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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 Furniture Manufacturing and the Merchant Wholesale Trade Furniture Manufacturing*

 


This is the second factoid in a series of four factoids addressing the rise of e-commerce in  furniture manufacturing and the merchant wholesale trade. A report from the Census Bureau shows business to business (B2B) e-shipments within the furniture and related manufacturing segment is now approaching 51 percent of the value of total shipments or $35.2 billion dollars in 2014. The Census Bureau defines manufacturers’ shipments to include “orders accepted for manufactured products from customers, including shipments to other domestic plants”. (See Methodology and Definitions in the first factoid of this series.)

 

The total value of manufacturing shipments in the furniture industry took a downturn alongside the economy during the recession. The 2014 value at $69.6 is still 9.9 percent below 2002. E-commerce shipments on the other hand kept an upward trajectory through the recession – increasing a total of 335.9 percent over 12 years. While total furniture and related products manufacturing increased by 15.4 percent since 2009, e-commerce shipments jumped another 70.3 percent to finish 2014 at $35.2 billion.

The percentage of total dollar shipments via e-commerce has climbed from 10.5 percent in 2002 to 50.6 percent in 2014 with the vast majority of growth (313 percent) occurring between 2002 and 2011 . From 2011 to 2013, increases of e-commerce as a percentage of total shipments tapered off. However, an 11 percent jump in 2014 pushed e-commerce to over half of furniture and related products shipment dollars.

Source: U.S. Census Bureau, Annual Survey of Manufacturers and the Economic Census
*Furniture and related products manufacturing

The Rise of E-Commerce in Furniture Manufacturing and the Merchant Wholesale Trade: Percent of E-Commerce in Furniture and Home Furnishings Retail Sales, Furniture Manufacturing Shipments, and Merchant Wholesaler Shipments

This is the first of a two part series of factoids on e-commerce in the furniture industry. This series of four factoids addresses furniture manufacturing and merchant wholesalers. A report from the Census Bureau shows business to business (B2B) e-shipments within the furniture and related manufacturing segment is now approaching 51 percent of the value of total shipments or $35.2 billion dollars in 2014. The Census Bureau defines manufacturers’ shipments to include “orders accepted for manufactured products from customers, including shipments to other domestic plants”.

The product categories included in data published by the Census Bureau may differ somewhat between furniture manufacturing shipments, merchant wholesaler shipments, and retail sales; however, the trend in e-commerce is the same. (See Methodology and Definitions box below.)

As of 2014, e-commerce accounts for over half (50.6 percent) of all furniture and related product shipments – up from 14.4 percent in 2004. During the same time period, e-commerce sales of furniture and home furnishings within the retail trade sector increased 503 percent – representing 15.3 percent of total retail dollars. While e-commerce among the merchant wholesale trade of furniture and home furnishings increased steadily since 2004, the share of overall sales have remained stagnant since 2009 – increasing from 14.3 to 14.4 percent.

Methodology and Definitions

E-Commerce shipments (e-shipments) are online orders accepted for manufactured products from customers, including shipments to other domestic plants of the same company for further manufacture, assembly, or fabrication where price and terms of sale are negotiated over the Internet, Extranet, EDI network, electronic mail, or other online system. Payment may or may not be online. – U.S. Census Bureau

Merchant wholesale firms are those that take title to the goods they sell. Agents and brokers are not included in the wholesale E-Stats estimates. – U.S. Census Bureau

Retail sales and Merchant Wholesale shipments include furniture and home furnishings. Industries in the Furniture and Related Product Manufacturing subsector make furniture and related articles, such as mattresses, window blinds, cabinets, and fixtures. The processes used in the manufacture of furniture include the cutting, bending, molding, laminating, and assembly of such materials as wood, metal, glass, plastics, and rattan. However, the production process for furniture is not solely bending metal, cutting and shaping wood, or extruding and molding plastics. 

Sources: Impact Consulting Services, Inc. proprietary industry model and U.S. Census Bureau’s E-Commerce Report issued June7, 2016 covering years 2002 to 2014.

The Rise of E-Commerce in the Furniture Industry. E-Commerce and Total Retail Trade

This is the final 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.

While internet purchases have made major inroads into many consumer product areas, e-commerce is still a small part of overall retail sales. According to the new government e-commerce report covering years 2004 to 2014, sales from e-commerce for all U.S. retailers, both brick and mortar retailers and e-commerce, for all consumer products excluding gasoline totaled $298.6 billion in 2014. This reflects an increase of 14.3 percent from the year before and a 311 percent change over ten years. Meanwhile total retail sales, excluding gasoline, grew 30.3%.

According to the Census Bureau, the internet claimed 7.3 percent of all retail sales, excluding gasoline, in 2014, up from 2.3 percent ten years before.

While the growth of internet sales of some products appears to be slowing, other product areas, like food, are still in their e-commerce infancies. The rapid growth of furniture industry sales by successful e-commerce retailers are challenging the brick and mortar stores and presenting a distribution dilemma for manufacturers. The next factoid series will highlight the changes in manufacturing brought on by the rise of e-commerce.

Source: U.S. Census Bureau E-Commerce Report, released June 2016

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