Charting the Progress of Survival: Furniture and Home Furnishings Stores

September 3, 2019  by HFBusiness Staff in Business Strategy, Industry   

This month’s Statistically Speaking studies a March 2019 report from the U.S. Census Bureau’s Statistics of U.S. Business. Although data collected ends in 2016, the report shines the light on challenges furniture and home furnishings stores have faced over the last 10+ years and continue to face going forward.

As shown in Table A, the disparity between furniture store openings and closings was the highest from 2007 to 2012. The ratio of furniture store closings as a percent of total stores averaged 11% in the five years during and immediately following the recession. Despite a boom of store openings from 2011 to 2012, the ratio of furniture store openings averaged only 8.3% in the same five years. From 2012 to 2016, the net change in stores has stayed relatively flat – never showing a positive net change for furniture store openings.

The disparity between store openings and closings has reached even wider for home furnishings stores – closing an average of 11.6% of stores per year from 2007 to 2012 and only opening a yearly average of 6.5% (Table B). Since 2012, the number of store closings has exceeded openings with the net change a negative 1.4%.

The heaviest decline in both furniture and home furnishings stores occurred between 2007 and 2012 (Table C). Furniture store locations dropped 18.8% during that period from 27,386 stores to 22,201. Meanwhile home furnishings stores fell 22.5% from 33,787 stores in 2007 to 26,184 in 2012. Furniture stores declined another 0.9% from 2012 to 2016, while home furnishings stores lost 5.3% more stores. Overall, from 2007 to 2016, the number of furniture store locations decreased by 19.6% and 26.5% for home furnishings stores.

Partnered with store closings is loss of store employees. For both furniture and home furnishings stores, the largest decline in the number of employees occurred in 2009 – a drop of 13.1% and 17.9%, respectively. Decreasing the number of employees steadily from 2007 to 2012, employees in furniture stores diminished by 28.4%, while home furnishings stores cut employees by 29.8%. Both furniture and home furnishings stores had employee growth from 2012 to 2016 as furniture stores increased employees by 7.9% and home furnishings stores by 5.7% (Table D). And though employment continues to slowly increase, it is still well below 2007 levels, 20% less than for furniture stores and almost 24% less for home furnishings stores.

Although hit hard by the Great Recession, furniture and home furnishings stores had a surge in new store openings from 2011 to 2012 (Table E). New furniture store openings jumped by 64.6%, while new home furnishings store openings increased by 20.9%. Unfortunately, as shown in Table F, 2012 also had the highest number of new furniture and home furnishings store clos-ings – new stores dropping by 75.6% and 33.8% respectively.

Between 2007 and 2011, the rate of loss of store employees was higher than the decline in store locations as shown in Figure 1. In 2007 furniture stores averaged 9.9 employees per store and home furnishings stores 9.6. By 2011 this ratio had fallen over a full person per store. There are many reasons for the decline in store employees and the fact that the number has not yet entirely recovered. During the recession the decline in sales was the driving force for employee losses. But since that time, especially for furniture stores, many stores have downsized store size and outsourced functions, especially warehouse and delivery. Of equal importance is the loss of store traffic. According to studies by Impact Consulting Services, the parent of Home Furnishings Business, where once a customer shopped several brick and mortar stores, online research prior to entering a store has helped reduce the average number of stores shopped per purchase to two.

As shown in Table G, small independent stores with under 10 employees make up the greatest share of total furniture stores in the U.S., roughly 44% in 2016. That share has diminished since 2006 – falling 5.7 percentage points from 49.7%. The largest furniture stores (corporate) with the highest number of employees (500+) grew their share of furniture store locations from 18.1% to 27.4% in nine years – a jump of 9.3 percentage points. Overall furniture retailers with less than 100 employees all lost share to larger corporate furniture stores.

The majority of furniture store employees (52.4%) worked in stores owned by corporations with more than 100 employees in 2016 and 41.3% of those were employed in furniture stores with 500+ employees. The largest retailers (500+) were the only employee range to gain a greater percentage share 2017 to 2016 – increasing by 9.5 percentage points. The shifts in store percentage and employee size were not as great for home furnishings stores (Table H). While home furnishings stores with 500+ employees did increase as a percent of total stores by 1.9%, stores with under 10 employees remained just under 60% of total home furnishings stores. Home furnishings stores with the most employees were also the only employee range to gain in size – increasing 4.2 percentage points to 55.7% in 2016.

Although the shakeout continues, the stores left standing (existing stores) are showing signs of some stabilization. Tables I and J track employment growth for a full year comparing 2007 to 2016. Progress is tracked in terms of whether existing stores grew employment, lost workers, had stable employment, or closed their doors by yearend. There are two important positive outcomes from this comparison. First, the number of stores increasing employees or with stable employment increased from 54.7% of the total existing stores at the beginning of 2007 to 70.9% by 2016. Also, the percent of existing stores that closed was almost cut in half in 2016 versus 2007, 6.6% closed (2016) compared to 12.8% (2007) (Table I).

The percentage of existing home furnishings stores that closed by year-end has decreased from 11.5% in 2007 to 7.7% in 2016 (Table J). While the percent of existing home furnishings stores open at year-end decreasing in employee size has fallen 5.2 points to 25.6% in 2016, the percent of existing stores open at year-end increasing in employee size has grown slightly by 0.6 points to 24.8%.

The percentage of existing home furnishings stores that closed by year-end has decreased from 11.5% in 2007 to 7.7% in 2016 (Table J). While the percent of existing home furnishings stores open at year-end decreasing in employee size has fallen 5.2 points to 25.6% in 2016, the percent of existing stores open at year-end increasing in employee size has grown slightly by 0.6 points to 24.8%.

Big-name store closings, like Mattress Firm, make the headlines, but the stark reality of the furniture industry is in the smaller headlines in hometown newspapers. These are seasoned retailers closing after decades of successful operation. Here are a few excerpts from local stories in 2017 that gave us pause. We selected a cross section from around the country: n Dearden’s, serving Southern California shoppers for 108 years, closing all eight of its stores n Montclair will bid farewell to one of its oldest-running businesses when Hampton House Furniture closes (NJ)

• All six Rothman Furniture stores closing – serving St. Louis homes since 1927
• Louis Shanks cites ‘dramatic’ retail shift in departure from Houston
• After 112 years in business, doors closed for the final time at Lee’s Furniture in Montrose (PA)
• Gray’s Furniture closing doors after 57 years on Broad Street (Selma, AL)