retail watch | Aug 20, 2020 |
Online furniture sales were on fire even before the pandemic

They said you could never sell furniture online—that the freight costs would kill you, that people needed to sit on a sofa or see the finish on a dining room table in order to buy. They said furniture simply couldn’t be sold on the internet.

Boy, were they wrong.

New research out this week reveals that the direct-to-consumer channel, largely driven by Wayfair and Amazon, was the fastest-growing sector in the furniture and bedding categories last year, far outstripping any other form of retailing for these products. The e-commerce giants are also now the second-largest channel for furniture sales among the 25 top retailers, trailing only traditional furniture stores like Rooms To Go, Raymour & Flannigan, and Havertys.

The findings come from Furniture Today’s Strategic Insights report, an annual survey of the 25 largest furniture retailers that is considered some of the best research in the field.

Together, these retailers recorded close to $49 billion in retail sales last year. But it was the e-commerce players that truly exploded, with Wayfair and Amazon reporting a combined $7.5 billion in retail sales in the home furnishings category—up $1.6 billion from their 2018 numbers, for a year-over-year growth rate of just under 28 percent. The report also notes that although Amazon is quickly gaining market share, the company—No. 4 on the list of 25 companies—still trails second-place Wayfair by an estimated $1.2 billion in furniture and bedding sales.

The two leaders (and the entire e-commerce category) have come a long way since the days when the industry at large looked askance at online sales. That sentiment was initially confirmed during the first internet burst of the late 1990s and early 2000s, which saw many of the startups in the field crash and burn. But over the past two decades, Amazon has built its furniture business on the base of its overall e-commerce revenue. Wayfair, which has been in business in its current form for less than a decade, has exploded in recent years.

The numbers will be even larger when the 2020 tally is taken, as Wayfair in particular has been reporting astonishing growth during the pandemic, including 84 percent in the past quarter alone. (Amazon does not break out its sales by merchandise classification, so it’s impossible to know if the company has seen similar growth in the category this year.)

According to the Furniture Today report, manufacturer-branded retailers like Ashley HomeStore and La-Z-Boy Furniture Galleries were the second fastest-growing channel last year, showing a sales increase of 8.3 percent. The report confirms that Ashley’s network of 722 stores across the U.S. (a mix of company-owned and licensed retailers) retained its spot as the top retailer for the 11th consecutive year, with an estimated $4.75 billion in furniture and bedding sales—up 9.4 percent over 2018 numbers.

The only loser in overall business and market share last year? Department stores, which were off 3.8 percent—a not-so-surprising finding for readers of this column. (A wave of COVID-era bankruptcies in 2020 likely won’t help these figures in next year’s report.)

At the beginning of the dot-com era, the home furnishings industry used to point to three categories that would never succeed online: furniture and mattresses, major appliances, and wall-to-wall carpeting. Like most other predictions about the home furnishings business, these have all turned out to be wrong.

And they appear to be getting more wrong every year.

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Online furniture sales were on fire even before the pandemicWarren 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.

Homepage photo: Shutterstock.com

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