thankfully, the cantankerous days are mostly behind us, and the movement has been making strides.
A number of big name retailers have put sustainbility at the forefront of their business strategy. I’m thinking Ikea, the Williams-Sonoma family of brands, Restoration Hardware, Crate & Barrel and Room & Board. Each of these brands have powerful name recognition among consumers, and they’re helping in their own way to create buzz around sustainability.
Smaller, more niche retailers have committed to taking big steps to make a difference in the greeing of furnitureland.
However, our target consumer isn’t quite there yet. She needs a bit more nudging and a lot more education on the matter. Nearly half of consumers in the latest Green Home Furnishings Study were not aware eco-friendly options were available in furniture. That’s a signifcant number in an industry filled with green choices and not so green choices. However, the bottom line is that the story, the craftsmanship and the benefit to the environment isn’t being told by the marketing departments. Nor is it being told on the sales floor while customers are in the mood to buy.
No great shifts in society ever happen overnight, in a few months or even a few years. The shift to sustainable home furnishings will ebb and flow, gain steam and lose momentum as we continue down the path; and external forces, like the economy, will continue to impact the progress we make.
The thought leaders—those that believe and lead others one small step by one small step—will evenutally make the difference. First comes one person, followed by two more, followed by a community. The furniture industry has those leaders who have already stepped up and are making a difference.
Here’s to more of those leaders willing to teeter on the edge for a better, environmentally friendly world, and to those who are eager to tell the story so consumers will care.
February 16,
2015 by in Economic News, Industry
By: Bob George
The term Tipping Point entered the business lexicon several years ago to describe an occurrence in the consumer sector. Made nearly famous by author Malcom Gladwell, the concept applies to the business sector as well. Simply put, tipping point is the instance of a previously rare happening becoming rapidly and dramatically more common.
For several years, Impact Consulting Services has conducted research on the topic of sustainability and specifically sustainability in the home furnishings industry. We have reached the magic number that indicates 50 percent of all consumers would be interested in buying green home furnishings.
The question now becomes what will it take to make green or sustainable or eco-friendly an established fact in the industry? According to Gladwell, author of the Tipping Point “The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts.” He notes these gifts specifically as connectors, mavens, and salesmen.
In his book, Gladwell defines each of those people as follows:
Connectors: “… people who know large numbers of people and are in the habit of making introductions.”
Mavens: “… ‘information specialists’, or people we rely upon to connect us with new information.”
Salesmen: “… are ‘persuaders’, charismatic people with powerful negotiation skills.”
What category do you fall into?
As an aside, I, as principal of Impact Consulting, was involved in a campaign several years back to set a minimum sofa cushion density of 1.8. It worked, and the industry is better for it.
We at Home Furnishings Business have provided the information. Let’s get started.
February 16,
2015 by in Economic News, Industry
Major shifts are occurring in the populations and purchasing habits of the four prime purchasing age groups for the furniture industry.
The two older groups—ages 45 to 54 and ages 55 to 64—are quickly surpassing the younger generations in size. Households ages 35 to 44 (Gen X), traditionally the core of the furniture industry, are in sharp decline. While the youngest age group tracked, ages 25 to 34 (Gen Y), has shown little growth since 2000, it does show great potential for the industry. As the second-highest birth rate generation, the numbers will be impressive as the group ages into the furniture buying segment.
Traditionally, furniture industry households have been divided into four age groups: 25 to 34 years, 35 to 44, 45 to 54, and 55 to 64. Consisting of more than 50 percent of the furniture buying population, the Baby Boomers (currently ages 49 to 68) have begun to exit out of the prime furniture purchasing years. Challenges face the industry as the group ages; especially in the next 5 to 10 years, as household formations slow.
The Rise of the Boomers
Since 2000, the rise in households has rapidly grown 68 percent due the successes of the Baby Boomers. In 2013, people aged 55 to 64, accounted for 26 percent of the furniture buying population. That’s up from 18 percent in 2000. People aged 45 to 54, currently including the younger portion of Baby Boomers, have increased in numbers by 15 percent since 2000.
While holding the greatest share of the furniture buying population in 2000, the Gen Xers, people between 35 and 44, dropped 11 percent to 24 percent in 2013. When compared with the Baby Boomers, Generation Y, those aged 25 to 34, have shown minimal growth since 2000. Gen Y grew 7.5 percent and made up 23 percent of total furniture buying households.
In 2007, the recession was hitting its stride and the older age groups surpassed the younger generations in numbers. Currently totaling 22.8 million households, ages 55 to 64 became the second largest group in 2011—a meager 5 percent lower than ages 45 to 54. As a combined group, predominately made up of Baby Boomers, it represents more than half of the furniture buying population.
Gen X households, which dominated the industry’s record growth in the late 1990s and early 2000s, are in sharp decline. In 2004, this prime family age group fell to second place in the race for the largest age segment, and in 2011 it dropped to third. The youngest group, Gen Y, holds the least number of households in the furniture buying population and has had consistently slow growth since 2000.
Spending vs. Age
Although Gen X is declining in numbers, it continues to lead the industry with an average annual expenditure of $527 in 2013, the most recent data available. On the flip side, the Boomers have grown in numbers, but their purchasing is 15.6 percent below Gen X furniture buyers with an average of $456 in annual furniture spending in 2013.
Table C illustrates annual expenditures by age group.
10-Year Historic Spending
Since the recession bottomed out in 2009, expenditures in most age groups have been steadily increasing to meet or surpass the average annual furniture purchase of 2002. Only one age group—45 to 54—in 2013, however, has come close to its spending levels from 2005.
The following four charts break down the historical furniture spending daty by age group.
While ages 55 to 64, the older Boomers, have made promising growth in spending since 2009 with an increase of 38 percent, the group spent 16 percent less per household on furniture than Gen Xers. The average spending is still down 14 percent to $456 per household for the Boomers from 2005 when they spend $527 on furniture.
Furniture spending trends by the largest age group — 45 to 54 — are shown in Table E. This group, split between the younger Boomers and the older Gen Xers, spent the lowest amount on furniture per household most recently. This group spent $422 on furniture in 2013.
That amounts represents a 6.8 percent drop from 2002 when the group was spending $453 on furniture and a slight 0.2 percent shy of its 2005 spending level of $423.
While sleeping in numbers, the 35-to-44 group, Gen X, has traditional spent the most per household on furniture. That trend continues, and Gen Xers have shown a 35 percent spending increase above their 2009 spending levels.
In the second quarter of 2013, the average Gen X household spend $527 on home furnishings, as shown in Table F.
The youngest group in among our furniture buyers, Gen Y encompassing those aged 25 to 34, is also the smallest in number. The group still spent on average $420 on furniture per household in 2013.
Gen Y appeared to be the least sensitive than older households in its spending habits during the recession. See Table G.
Future of Furniture Buying
Looking ahead into the next seven years, households in the age segment of 55 to 64 will continue to increase at a staggering rate. With an estimated 77 percent from 2000 to 2020, this segment will make up the majority of the furniture buyers.
Ages 25 to 34 are projected to increase 15 percent over the 20-year span, and those between ages 35 to 44—the prime furniture buyers—are expected to fall by 7.5 percent during the same period. The age group of 45 to 54 will have flat growth in 2020.
In 2020, age group 55 to 64 is projected to make up 19 percent of the furniture buying population, while the three younger generations will each account for about 16 percent.
February 16,
2015 by in Business Strategy, Industry
By: Sheila Long O'Mara
Kevin Sauder, president and CEO of Archbold, Ohio-based Sauder Woodworking, recently took the reins as chairman of the American Home Furnishings Alliance. He takes over as the industry is facing a number of regulatory issues and is sure to have a very full year. Sauder gave us a bit of his time recently to answer a few questions.
Home Furnishings Business: Share with me your outlook on the state of the industry for 2015. What are the challenges and what are the strengths?
Kevin Sauder: All signs point to a stronger economic environment for 2015, particularly with housing starts and the positive consumer feelings about lower gas prices. So we think furniture should have a good year. Sauder is booked solid through the first quarter.
Medium and higher-end furniture is a big-ticket, planned purchase, so it tracks more closely with consumer confidence, the stock market and housing starts. At the low end and in the ready-to-assemble (RTA) markets, we’re more tied to disposable income and the purchase of new electronics, such as TVs and computers. So we like to see low gas prices and innovations in electronics.
We’re fortunate in the RTA industry to make a product that ships well to consumers and is immediately available in inventory. The dot com channel, whether Internet-only retailers or combining bricks and mortar with online retailing, is a real growth area for our company because it takes advantage of these benefits.
HFB: What is the biggest obstacle facing the furniture industry?
Sauder: Other big-ticket purchases like cars and appliances spend huge budgets on innovation and advertising, which builds brand awareness and consumer demand for the newest thing. Furniture retailers like Restoration Hardware, Pottery Barn, Ikea, and Crate & Barrel have done a nice job of defining their niche and creating real demand for their products. It’s harder for more full-line retailers and manufacturers to create those “gotta have it” products to bring in the crowds without being tied to Labor Day promotions.
HFB: What’s your perspective on domestic manufacturing?
Sauder: More than 90 percent of our products are made in Archbold, Ohio, because we have a very productive labor force and a highly automated factory. Where it’s impossible to automate major portions of the production process, we’ll still need to import some complementary items. Domestic manufacturing can be a real benefit to the retailer with quicker response times, less inventory risk, and better quality control. But the Asian factories continue to improve and often represent real value for long runs of popular SKUs.
HFB: Where does the industry need to move in regard to the regulatory climate?
Sauder: We used to be reactionary to government regulation, ‘Why are they doing this to us?’ But once we started becoming more proactive and getting involved upfront with standard setting and testing, the industry developed a healthier relationship with agencies like CARB, EPA, and CPSC. Sauder offers our internal chemist to work on formaldehyde standards and our product safety director to help design safety tests. Ashley has done much of this as well. The AHFA also plays an important role in all of this. I think we need to keep being proactive to ensure our voice is heard and common sense legislation becomes the norm.
HFB: What would you like for your legacy as the 2015 AHFA president to be?
Sauder: I’m thrilled that they asked a guy who makes $99 TV stands for Walmart and Ikea to be the next AHFA president. The furniture industry is rapidly changing, the retail channels are evolving, and the regulations keep coming. We need to be very inclusive in utilizing the strengths of our entire AHFA membership and work together to grow our industry.
February 16,
2015 by in Casual Dining, Dining Room, Product
By: Sheila Long O'Mara
Gathering around the table to share a great meal has become the perfect bonding experience for growing, busy families.
To do that, families need a table at which to gather, and the furniture industry has come through with a wide variety of styles and looks to fill the bill.
While formal dining rooms seem to be becoming extinct in today’s homes — a sentiment echoed in the latest consumer survey by Home Furnishings Business — dining at home has not. Instead, they’ve shifted their dining location.
The 276 consumers who participated in our dining survey had shopped for dining room furniture for their homes within the last 18 months. More than 86 percent of them reported dining most frequently in their casual dining area or in the kitchen, and 13.5 percent said the formal dining room was their go-to spot for dining.
Their shopping patterns fall in line with that figure with 67.5 percent saying they were in the market to buy a casual dining group while the other 35.5 percent said they were seeking a formal dining group.
Busy family schedules filled with after-school activities for children, dual-income couples and other family activities have shifted the long-ago formal dinners to more casual affairs. That’s not to say coming together at the end of a full day takes on less importance. Today’s family is dining more casually, and dare we say more intimately, with lots of sharing of the day’s happenings from all family members.
The dining table — be it formal or casual — tends to be the hub of many homes and often serves multiple purposes. Consumers cited a number of activities that take place around the dining table, including sitting to talk (32.1 percent), watching television (17.8 percent), paying bills (16.4 percent), hobbies (13.6 percent), work (11.1 percent) and homework (9 percent).
Of those consumers shopping for casual dining styles, 43.5 percent bought a table and 42.6 percent also bought chairs within the last 18 months. Contemporary looks reigned with the consumers. More than 43 percent bought contemporary casual dining, while 28 percent opted for a traditional look. The remaining purchases were sprinkled among European country, rustic country, mission, cottage and transitional styles.
According to dining suppliers who submitted their top-selling dining groups, the industry offerings are inline with consumer trends and tastes. Consumers are on the prowl for casual, more livable dining options with little to no high gloss finishes for their casual dining areas. Nearly 60 percent say they prefer a medium gloss and 32.5 percent prefer a flat, dry finish.
Cherry, (26.5 percent) mahogany (29 percent) and oak (23.7 percent) score highest in preferred wood species among consumers in the casual dining market.
When it comes to pricing, consumers vary on their price expectations for a casual dining group — table and four chairs. More than 35 percent (35.6 percent) say they’d expect to pay between $600 and $999 for a casual dining suite. More than a fourth (25.6 percent) would pay $1,000 or more, while 21.6 percent peg the cost for a five-piece group at between $400 and $599.
Moving into the formal dining, 36.2 percent of the consumers who purchased the category within the last 18 months bought a table while 29.8 percent bought chairs, too.
As expected, price considerations for formal dining climbed beyond those of casual dining. Slightly more than half (50.7 percent) of consumers expect to pay between $1,500 and $3,999 for a formal table and six chairs. About 26 percent (26.2 percent) expect to pay less than $1,500, and 23.1 percent expect the group to cost between $4,000 and $11,999.
The style preferences for formal dining flip flopped from the casual dining category. More than 38 percent (38.7 percent) of the consumers say their dining room furniture is traditional, and 29.3 percent reported having a contemporary dining group. Medium gloss finishes come out ahead for formal dining as well with 65 percent saying that look is their preferred finish. Only 11.7 percent said they preferred a high gloss finish in their formal dining room.
Mahogany and cherry are the two referred wood species for formal dining with 35.5 percent selecting cherry as their top choice, and 31.5 percent opting for mahogany. Another 22.8 percent said they’d prefer an oak formal dining group.
Want More?
A more in-depth report on the bedroom category is available for purchase by calling Natalia Hurd at (404) 390-1535 or via e-mail at NataliaHurd@ImpactConsultingServices.com
Callouts
11.25%
Dining’s percentage of 2014 furniture sales through 3Q
$6.17 Billion
Dining sales through 3Q 2014
2.2%
Dining’s sales growth between 2013 and 2014 through 3Q
Retailers Say
Saloom’s Cresent Dining Table
“The maple table is available in a number of finishes offering a great amount of customization for our customer. We do a lot of COM on the upholstered seats, too.” Table retails at $1,200.
Peggy Burns
Circle Furniture
Acton, Mass.
Winner’s Only Mango Dining Room
“Customers like the casual, relaxed style, and the warm finish on the mango wood with the metal accent details. The butterfly leave makes it easy to expand the table for gatherings plus there are coordinating stools and a gathering table. It’s perfect styling for our Minnesota casual lifestyle.” Retail is $999 for dining table and four chairs.
Susan Strong
Schneiderman’s Furniture
Lakeville, Minn.
Suppliers Say
A.R.T. Furniture’s Harvest Dining from Collection One
Collection One from A.R.T Furniture is a casual dining collection inspired by antiques from Provincial Canada and American architecture. The Harvest Dining speaks to consumers with its classic style, rich scale, and detail and unique appearance. Suggested retail as shown is $2,999.
Copeland Furniture’s Audrey Dining with Estrelle Chairs
Audrey offers an abundance of versatility for consumers and retailers. The table from Copeland Furniture is manufactured in solid American walnut or cherry in five finishes and is available in six extension table sizes as well as two fixed-top sizes. The precision ball-bearing extension system with self-storing, butterfly leaf is popular feature. The 42-inch by 72-inch/96-inch extension in walnut retails at $2,999.
Hickory Chair’s Ingold Oval Table
Customization makes the Ingold table from Hickory Chair a winner. Its classic form can adapt to the traditional or the modern, and the table is available in a number of configurations, including round or oval. The pedestal bases can be built with casters of antique bronze, antique silver or antique brass. Starting suggested retail is $7,575.
Fine Furniture Design’s Antebellum
The Antebellum dining room from Fine Furniture Design offers relaxed traditional styling in the tradition of period pieces, but scaled and designed with today's consumer in mind. Crafted of walnut solids, figured swirly mahogany veneers, with inlays of maple and ebony veneers. Retail for table and chairs is $5,800.
Lexington Home Brands’ Tommy Bahama Home Ocean Club Peninsula
Ocean Club from Lexington Home features a timeless design and generous styling packed with function. The combination, along with the fresh interpretation of contemporary island living, makes the group a winner with consumers. Suggested retail for the table is $2,149; side chairs are $399, and arm chairs are $459.
American Attitude from Samuel Lawrence Furniture
Samuel Lawrence delivers a unique mix of artistry and design to dining with American Attitude. Building on the popular industrial chic trend, the collection pays homage to the environment with its authentic, natural viewpoint.
Retail, as shown, is $4,300.
Corliss Landing from Cresent Fine Furniture
An opaque driftwood stain enhances the knots and imperfections of the acacia wood in Cresent’s Corliss Landing. The natural weathered look remains a popular option for consumers looking for more casual dining options.
Artisan Shoppe from Kincaid Furniture
A design-your-own approach from Kincaid’s Artisan Shoppe speaks to consumers looking to furnish their dining needs. The collection offers a range of choices in sizes, shapes, finishes and chair styles as well as storage cabinets. Retail for table, $1,849.
American Drew’s Park Studio
The space-saving design of Park Studio from American Drew works for first homes or small, urban apartments and loft spaces. Tables are paired with compact seating options.
Suggested retail for round table and four chairs, $2,460.
Viewpoint from Emerald Home Furnishings
Emerald Home Furnishings offers simple, contemporary lines with Viewpoint. Solid pine combines with oak veneers to showcase a textured wire brush finish that speaks to the casual feel consumers are seeking. Suggested retail for five-piece group, $799.