retail watch | Jun 23, 2022 |
The boom is over, but retailers are still betting on home

If you’re worried the home furnishings business is tanking, try telling that to some of the biggest retailers in the country. Walmart, Overstock and At Home are all in the midst of expanding their furnishing assortments—and Overstock is in the middle of a transition to become exclusively a home furnishings e-commerce retailer. Or run the idea by Texas grocer H-E-B, which is entering the home category for the first time.

No doubt—the business has slowed down after two incredible years of crazy growth. Yet some big national retailers like Williams-Sonoma and RH are continuing to put up good numbers for both their top and bottom lines, indicating the slowdown is not universal. There’s still a lot of life left in home.

Walmart Bets on Home
Home has always been a core business for the country’s biggest retailer, but in unveiling its latest Supercenter prototype, the big boys from Bentonville seem to be doubling down. While grocery, health and beauty products account for the majority of Walmart sales, this new store, in Springdale, Arkansas—just 16 miles from corporate headquarters—takes a fresh look at more fashionable offerings in both home and apparel.

These programs, including an expanded line of Gap home merchandise as well as a new collection from the stars of the Netflix series “The Home Edit,” generally carry higher price points and appeal to a more upscale customer than the traditional Walmart shopper. As such, the discounter is hoping to improve its margins—an important shift as consumers look to save money on groceries.

CEO Doug McMillon recently told investors the retailer is using home to trade up customers. “As you move up the income scale, how many of those customers can you attract in the areas you might not have been doing business with them as frequently?” he said. “Can we move some volume into apparel and home … as people become even more value-conscious?”

Overstock Goes All-In on Home
The online retailer has always been home-heavy but has historically sold a huge range of goods. Under prior management it even veered into blockchain and cryptocurrency endeavors that seemed to distract it from its core merchandising business. All of this is now ending, Overstock president David Nielsen said in a recent interview: “By the end of the month of June, we will be 100 percent home on our website.” Its last nonhome business, jewelry and watches, is in the final stages of being phased out.

Nielsen said categories like housewares, tabletop and appliances will get more attention and be expanded. On its recent first-quarter-earnings call, the company also pointed to mattresses as a category it has successfully grown recently. From now on, it’s all home, all the time. “We’ve done this consciously because we know that those customers are much more likely to repeat with us. They are more valuable to us … they’re longer term, and they trust us,” said Nielsen. “[Home] has been a smashing success through the years, and it’s something that our customers have come to know us for.”

At Home Continues to Expand
Even as it opened its 250th store this month, home decor chain At Home still has ambitious plans to expand its brick-and-mortar footprint. The big box retailer, some of whose stores are as large as 200,000 square feet, went private about a year ago, but the change hasn’t altered the brand’s plans to get to 700 locations nationwide. It opened 16 stores last year and has opened at least seven so far this year—it now operates in 40 states.

At Home’s assortment leans heavily toward private label goods, including occasional furniture, outdoor, home accents, rugs and decorative accessories. It has also begun to bring in collections featuring celebrity designers such as Ty Pennington, Grace Mitchell, Laila Ali and Tracey Boyd. At the latest opening, CEO Lee Bird said it is still on track for its projected expansion plans. “Today’s milestone is a significant step toward our long-term potential to grow the brand, increase market share and strengthen our position as the leading retailer of home decor,” he said.

H-E-B Does Home, Too
It’s only one store—not much compared to the others mentioned here—but it’s a significant first. H-E-B, the Texas-based upscale grocery chain (the company wisely changed its name from H.E. Butt), just opened its first in-store home department at a new location in New Braunfels, just outside of Austin.

Housed in a massive 122,000-square-foot location that also includes a two-story True Texas BBQ restaurant, Home by H-E-B includes hundreds of items, ranging from furniture to textiles to decorative accessories under two private labels, Haven + Key and Texas Proud. This being the heart of Texas cowboy country, the latter label features wood and antler art, leather goods and cowhide benches.

H-E-B isn’t talking about plans for additional home departments, but based on what competitors are doing, it wouldn’t be surprising to see more down the road. Whole Foods has long carried home goods and has even experimented with separate home products stores or adjacent areas with their own entrances. Kroger, the largest supermarket chain, has expanded its home offerings for years, working through its Fred Meyer nameplate, which has long combined home and groceries. And of course, Walmart and Target have sold both categories in their larger superstore formats.

So, yes, the home furnishings business has come back down to earth. But for many retailers, expanding their footprint in the category remains fertile terrain.

Homepage photo: ©Kittiphan/Adobe Stock


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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