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Factoids

Factoids offer brief snapshots of current topics pertinent to the Furniture industry based on our on-going research. Increase your grasp of current trends, consumer attitudes, and shifts within the industry through solid statistics and concise insight.

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Factoids

Housing Industry Dilemma Housing Inventories

The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences.  Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the second factoid in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.

The most critical result of the lack of new housing starts is falling housing inventories which in turn drive up prices.  The number of rentals and homes for sale has been falling consistently since coming out of the recession when inventories were high. During the four-year period 2010 to 2014, rental inventories fell at an annual rate (CAGR) of 7.5 percent and housing for-sale inventories declined 10.2 percent. During the following three years, 2014 to 2017, rentals and housing inventories fell again but at a smaller annual rate of 0.4 percent and 4.8 percent respectively.  This year, based on an annualized first quarter, rental inventories are down another 3.4 percent and houses for sale have declined 7.2 percent.

Source: U.S. Census Bureau, Current Population Survey/ Housing Vacancy Survey

Housing Industry Dilemma Furniture and Housing Indicators

The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences.  Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the first in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.

Fewer homes are being built per household than at almost any time in U.S. history and home construction per household, a decade after the recession bust, remains the lowest level in 60 years of record-keeping.  Adding fuel to the flame, the housing industry is not able to provide the work/lifestyle preferences of ballooning Millennial households nor affordable housing to first-time home buyers.

Since 2010, when the recovery from the recession began in full swing, the furniture industry has been consistent, averaging around 4.7 percent growth.  And while the growth in housing starts appears stronger on paper compared to the lackluster growth in new household formations, the actual numbers are about the same, 6.2 million units each over the last five years, not enough to keep up with demand.  Building shows signs of picking up based on first quarter starts this year (up 9.3 percent), but economists say this will do little to ease the crisis in many cities.

E-commerce and the Furniture Industry Retail Trade Totals

This is the final factoid in a series of five factoids detailing the rise of e-commerce in the furniture industry. As many brick and mortar stores search for strategies to compete with giant online retailers, those same retailers are looking for ways to remain profitable.

Retail Trade Totals

Internet sales of all consumer products from all retail types of outlets, whether brick and mortar or e-commerce companies, are estimated to have reached $437.5 billion in 2017. It may be surprising to some, however, that these internet sales represent only 8.6 percent of all retail sales for all consumer products. But internet purchases continue to make major inroads into many consumer products with no sign of slowing down.

The rapid growth of furniture industry sales by successful e-commerce retailers are challenging brick and mortar stores, but traditional store fronts still offer a customer experience that an e-commerce retailer cannot. But e-commerce companies are quickly moving into areas (for example, store fronts and print catalogs) to challenge the customer experience of traditional brick and mortar retailer.

E-commerce and The Furniture Industry E-commerce Retailer Sales

This is the fourth factoid in a series of five factoids detailing the rise of e-commerce in the furniture industry. As many brick and mortar stores search for strategies to compete with giant online retailers, those same retailers are looking for ways to remain profitable.

E-commerce Retailers

E-commerce retailers are defined as companies without physical stores competing with brick and mortar establishments. Sales of combined furniture and home furnishings through e-commerce retailers have increased from $7.9 billion in 2006 to an estimated $46.3 billion in 11 years (2006 to 2017) – a growth of 486 percent.

Growing at an average annual rate (CAGR) of 17.4 percent a year, e-commerce furniture and home furnishings retailers show no signs of slowing down. The two giants in the industry, Amazon and Wayfair, are both looking at ways to incorporate brick and mortar stores into their portfolios. These companies see the desire held by a majority of consumers to see especially higher ticket furniture items in person before making the leap to buy. Along with Wayfair’s entry into the print catalog business, according to Boston Magazine, the company is looking to open its first showroom in an old Marshall’s storefront in downtown Boston. Rather than resist the looming presence of Amazon, mattress manufacturer Tuft & Needle has partnered with the online company to expand its brick and mortar stores using Amazon technology and selling various Amazon products in the stores. These moves could put more stress on traditional furniture retailers.

In addition to furniture and home furnishings, other consumer merchandise lines dramatically increased sales through e-commerce retailers. At $59.1 billion in sales, clothing/footwear leads e-commerce retailer sales in 2016 up from $12.9 billion in 2006 – skyrocketing 358 percent. Although not as high as clothing/footwear, furniture and home furnishings experienced the highest growth among e-commerce retailers over two years 2014 to 2016 – jumping 54 percent. Sporting goods sold through e-commerce retailers also continue a positive trajectory, increasing 44 percent in two years and passing the slower growing computer hardware merchandise line.  

Source: U.S. Census Bureau, 2017 estimates by Impact Consulting Services Inc’s proprietary FurnitureCore model. All years have been revised by the Census Bureau in March 2018. *data for 2017 is not yet available.

E-commerce and the Furniture Industry Brick and Mortar Stores E-commerce Mail Order Retailers

This is the third factoid in a series of five factoids detailing the rise of e-commerce in the furniture industry. As many brick and mortar stores search for strategies to compete with giant online retailers, those same retailers are looking for ways to remain profitable.

Brick and Mortar Stores E-commerce

While the success of online retailing among brick and mortar merchants has increased over the years, the e-commerce sales comparison remains vast between brick and mortar stores and pure e-commerce retailers. E-commerce sales among combined furniture and home furnishings stores jumped 200 percent from $367 million to $1.1 billion 2006 to 2016 but furniture stores only held one percent of that volume. (Note: 2017 data has not yet been released.)

Comparing combined furniture and home furnishings stores to other retail brick and mortar companies, furniture and home furnishings stores lag behind in percent of e-commerce sales to total sales but has shown 25 percent growth from 2014 to 2016. Just reaching 3.0 percent in 2016, clothing and clothing accessories stores have the highest volume of e-commerce sales as a percent of total sales among brick and mortar retail store types.

Mail Order Retailers

Technically the mail order business is a small part of the furniture industry but the lines between mail order and e-commerce are blurring and print catalogs are making somewhat of a comeback as another media to reach out and touch the consumer. Data from the Census Bureau and Impact Consulting’s FurnitureCore.com industry model estimates the furniture mail order business at $2.3 billion in 2017, only 2.2 percent of industry sales. These sales were flat compared to the previous year.  And according to the U.S. Postal Service and research by Data & Marketing Assn., in 2016, consumers are getting fewer catalogs in the mail compared to the glory days. In 2016 9.8 billion catalogs of all types reached American mailboxes compared to double that amount in 2007.

Despite the gloomy statistics, last year saw evidence that print catalogs are resurging but not in traditional mail order formats.  For example, home furnishings e-commerce giant Wayfair produced its first print catalog at the end of 2016 and continues to roll them out. Wayfair claims its catalogs are meant to inspire a lifestyle as opposed to promoting a brand. 

Research points to several reasons print catalogs are growing.  First, consumers are getting less and less mail overall as the “paperless” movement has become popular and therefore catalogs now stand out in consumer mailboxes.  Also, the advertising clutter in email boxes along with saturation in social media has driven companies to give the old fashioned catalog another look. Plus, software ad blockers are causing fewer marketing messages to actually reach the consumer. And finally, research by Data & Marketing Assn. suggests simply that Millennials really do like them.

Industry Sales by Quarter 2011 Q3 to 2018 Q3 Bedding Industry

Industry experts are still trying to get a handle on the impact of the closing of Mattress Firm stores as well as the ongoing Bedding sales through eCommerce. Preliminary data puts third quarter 2018 retail bedding sales at $4.14 billion up 3.5 percent over the same Q3 of 2017. Compared to the previous second quarter of this year, third quarter sales are up 10.2 percent signaling Bedding’s cyclical third quarter rise in sales.

Preliminary 2018 Q3 data points to continued slower Bedding growth compared to other major furniture products. Sales of $4.14 billion are 3.5 percent greater than 2017 Q3 and 10.2 percent higher than 2018 Q2.

For the first three quarters of 2018, Bedding sales totaled $11.9 billion, up 2.7 percent over the first three quarters of last year.

Source:  Impact Consulting Services, Inc. industry model 
Note: 2018 industry data is preliminary

Industry Sales by Quarter 2011 Q3 to 2018 Q3 Furniture & Bedding

Despite the ongoing disruptions in the Bedding industry, the total industry (furniture and bedding) continued steady and good growth in the third quarter pushing sales up 7.5 percent over 2017 Q3. Third quarter sales reached $28.54 billion. Compared to the last quarter, 2018 Q2, the third quarter was up 1.4 percent. Retail furniture stores appear to be leading the surge this year posting 8.1 percent year-to-date growth over 2017 through three quarters.

Furniture (excluding Bedding) in the third quarter grew 8.2 percent in versus the same quarter in 2017 totaling $24.4 billion. Compared to last quarter, 2018 Q2, growth was flat.

As the Bedding industry attempts to steady itself with the demise of Mattress Firm, third quarter sales grew in the neighborhood of 3.5 percent compared to the same quarter last year, totaling $4.14 billion. This number is up 10.2 percent over the last quarter, 2018 Q2, signaling Bedding’s typical third quarter cyclical rise in sales.

As shown in the graphic, until the fourth quarter of last year, quarter over quarter growth had been under 3.5 percent for the preceding five quarters throughout 2016 and the first three quarters of 2017. Since that time, the industry has picked up steam, with the third quarter growth this year of 7.5 percent adding to the momentum.

Furniture (excluding Bedding) increased 8.2 percent in 2018 Q3 versus the same quarter in 2017 with sales of $24.4 billion.

Bedding sales are still under review, but preliminary results show 2018 Q3 Bedding at $4.14 billion, up 3.5 percent over the same Q3 of 2017.

Source:  Impact Consulting Services, Inc. industry model Note: 2018q2 has been revised.

Furniture Industry Growth by Outlet Type

This is the second factoid in a series of five factoids detailing the rise of e-commerce in the furniture industry. As many brick and mortar stores search for strategies to compete with giant online retailers, those same retailers are looking for ways to remain profitable.

The total furniture and bedding industry grew 3.9 percent last year. It is estimated that brick and mortar store sales of furniture grew only 2 percent while e-commerce retailer sales grew 12.9 percent. 

Over the course of seven years since the bottom of the recession in 2009 furniture sales through e-commerce have grown at an annual rate (CAGR) of 22.2 percent compared to brick and mortar retailers at 3.0 percent.  Total industry sales have grown at an annual rate of 5.1 percent.

Annual year-over-year growth of the three outlet types

The rate of e-commerce sales peaked at 26 percent in 2015, but has slowed somewhat over the last two years to 12.9 percent in 2017.  Meanwhile, brick and mortar sales have struggled to reach 2 percent growth over the last two years.

Along with furniture e-commerce sales, other home furnishing products – floor covering, window treatments and home accessories – have grown at an even faster pace and surpass furniture in online sales. Consumers are still finding it easier and less daunting to buy home furnishings online without seeing or touching them in a store. While furniture e-commerce sales have grown from over 300 percent since 2009 (bottom of the recession) totaling $19.7 billion last year, home furnishings have grown 489 percent to $27.7 billion in 2017.

Source: Impact Consulting Services Inc.’s FurnitureCore.com proprietary Industry Model; U.S. Census Bureau’s Annual Survey or Retail Trade (e-commerce) with all sales revised in March 2017. 2017 preliminary estimates

E-commerce Strengthens Foothold on Furniture Industry Furniture Industry Sales

This is the first factoid in a series of five factoids detailing the rise of e-commerce in the furniture industry. As many brick and mortar stores search for strategies to compete with giant online retailers, those same retailers are looking for ways to remain profitable.

It is estimated that 2017 internet sales of furniture alone from both brick and mortar and pure e-commerce retailers totaled an estimated $19.7 billion or 18.8 percent of the total industry.

The retail furniture industry reached $105.2 billion last year, a growth of 3.9 percent over 2016. Of the $105.2 billion industry total, sales can be distributed between (1) brick and mortar stores, (2) e-commerce retailers plus e-commerce sales by brick and mortar companies, and (3) mail order houses. Pure e-commerce retailers are those that do not have physical store locations, like Amazon or Wayfair, or their e-commerce is operated as a separate business unit, like Walmart.com. Additional e-commerce sales from brick and mortar stores total only 1 percent of the total industry.

Last year furniture and bedding sales by brick and mortar stores (non internet) totaled $83.1 billion compared to $19.7 billion e-commerce (all outlet types), and $2.3 billion from mail order houses.

E-commerce continues to gain a greater share of the furniture industry – jumping from 5.1 percent of sales in 2006 to 18.8 percent in 2017. Meanwhile, brick and mortar share of total sales fell from a 92.2 percent share to 79.0 percent – decreasing dramatically as the economy improved after 2009.

Source: Impact Consulting Services Inc.’s FurnitureCore.com proprietary Industry Model; U.S. Census Bureau’s Annual Survey or Retail Trade (e-commerce) with all sales revised in March 2017. 2017 preliminary estimates

Companies Facing Nationwide Worker Shortage Population Not in Labor Force

This is the final factoid in a series of four factoids showing how labor shortages throughout the U.S. are fast becoming a real issue across all major industries. From farms to factories, employers are having a hard time finding both unskilled and skilled workers. The brick and mortar home furnishings industry is not immune to the worker shortage crisis facing American businesses.

Data from the Bureau of Labor Statistics supports the growing need facing companies to attract and retain employees, while adapting their training methods and introducing technology that fills the gap of a smaller workforce.

Of the 37 percent of the civilian population over age 16 that are not in the labor force, only 5.4 percent actually want a job, but are just not actively looking for one. This figure represents 5.2 million Americans, down from 6.6 million in 2012, that want a job, but are not in the workforce.

The number of men not in the labor force as a percent of the total labor force has slowly increased over the last decade and beyond. In 2006, only 37.9 percent of those not in the labor force were men. Since then, the number has grown yearly – up to 40.3 percent in February (2018). Conversely, the number of Women as a percent of those not in the labor force is declining. They represent 59.7 percent of those not in the labor force, down from 62.1 percent in 2006.

Adding to the worker shortage is that the desire for a job is falling as those not in the labor force keeps climbing. The percent of people not in the labor force but still would like a job fell 6.6 percent last year, with women growing slightly more interested in working than men.

With many companies having a difficult time finding qualified employees, real concern is growing over worker shortage. Many older workers are retiring or choosing not to work and there are less young, not as qualified, workers to replace them. As a remedy, some industries are turning to robots, automation, and artificial intelligence to adapt to labor shortages. Through education, training, and pairing human skills with technology, companies may find ways to cope with a smaller labor force.

Source: Bureau of Labor Statistics, Current Population Survey
*Persons who want a job now are part of those not in the labor force but who are not actively looking for a job. Unemployment figures reflect those actively looking for a job.

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