Only in 2013 did the home furnishings market recover its losses from the recession of 2008 and 2009. Today, what's left of the market is very different than the market that went into the recession. According to a new report from Unity Marketing, Americans are "cocooning" in a new style, combining fashion and function to create a safe, comforting and stress-free environments.
The report entitled Cocooning in New Luxury Style lays out the plan for marketers to grow in the new post-recession home furnishings market. Read on for a few highlights from the report.
Five years to bounce back: The U.S. home furnishings market reached $315.3 billion in 2007, only to retreat to $273.5 billion in 2009 during the recession. But it took five years before the home furnishings market got back to its pre-recession levels. At the close of 2013 industry sales were $315.9 billion, according to the latest estimate from the Bureau of Economic Analysis, NIPA 2.4.5.
Many furniture retailers closed their doors: As the home furnishings market lost 13 percent of shares as it retreated from its 2007 pre-recession high to its 2009 low, retailers that specialized in furniture and home furnishings took a bruising. Back in 2007, there were 65,144 furniture and home furnishings retailers in the country. By 2012 there were only 51,998—a 21 percent drop in the number of retail doors classified as furniture or home furnishings retailers, based upon the latest Census Department's five-year Economic Census. In 2007 those retailers generated sales of $108.2 billion, or about 34 percent of the total home furnishings industry.
By 2012, the retailers that survived the recession had sales of only $89.1 billion, an 18 percent decline. Further in 2012 these retailers accounted for only 29 percent of the total industry, indicating that other types of retailers—department stores, discounters, online/internet, and others—have taken a huge chunk out of sales that used to go to furniture and home furnishings stores.
While the industry overall has recovered from the recession, furniture and home furnishings' retailers still lag behind the overall industry. In fact, this class of stores is even behind sales in 2002, or $91.8 billion.
Hope for growth: The home furnishings market is heavily dependent on the affluent consumer segment. Affluent people (that is, those in the top quintile of U.S. households based upon income, which today starts at about $100k) make up only 20 percent of total U.S. households, yet account for over 40 percent of the industry's sales. That makes each affluent customer two-times more valuable to retailers and marketers than a typical middle-income customer. The affluent are the “heavy-lifters” in the consumer economy.
Not only do the affluent make up a far greater share of industry sales than their total numbers would indicate, they also are the ones with discretion to pay a premium for new home furnishings. This is the consumer segment that home furnishings retailers and marketers must cultivate for growth now and in the future.
Affluent people are careful spenders: Just because they have more money to spend, that doesn't mean they are looking to spend it as fast as they can. The affluent are careful spenders and use all the tools available to comparison shop and get the best deal. They are value-oriented consumers, looking to maximize their investment in furnishings for their home that will return the utmost pleasure and enjoyment. Marketers that understand their attitudes and motivations in home purchases will uncover the secret to future prosperity and growth of their business.
Affluent’s needs: Cocooning in New Luxury Style, delves deeply into the affluent consumer segment and their home furnishings needs and desires. In July 2014 Unity Marketing surveyed 1,200 affluent consumers to discover their recent home furnishings purchases—what they bought, how they shopped, what motivated the purchases, their spending levels and much more.
The results of that survey provide a road map for growth to home marketers that need to understand their best potential customers. Plus the report includes a competitive analysis of how marketers as diverse as IKEA, West Elm, Wayfair, Restoration Hardware, Design Within Reach, LG, Ekornes, Saatva and others have successfully tapped the greater spending potential of affluent people and they've done it at all different price levels.
The full report is 120 pages and can be purchased online for $750.
News categoriesAll News >
Is this week the most important one ever for design auctions?
Hot off the press: Design books embrace wellness as a theme
How to maximize your PR potential
Design ADAC explores "The Innovation of Expression"Trade Shows | 4:59Design ADAC explores "The...
Meet ADAC's designers and architect of the yearTrade Shows | 3:54Meet ADAC's designers and...
Fort Lauderdale Home Design and Remodeling ShowTrade Show
ARF Designer Show House & Sale
D&D Building's Spring MarketDesign Center Event
- In Print