retail watch | Dec 23, 2021 |
Making sense of retail’s new abnormal

If the past two years have taught us anything, it’s that unpredictability rules the day. Still, as 2021 comes to a close, it’s worth taking a look at the ups and downs of home furnishings retailing in this tumultuous year and exploring how those market forces will shape the year to come. In this four-part series, Retail Watch columnist Warren Shoulberg is taking stock of the current state of play, the year’s retail winners (and losers), the characteristics that will define success in 2022, and which companies are on track to make waves in the new year. Here, he starts by examining the larger societal forces that have shaped selling home furnishings.

If there’s anything that causes home companies to wake up with night sweats, it’s the belief that the incredible surge in home furnishings sales is going to suddenly and cruelly come to a crashing halt. Before omicron began making headlines, folks in many states were increasingly spending more time and money on external pursuits as pandemic conditions lifted.

Even as it becomes increasingly crazy to try to forecast what’s going to happen in the days ahead—much less the months or years—it’s worth asking: What does the future hold for the home furnishings business?

I’ll get there. But first, a bit of advice: Relax.

Though the industry is not likely to continue with the double-digit growth rates it experienced over the past 18 to 22 months, the bottom is not going to fall out of the business. Here’s why.

1. Life From Home
Even as some offices begin to reopen, the fact of the matter is that we are spending a greater percentage of our waking hours in our homes. It appears many white-collar jobs will have some sort of hybrid configuration, where workers continue to spend at least part (and often a majority) of their time working from home. Thus, home office furniture and products should remain a good business for the years ahead.

And there’s more: We’re still eating more meals at home, even as restaurants have begun to return to normal capacity. That’s more use of dining rooms, breakfast rooms, or wherever most of us eat (probably the living room in front of the TV), and it’s good news for the housewares and tabletop sectors too. Considering the lockdowns in other countries across the globe, we’re likely to keep spending leisure time in our very own backyards. Terraces, decks and front porches maintain their importance, as do outdoor furniture, grills, fire pits and all the outdoor trimmings.

2. The Great Migration
The population shifts of the past two years have been unprecedented in scale and speed. City dwellers moved out to the suburbs. Suburbanites moved to rural areas. And out-of-towners jumped into urban areas in the brief window that prices came down and availability went up. Putting it all together, there was a crazy amount of people and families moving into new places to live, and that’s always a good thing for the home furnishings industry. Again, while the pace is likely to slow down eventually, these enormous population movements will reverberate in the industry for years.

3. Millennials Moving On
Perhaps the most important dynamic of the years ahead is the natural progression of the millennial generation into their prime homeownership and family-formation years. They may have struggled more than previous generations to reach these financial milestones, but they are indeed having kids, buying houses and moving toward areas with good schools—just like their parents and grandparents did. This shift was bound to happen, with or without the pandemic, but it will be the defining demographic trend of at least the next decade.

4. Home Sweeter Home
Amid all the tangibles out there, there is another esoteric but important factor: We all seem to have a newfound appreciation for our homes. Turns out that spending time with friends and family right where we live isn’t so bad after all. Is this a fundamental, long-term shift in the American psyche? It’s hard to say, but for the time being, it’s very real—and very good for the furniture and home furnishings business.

This “new abnormal” we’re going through is still defining itself, and there will no doubt be plenty of additional twists and turns as things sort themselves out. But right here, right now, the home run shows no signs of letting up.

Next week’s column will unpack the “Magnificent Seven” of successful home retailing—the brands that have met the moment and are doing home furnishings retailing right in these uncertain times. Stay tuned!

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Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.

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