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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

The Rise of E-Commerce in the Furniture Industry E-Commerce Retailer Sales

This is the third factoid in a series of four factoids showing the rise of E-Commerce in the Furniture Industry. The phenomenon of e-commerce has been the rise of what was once called “Non-Store Retailers”, now referred to as “E-Commerce Retailers” – companies without physical stores competing with brick and mortar establishments. Furniture and home furnishings through e-commerce retailers increased from $4 billion to $24.3 billion in ten years (2004 to 2014) – a growth of 503 percent.

Along with furniture and home furnishings, other consumer merchandise lines dramatically increased sales through e-commerce retailers. At $46.9 billion in sales, clothing/footwear leads e-commerce retailer sales in 2014 up from $7.1 billion in 2004. By far, the fastest growing products sold by e-commerce retailers, clothing/footwear increased 561 percent over the ten year period. Furniture and home furnishings experienced the highest growth among e-commerce retailers coming out of the recession 2009 to 2014 – jumping an average of 20 percent per year. Sporting goods sold through e-commerce retailers also experienced high growth in the last few years, but electronics and computer hardware have tapered off with sales increasing a yearly average of five percent since 2011.

Of the five selected merchandise lines, clothing/footwear holds the highest share of e-commerce retailer dollars and grew from 13.3 percent share in 2004 to 18.4 percent share in 2014. Furniture and home furnishings also saw a gain in share – finishing 2014 at 9.3 percent. As more merchandise lines like clothing and furniture have increased their internet presence, two broad product areas have lost share among e-commerce retailers -- electronics and appliances and computer hardware. Once the king of e-commerce, computer hardware fell from 15.1 percent share to 6.3 percent in ten years. Electronics and appliances slipped down from 10.8 percent share of e-commerce retailer sales to 9.2 percent. The next and final factoid of this series will compare e-commerce to total retail trade.

The Rise of E-Commerce in the Furniture Industry Brick and Mortar Store E-Commerce Sales as a Percent of Total Sales

This is the second factoid in a series of four factoids showing the rise of E-Commerce in the Furniture Industry. With the sophistication of the internet has come the booming growth of e-commerce. The combined furniture and home furnishings industry has been one of the big recipients of this growth second only to the clothing/footwear industry. It is estimated that 2015 internet sales of furniture alone now totals an estimated $14 billion or 15 percent of furniture industry sales.

Retail sales of furniture and home furnishings products are sold through three avenues – brick and mortar stores, internet shopping (e-commerce) and finally mail order and other miscellaneous non-store retailing. In the first instance - brick and mortar stores -consumers can physically visit the store or they can often visit the store’s website and make an online purchase. Many of these retailers offer expanded product offerings on their websites not available in stores. While some large brick and mortar merchants have been successful in online retailing of furniture and home furnishings products, furniture and home furnishings stores as a whole have been much less successful with online attempts. These websites serve as much to draw the consumer into the store as to generate online sales. And while e-commerce sales among furniture and home furnishings stores almost doubled from $330 million to $651 million 2004 to 2014, this only increased internet sales to less than one percent of furniture stores volume in 2014.

Comparing 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, though none are exceeding three percent of sales via e-commerce.

Source: U.S. Census Bureau, E-Commerce 2014 Report

The Rise of E-Commerce in the Furniture Industry Furniture Industry Sales by Retailer Type Selected Years: 2004 to 2015

This is the first factoid in a series of four factoids showing the rise of E-Commerce in the Furniture Industry. With the sophistication of the internet has come the booming growth of e-commerce. The combined furniture and home furnishings industry has been one of the big recipients of this growth second only to the clothing/footwear industry. It is estimated that 2015 internet sales of furniture alone now totals an estimated $14 billion or 15 percent of furniture industry sales.

Since the bottom of the recession in 2009, total furniture industry sales have grown 24.1 percent, and much of that growth can be attributed to the rise in e-commerce. Actual brick and mortar store sales of furniture are up 13.8 percent since 2009 while e-commerce has grown by 168 percent.

In 2004, e-commerce sales were inconsequential in relation to brick and mortar store sales which accounted for 93.4 percent of the total furniture industry. Over eleven years, the share of e-commerce has grown from 3.2 percent to 15.3 percent in 2015, while brick and mortar sales fell to 82.9 percent of total furniture dollars.

Along with furniture e-commerce sales, other home furnishings products – floor covering, window treatments and home accessories – have grown at an even faster pace than furniture. While furniture e-commerce sales have grown 440 percent since 2004, home furnishings have growth 697 percent to $13.9 billion. The next factoid in this series will take a closer look at brick and mortar stores e-commerce.

Source: Impact Consulting Services, Inc. proprietary industry model and U.S. Census Bureau’s E-Commerce Report issued June 2016 covering years 2004 to 2014

Consumer Characteristics and Shopping Behaviors of Millennials

This is the final factoid in a series of four factoids detailing Millennial home buying trends, shopping attitudes and habits and whether they lend themselves to home furnishings purchases in the future. Millennials, ages approximately 17 to 34, represent the largest generational cohort in history with numbers exceeding 83 million.

This factoid explores through surveys and studies how Millennials shop and what guides their purchases. As the economy improves and Millennials grow their bank accounts, settle down, and become homeowners, how else will they spend their money? Forbes magazine conducted a study on the consumer characteristics of Millennials in 2015 and surveyed 1,300 young adults. A majority of Millennials are loyal to brands (60 percent) and want them to engage with them on social networks (62 percent). Seventy-five percent hate corporate greed and find it very important to give back to society, especially through local communities. Compared to fewer than three percent relying on TV news, magazines, or books, 33 percent of Millennials look to blogs for recommendations and design ideas.

Just because Millennials are a digital generation does not mean they want to completely abandon traditional ways of shopping. Instead, they expect to have a streamlined experience between physical stores and the internet. According to a study conducted by Accenture on the shopping behaviors of Millennials, 68 percent of young adults demand an effortless transition from smartphone to personal computer to physical store when searching for the best products. Forty-one percent said they practice “showrooming” by checking out a product at a nearby retail store and then shop for it online to find the lowest price. Millennials love loyalty programs and 95 percent said they want brands to reach out to them by sending coupons via text, email or mailed to their homes.

Source: Forbes Magazine “Elite Daily Millennial Consumer Study 2015”; Accenture Survey “Who are the Millennial Shoppers? And what do they really want?’

Millennials are choosing to buy in Suburbs over Urban Areas

This is the third factoid in a series of four factoids detailing Millennial home buying trends, shopping attitudes and habits and whether they lend themselves to home furnishings purchases in the future. Millennials, ages approximately 17 to 34, represent the largest generational cohort in history with numbers exceeding 83 million.

Millennials are arriving late to the home buying industry and in turn the home furnishings industry. But studies show many Millennials actually would prefer to own rather than rent, but opportunity and financial barriers are hindering them. These first-time home buyers have been sitting out of the housing recovery largely because of financial reasons.  

First-time home buyers fell to just 30 percent of units sold in February. Historically it should be at least 40 percent. Even with Millennials waiting longer to buy homes, they still account for the majority of home purchases and this number should grow as more of the generation ages into their 30’s. For three years Millennials have comprised the largest group of recent home buyers, 35 percent in 2015 compared to 32 percent in 2014, more than the previous smaller Generation X (26 percent), Baby Boomers (31 percent), and the oldest Silent Generation (9 percent).

While many Millennials sought the urban lifestyle for renting, most appear to be leaving the city for the suburbs when it comes to buying a home. In 2015, only 17 percent of Millennial home buyers purchased inside an urban or central city area compared to 21 percent a year ago. The higher costs of in-town properties in many urban areas are driving them to the suburbs where they are looking for more affordable and larger homes.

Source: National Association of Realtors (NAR)

Millennials Now Largest Home Buyers Individual Median Income vs. Household Income of Home Buyers Ages 25 to 34

          

This is the second factoid in a series of four factoids detailing Millennial home buying trends, shopping attitudes and habits and whether they lend themselves to home furnishings purchases in the future. Millennials, ages approximately 17 to 34, represent the largest generational cohort in history with numbers exceeding 83 million.

While the sheer size and education of this generation should lend itself to consumers pouring into prime furniture buying years, the negative results of the Great Recession and a delay in marriage has initially slowed down homeownership among Millennials. These first-time home buyers have been sitting out the housing recovery largely because of financial reasons.

Along with staggering college debt, young adults are faced with a slow to increase median income. Millennials ages 25 to 34 earn $31,219 annually, down over 10 percent from a peak of $34,459 in 2007. According to a recently released survey by the National Association of Realtors (NAR) of over 6,000 home buyers July 2014 to June 2015, Millennials purchasing homes have a median household income of $77,400 and take a median of four years to save for a down payment.

Source: National Association of Realtors (NAR)

Millennials Now Largest Home Buyers Percentage of Graduates with College Debt 2004 to 2014

This is the second of two series profiling Millennials. Last series explored demographically how the Millennials have altered the population, income, education, and household characteristics of young adults. This series delves into Millennial home buying trends, shopping attitudes and habits and whether they lend themselves to home furnishings purchases in the future. Millennials, ages approximately 17 to 34, represent the largest generational cohort in history with numbers exceeding 83 million.

Due to high unemployment rates, lower marriage rates, and a fallen median income, Millennials are arriving late to the home buying industry and in turn the home furnishings industry. But studies show many Millennials actually would prefer to own rather than rent, but opportunity and financial barriers are hindering them. These first-time home buyers have been sitting out the housing recovery largely because of financial reasons. The Great Recession ushered in a poor job market and the first factoid in this series shows the rising percentage of graduates with college debt.

According to The Institute for College Access and Success (TICAS) Project on Student Debt, the graduates with debt grew from 65 percent in 2004 to 69 percent in 2014 to an average of $28,000. In fact, the Census Bureau reports that one in five young adults is living in poverty, up from one in seven in 1980.

The next factoid will show the slow to rise median income among Millennials and how that has added to a delay in what should become an influx of young adults buying homes.

Source: Institute for College Access and Success

Industry Sales by Quarter 2009 Q2 to 2016 Q2 Bedding Industry

Industry Sales by Quarter 2009 Q2 to 2016 Q2 Bedding Industry


Bedding sales continued to post slower growth in the second quarter of this year growing only 2.0 percent over the same Q2 in 2015 totaling an estimated $3.42 billion.  Compared to the last quarter (2016 Q1) sales were flat, down 0.7 percent. (Note: First quarter bedding sales were revised downward to 1.7 percent growth Q1 compared to Q1 of 2015.)

Source:  Impact Consulting Services, Inc. industry model. 2015 Q4 and 2016 Q1 sales have been revised.

 

Industry Growth Quarter to Quarter 2013 Q2 to 2016 Q2 Bedding Industry


The slow growth this year in the Bedding industry is reflected in the quarter-over-quarter increase from 2015 to 2016. Bedding sales in the second quarter of 2016 were up 2.0 percent quarter over quarter totaling $3.42 billion. (Note: First quarter bedding sales were revised downward to 1.7 percent growth Q1 compared to Q1 of 2015.)

Source:  Impact Consulting Services, Inc. industry model. 2015 Q4 and 2016 Q1 sales have been revised.

 

Industry Sales 2008 to 2016 Q2 Bedding Industry


Second quarter year-to-date Bedding sales totaled $6.86 billion, up only 1.8 percent from the same period last year.

Source:  Impact Consulting Services, Inc. industry model. 2015Q4 and 2016 Q1 sales have been revised.

 


Industry Sales by Quarter 2009 Q2 to 2016 Q2 Furniture & Bedding

Industry Sales by Quarter 2009 Q2 to 2016 Q2 Furniture & Bedding

Industry sales slowed in the second quarter to 2.3 percent growth compared to Q2 of last year and only 1.5 percent growth over the first quarter of this year. Total furniture and bedding sales totaled $23.5 billion.

Year-to-date through the second quarter,  the industry grew at 3.5 percent.

Furniture (excluding Bedding) in the second quarter increased 2.4 percent compared to the same quarter last year totaling $20.08 billion. Compared to the first quarter of this year, furniture only sales are up 1.9 percent. Year-to-date furniture sales (excluding Bedding) are up 3.7 percent.

The Bedding industry also slowed to 2.0 percent growth quarter to quarter and fell 0.7 percent compared to the first quarter of this year.  Sales totaled $3.42 billion in Q2. Year-to-date sales are up 1.8 percent. (Note: First quarter bedding sales were revised downward to 1.7 percent growth Q1 compared to Q1 of 2015.)

Industry Growth Quarter to Quarter 2013 Q2 to 2016 Q2 Furniture & Bedding

Industry sales are still growing, but at a slower pace, as shown by the chart above. For the third straight quarter since 2015 Q3, quarter-over-quarter industry performance  has slowed.

Second quarter combined Furniture and Bedding industry sales of $23.5 billion were a modest 2.3 percent improvement over the same Q2 in 2015. Compared to last quarter (2016 Q1) sales increased 1.5 percent.

Furniture (excluding Bedding) increased 2.4 percent in 2016 Q2 versus the same quarter last year with sales of $20.08 billion.

Bedding quarter-over-quarter sales totaled $3.42 billion, up 2.0 percent over second quarter sales last year.

Industry Sales 2008 YE to 2016 Q2 Furniture & Bedding


Year-to-date industry sales in the second quarter of 2016 totaled $46.65 billion, an increase of 3.5 percent over the same period last year. 

Millennials: The Changing Face of Young Adults in the Furniture Industry Education and Unemployment Rates

Millennials: The Changing Face of Young Adults in the Furniture Industry Education and Unemployment Rates

 

This is the third factoid in a series of five factoids that explore demographically how the Millennials have altered the population, income, education and household characteristics of both the Under 25 and 25 to 34 age groups over a ten-year period. Millennials, Americans born roughly between 1982 and 2000, account for more than one quarter of the nation’s population. As of 2015, these 17 to 34 year olds numbered 83.1 million and have surpassed the 75.4 million Baby Boomers.

Education

The percentage of Millennials that are college educated is higher than any generation preceding it, a fact that should bode well for future economic growth. Over seventy percent of Millennials have some higher education; a much higher percentage than their Boomer parents.

Unemployment

Despite the level of education, a staggering number of Millennials are still looking for work. At the end of last year, 9.4 percent of adults ages 20 to 24 seeking jobs were still unemployed.

The next factoid will detail the delays in marriage and home buying among Millennials.

 

Millennials: The Changing Face of Young Adults in the Furniture Industry Marriage and Homeownership


This is the fourth factoid in a series of five factoids that explore demographically how the Millennials have altered the population, income, education and household characteristics of both the Under 25 and 25 to 34 age groups over a ten-year period. Millennials, Americans born roughly between 1982 and 2000, account for more than one quarter of the nation’s population. As of 2015, these 17 to 34 year olds numbered 83.1 million and have surpassed the 75.4 million Baby Boomers.

Marriage

Of all of the characteristics of Millennials, perhaps none is more significant to the home furnishings industry than the tendency to delay marriage. In less than ten years, the marriage rate shifted from 38 percent of adults marrying by age 34 to only 26.8 percent. Marriage spurs home ownership and family planning which in turn feeds the home furnishings industry.

Home ownership

Although Millennials make up the largest and most educated generation in American history, the combination of economic factors, delayed marriage and family formations and shifting consumer attitudes also make them the slowest to embrace home ownership. This is most evident in the 25 to 34 age group where home ownership has fallen 10 percentage points in 10 years. In 2004, 49 percent of Millennials owned their own homes compared to 39 percent in 2014.

The final factoid will show the state of both furniture expenditures and industry sales across all age groups.

 

Millennials: The Changing Face of Young Adults in the Furniture Industry Average Annual Furniture Expenditures and Furniture Industry Sales by Age Group: In Selected Years


This is the final factoid in a series of five factoids that explore demographically how the Millennials have altered the population, income, education and household characteristics of both the Under 25 and 25 to 34 age groups over a ten-year period. Millennials, Americans born roughly between 1982 and 2000, account for more than one quarter of the nation’s population. As of 2015, these 17 to 34 year olds numbered 83.1 million and have surpassed the 75.4 million Baby Boomers.

The glut of the Millennials, the Under 25 age group, is one of the few groups to increase expenditures on furniture in the last 10 years, although expenditures still comprise only about 5 percent of industry sales. Many of these Millennials, however, still rely heavily on family financial support. Millennials ages 25 to 34 as well as the older GenX 35 to 44 group, traditionally the core of the furniture industry, have both failed to reach pre-recession furniture expenditures – down 8.2 percent and 12.3 percent.

For the home furnishings industry, the Millennials always seem to be just over the horizon but yet to make their big entrance. In terms of furniture industry sales, sales to the Baby Boomers are still growing, but they will begin to lessen their impact and make way for the Millennials.

Many things add up to help explain the slow arrival of the Millennials on the home furnishings consumer scene. The long recovery from the recession brought stagnant wages and higher unemployment. Add to that the delaying of marriage and slow home purchases. But the industry is ready.

Source: U.S. Census Bureau, Consumer Expenditure Survey.  Note: Expenditures by the CES survey are generally significantly lower than the Personal Expenditure Survey conducted by the Bureau of Economic Analysis and may not include all furniture purchases.

Impact Consulting Services, Inc., Proprietary Industry Model

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