Search Twitter Facebook Digital HFBusiness Magazine Pinterest Google

Get the latest industry scoop


Daily News

From Home Furnishing Business

Falling in and out of Love With Furniture

By Home Furnishings Business in Furniture Retailing on March 2007 Retailers in categories ranging from grocery stores to apparel to home improvement chains seem to be falling in and out of love with furniture with astonishing speed.

In the grocery sector, both Kroger and Albertson€™s have been experimenting with furniture departments in new, super-sized stores with large general merchandise departments. Kroger has built at least half a dozen Marketplace stores that combine groceries with outdoor living products, electronics, toys and sofas and chairs. Analysts say the broader offerings are a reaction to super-sized Wal-Mart and Target stores that boast complete grocery departments, as well as the usual housewares, electronics and sporting goods offerings. It€™s a strategy Kroger has been building on since 1999 when it acquired the 132-store Fred Meyer chain, which was an early pioneer in combining general merchandise with food and home goods.

In recent years, the number of mass retailers that have significantly expanded their furniture offerings include Target, JC Penney, TJ Maxx and even some crafts stores. Analysts say the booming real estate market in the five years leading up to mid-2006 inspired those retailers to become more focused on home products, including furniture. While the housing market has cooled, many mass retailers are sticking with furniture since the category delivers much higher margins than many of the products they sell.

Housing Slowdown Hurting Home-focused Retailers

Existing home sales are expected to decline again this year following an 8.2 percent decrease in 2006, according to the National Association of Retailers. As a result of the housing decline, home retailers have been cutting prices and seeing share price declines as a result. The Telsey Advisory Group€™s composite index of 17 home improvement, furniture and furnishings companies is down sharply to 98.58 from a peak of 106.6 in mid-2005.

It€™s impossible to predict whether mass retailers will continue to expand furniture departments in light of the housing slowdown, but some big players€”such as Home Depot€”have altered their furniture-related strategies over the past year.

America€™s Research Group Chairman Britt Beemer said the flood of furniture imports from Asia gives retailers as varied as Stein Mart and Hobby Lobby the chance to seek out €œopportunistic buys€ of furniture items, including low-cost overstocks and closeouts. €œThey€™re trying to maximize as much as they can the traffic in their stores€ with furniture that tends to carry higher price points, said Beemer, whose Charleston-based market research firm works closely with several large regional furniture retailers. €œAt Christmas, especially, when store traffic increases 40 percent to 60 percent, they€™ll try all types of items to see what works. Sometimes, it doesn€™t work, but they€™re always looking for that home run.€

For the most part, he said, those retailers don€™t pose a threat to traditional furniture stores because they€™re selling single items, not complete bedrooms or dining rooms.

Analyst Jerry Epperson, managing director of Richmond-based Mann, Armistead & Epperson, said mass merchants face fewer €œbarriers to entry€ to selling furniture with the rise of imports and the decreasing importance of brands to many shoppers. €œMany of these (mass) retailers have sophisticated global supply chains. Furniture retailers can€™t compete against them in the same ways they used to,€ he said, adding that traditional furniture retailers have to focus more on superior delivery capabilities, selection, custom orders and other built-in advantages.

Not All Furniture Initiatives Successful

A few retailers have reversed course on furniture after making significant investments in the category. The Home Depot, Atlanta, launched a high-end furniture catalog called €œ10 Crescent Lane€ and a lighting catalog called €œPaces Trading Co.€ in late 2005, but dropped both titles by the end of 2006. Home Depot officials said both catalogs were folded into the retailer€™s Web site, and it continues to operate €œHome Decorators Collection,€ a catalog it purchased in April 2006. Filled with furniture, €œHome Decorators Collection€ focuses on lower price points than the luxury €œ10 Crescent Lane€ title.

In late 2005, Big Lots announced that it would close 41 free-standing Big Lots Furniture stores due to disappointing sales. At the time, Big Lots officials said furniture sales are a vibrant part of its closeout stores€”accounting for 12 percent of total sales€”but the standalone stores had been losing money with sales that totaled less than 1 percent of the Columbus, Ohio-based retailer€™s total revenues.

In late 2006, The Bombay Company announced it would close all 60 of its Bombay Kids furniture stores by the end of this year. The move, which was predicted to save the company $7 million annually, was part of a strategy to return the home furnishings chain to profitability. HFB

Comments are closed.
Performance Groups
HFB Designer Weekly
HFBSChell I love HFB
HFB Got News
HFB Designer Weekly