This is the second factoid in a series detailing the Furniture Industry’s Distribution Channels. Factoid #2 explores the changes of the percent of total distribution by each channel during years 2002, 2007, and 2014.
Furniture and Home Furnishing Stores: Still the primary source of Furniture sales, this traditional distribution channel has decreased it’s percent of total by a total of 8.1% from 2002 to 2014 – down to 64.5% in 2014 from 72.6% in 2002.
Electronic Shopping: While Furniture and Home Furnishing Stores decrease their hold on the Furniture Industry, Electronic Shopping is steadily gaining traction as a major distribution channel. Jumping from 2.8% in 2002 to 7.3% in 2007, Electronic Shopping finished out 2014 with 17.8% of the total distribution.
Warehouse Clubs and Supercenters: This channel increased it’s share of total distribution slightly from 2002 to 2014 – up from 3.6% to 4.0%.
General Merchandise Stores: After slightly increasing by 0.3% from 2002 to 2007, General Merchandise Stores grew by 1.1% in 2014 – accounting for 3.4% of total distribution.
Discount Department Stores: Dropping it’s percent of total by (-1.5)% from 2002 to 2007, this channel rebounded slightly with an increase of 0.2% in 2014 – decreasing 3.8% to 2.5% over the 12 year span.
Home Center and Other Building Materials: This channel decreased from 3.1% of total distribution in 2002 to 2.3% in 2007 and a minimal rise to 2.4% in 2014.
Department Stores: Decreasing by (-0.7)% from 2002 to 2007 and (-0.6)% from 2007 to 2014, Department stores was 1.8% of distribution in 2014.
All Other Retailers: In 2014, the remaining retailers dropped to 3.7% of distribution, after a decline from 8.9% in 2002 to 7.9% in 2007.
Source: Figures reflect data from the U.S. Census of Retail Trade issued every 5 years – 2002, 2007, and 2012. Figures for 2014 have been estimated by Impact Consulting Services’ furniture industry model.
Where is Furniture being sold and who sells what type of product? This is the first factoid in a series detailing the Furniture Industry’s Distribution Channels. Factoid #1 shows Furniture Retail Sales by Distribution Channel in selected years – 2002, 2007, and 2014.
Furniture and Home Furnishing Stores are at the heart of Furniture Distribution – accounting for over 2/3 of the industry. This channel includes traditional furniture stores along with specialty furniture retailers, mattress stores, and other retail outlets where furniture is the primary source of sales. Of course many different business models drive this category, including manufacturing and retail verticals, national and regional and national chains, and Mom and Pop dealers. This main channel reflects the ups and downs of the economy from 2002 to 2014. From 2002 to 2007, Furniture and Home Furnishing Stores rose 13.6% in sales before falling (-10.6)% - an overall increase of 1.5% in 2014.
The most noteworthy changes occur in Electronic Shopping as the online distribution of Furniture has made great strides despite the Recession years. Over the course of twelve years, Electronic Shopping has jumped 627.2% - increasing 201.3% the first 5 years and 141.3% the latter 7 years. Furniture Retail Sales grew from 1.8 Billion in 2002 to 13.0 Billion in 2014.
Both General Merchandise Stores and Warehouse Club and Supercenters grew in distribution from 2002 to 2014. General Merchandise Stores increased by 27.3% from 2002 to 2007 and 47.5% from 2007 to 2014 – with at total growth of 87.8%. While Warehouse Club and Supercenters had just a slight increase of 2.9% from 2007 to 2014, they had an overall jump of 24.3% over 12 years.
All other distribution channels showed substantial declines over the 12 year span. With the exception of Discount Department Stores showing growth of 8.8% from 2007 to 2014 after a drop in the first five years, the remaining channels decreased both time increments.
Source: Figures reflect data from the U.S. Census of Retail Trade issued every 5 years – 2002, 2007, and 2012. Figures for 2014 have been estimated by Impact Consulting Services” furniture industry model.
In the first quarter of 2015, Bedding Sales increased 16.3% from 2014Q4 and 10.2% compared to sales in the same quarter last year. Year-to-date sales at $3.5 billion are up from $3.2 billion over the 2014Q1.
The chart above shows quarter-to-quarter Bedding industry performance from 2011Q3 through the first quarter of 2015. For the last eight quarters bedding has shown steady and increasing improvement over the same quarter of the previous year. In the first quarter of this year sales totaled $3.5 billion, up 10.2% over Q1 of 2014.
Note: Previously issued 2014 Q4 estimates have been revised.
The Industry continued its steady growth in the first quarter of this year. A 7.7% increase over the same quarter last year resulted in Furniture and Bedding sales totaling $22.7 billion. Compared to the previous 4th quarter of 2014, sales were up slightly 0.75%.
Furniture (excluding Bedding) increased 7.2% over 2014 Q4, but was down 1.68% over quarter 4 of last year. After a typical 4th quarter slump last year, Bedding grew 10.2% compared to Q1 of last year and 16.3% over Q4 of 2014.
The chart above shows quarter to quarter industry performance from 2012 Q1 through the first quarter of 2015.
First quarter combined Furniture and Bedding industry sales of $22.7 billion were a 7.7% improvement over $21.1 billion from the same quarter in 2014. Compared to last quarter (2014 Q4) sales improved 0.75%/
Furniture (excluding Bedding) increased 7.2% with sales of $19.2 Billion in 2015 Q1 – up from $17.9 Billion in 2014 Q1.
Bedding had an impressive quarter with sales of $3.48 billion, up 10.2% over first quarter sales last year of $3.15 billion.
This is a third in a series detailing how the projected shifts in population will determine which age segments will have the highest numbers and who the Furniture industry should look to as it’s target customers.
The growth of the 25 to 44 year olds coupled with the decline of ages 45 to 54 (as shown in Factoids #1 and #2 of this series) should still result in moderate growth as the Millennials start to spend. This is based solely on demographic trends --projected population growth (Department of Commerce, Census Bureau), current headship rates, and most recent average consumer expenditures by age group (Consumer Expenditure Survey).
Demographic trends alone should grow the industry by $7.7 billion dollars over the next 10 years to $97 billion. Because of their sheer numbers, in ten years the over 65 Baby Boomers will still spend $17.8 billion and have the highest volume increase of $3.1 billion. The 35 to 44 year olds, although smaller in number, will spend $21.7 billion with the highest average per household and grow by more than $2.5 billion in industry sales.
Couple these demographically driven increases with the Department of Labor’s projected increases in consumer spending over the next ten years and the outlook significantly improves. In addition, increased housing demand by the Millennials will also fuel the furniture industry.
*Estimates are based on current demographically driven trends projected by the Census Bureau and do not reflect any changes in economic conditions. The Bureau of Labor Statistics is projecting increases in consumer spending over the next ten years that would significantly improve this outlook.
This is a second in a series detailing how the projected shifts in population will determine which age segments will have the highest numbers and who the Furniture industry should look to as it’s target customers.
Ages 15 to 24: Many of the Millennials will be aging out of the youngest of the future furniture purchasers, the 15 to 24 year old group, over the next five years. The group is expected to decline (-1.7)% by 2020 and remain relatively flat with 0.4% growth from 2020 to 2025.
Ages 25 to 34: As the Millennials begin to age into the young adult group ages 25 to 34, a projected rise of 6.3% in population by 2020 should cause the Furniture industry to take notice.
Ages 35 to 44: The largest spenders on home furnishings, the 35 to 44 year olds, are expected to have the highest growth among the key home furnishings purchasers– increasing 5.2% by 2020 with an additional jump of 7.7% by 2025. Combined 25 to 44 year olds are set to increase in number from 84.7 million to 93.4 million over the next decade – a gain of 10.4%. These younger adults will become the heart of the furniture industry.
Ages 45 to 54: These prime earners are projected to decrease (-5.3)% in the next five years and will ultimately shift from 43.1 million in 2015 to 40.7 million in 2025. The decline of these high earners will have the most negative impact on upper and premium price points.
Ages 55 to 64: While expected to jump 5.3% by 2020, Baby Boomers will age out of this group the following 5 years - resulting in a slight overall growth of 1.6% from 2015 to 2025.
Ages 65 and Over: As Baby Boomers begin to age, this age segment is expected to skyrocket 18% by 2020 and have a total increase of 37.8% for the entire decade.
*Source: U.S. Census Bureau, Projections of the Population of the U.S.
This is a first in a series detailing how the projected shifts in population will determine the Furniture industry’s target customers in the next 5 to 10 years.
The children of the Baby Boomers, the Millennials, are entering their 30s and will slowly feed the furniture industry for the next 20 years. Not surprisingly, Baby Boomers turning 65 in the next 10 years will facilitate a dramatic increase in the 65 and over age group . Their growth will skyrocket 37.8% - increasing at a rate of 3.3% a year from 2015 to 2025.
Combined, the 25 to 44 year olds are projected to increase 10.4% over the next decade. Note that consumers ages 35 to 44 spend the most on home furnishings per household of any group.
Meanwhile, the tail end of the Baby Boomers , the 45 to 54 year olds, who have been the highest populated group over the last ten years, will now house much of the Baby Bust generation and are estimated to drop (-5.7)% by 2025. These high earning consumers have historically been key purchasers of upper and premium furniture. While projections for Ages 55 to 64 show a growth of 5.2% by 2020, these final Baby Boom numbers are expected to drop (-3)% by 2025.
The youngest segment, ages 15 to 24, is due to remain flat over the next five years and decline (-1.2)% by 2020.
*Source : U.S. Census Bureau, Projections of the Population of the U.S.
This is the fourth and last factoid in a series detailing demographic shifts over the next five and ten years that will impact the Youth Furniture industry.
A major factor in determining the future of the Youth Furniture market is the projected population of women of childbearing age. Are they increasing in number and are they having enough babies to support healthy growth in Youth Furniture sales?
While the crude birth rate (number of births per 1,000 women) continues to decline and is expected to drop (-3.2)% from 2015 to 2025, the population of women of childbearing age (18 to 44) is estimated to increase by 6.5% during the next decade – accounting for increases in projected births.
The number of women ages 35 to 44 is projected to increase by 12% in the next 10 years as the children of the Baby Boomers finally reach their prime furniture purchasing years. According to the National Center of Health Statistics, the number of first births to women 35 and over is nine times higher than in 1970. These women are delaying childbirth or having additional births well into their 30s.
Women ages 25 to 34 are also expected to increase in population – growing 7% over the next 10 years, while ages 18 to 24 is projected to decrease by (-1.2)% as the children of baby boomers begin to leave that age group.
Sources: National Center for Health Statistics and U.S. Census Bureau, Projections of the Population of the U.S.
This is the third in a series of factoids detailing demographic shifts over the next five and ten years that will impact the Youth Furniture industry. By studying population projections, the Furniture industry can better gage potential for Youth Furniture growth.
As shown in the second factoid of this series, the Under 5 Age Segment has the highest population bump in the forecast. By 2020, youth Under 5 will grow by 3% and 5.2% by 2025 – increasing from 20 million to 21 million.
Youth ages 5 to 9 are expected to grow 2.1% in 10 years. After a projected drop of (-0.9)% in 5 years, the Under 5 Age Segment will give this youth population a boost of 3% -- resulting in an estimated population of 20.9 million in 2025.
With an overall flat growth of 0.1% from 2015 to 2025, age group 10 to 13 shows signs of an initial slight increase of 0.8% by 2020, but is expected to fall (-0.7)% in the following five years. Continuing to decline, Age Group 14 to 17 is forecasted to decrease (-0.4)% in 2020 and another (-0.3)% in 2025.
The dismal population outlook for the two older youth segments can be attributed to a combined slowing of birth rates over the last five years caused by the Great Recession and the glut of the grandchildren of the Baby Boomers not yet reaching their teenage years. Looking past the next 10 years to the following decade (2025 to 2035), Ages 10 to 13 and 14 to 17 are both expected to grow over 4%.
Source: U.S. Census Bureau, Projections of the Population of the U.S.
This is the second in a series of factoids detailing demographic shifts over the next five and ten years that will impact the Youth Furniture industry. By studying population projections, the Furniture industry can better gauge potential for Youth Furniture growth.
The chart shows the Indexed Growth in the youth population by age range over the next ten years. Note that indexing is an effective way to compare growth rates (as opposed to size of the population). Looking at the youth population age segments, the group “Under Five Years” is projected to have the highest gains in population by 2025 – increasing 5.2%. This youngest age segment is expected to grow an average of 0.5% per year, while the three older youth age segments are projected to experience multiple dips and minimal growth in comparison.
Ages 5 to 9 are still reeling from the lower birth rate during the Great Recession and the group is expected to decrease by (-1.4)% from 2015 to 2018. Youth Under 5 will then begin to age into this group – causing an estimated increase of 4% from 2018 to 2025.
Over the next 10 years, both the tween and teenage groups are projected to diminish or remain flat. They will not pick up steam again until more than ten years out when an expected increase in birth rate and the migration of the grandchildren of the Baby Boomers into these age segments boost these tween/teens in the decades to come.
Source: U.S. Census Bureau, Projections of the Population of the U.S.