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industry insider | Jun 29, 2022 |
Who sells the most home goods in America? A new index aims to find out

The design world is a desert when it comes to hard data. Most brands are privately held, and designers themselves are understandably hesitant to share too much detail about what their clients are buying. Given that, it’s always cause for nerdy celebration among industry watchers when a new data set drops—and so it was earlier this month when the analytics firm YipitData announced that it had compiled an index of the top 30 home goods retailers in the country.

The index ranks “pure play” retailers—stores like Target, Walmart and Amazon that sell a variety of merchandise were excluded—by “gross merchandise value.” In other words: the total amount of stuff sold (profitability was not a factor). The big winner? Drumroll, please … Wayfair, which, according to YipitData, accounted for a whopping 16.7 percent of all home goods sales in the first quarter of 2022. Bringing up the rear are Houzz, City Furniture and Mathis Brothers, which, per the data, collectively accounted for just over 1.5 percent of the total market.

“The pandemic caused all of this chaos in the home space—it’s one of the industries that’s been pretty disrupted,” says Ariane Turley, a senior research analyst at YipitData who oversaw the creation of the index. “Two years on, how have things like huge increases in sales, supply chain issues and inflation affected the home goods industry as a whole? We wanted to look at what the post-pandemic period will look like in the sector.”

How does YipitData gather its information? It’s complicated. The company specializes in what is euphemistically referred to in the financial industry as “alternative data,” a classification that covers everything not included in SEC filings. A common example: purchasing credit card transaction records (they’re anonymized, but yes, those are for sale) and analyzing them for takeaways. The field has more exotic research methods as well—alternative data firms have been known to purchase satellite imagery and look at the parking lots of major retailers to see how busy they are. A full lot of cars for the big Memorial Day sales event? Target might be in for a good quarterly earnings report, or so the thinking goes.

For this report, YipitData analyzed a combination of credit card transaction records, information scraped from public sites (for example, how many red chairs Wayfair has for sale) and data from a free app called Edison Emails that collects anonymized transaction information. From that, it uses data science to hone the raw information into insights ranging from the health of an overall industry to micro-targeted observations—like how well red chairs are selling.

As with many alternative data companies, YipitData sells its services to investors who want an edge on the stock market. But in recent years, the company has also been working with corporations, which buy its data both to benchmark their own performance and to plan strategically. The home index is essentially a marketing tool—by offering some insights for free, YipitData is hoping that it will attract the attention of companies who are willing to pay for deeper dives.

It’s worth noting that YipitData’s home index is based on data that’s difficult to verify, and it presents an extremely wide-angle view of the industry. Vertically integrated companies like Ethan Allen are on the same list as classic retailers like Ashley Furniture. RH (eighth on the list, if you’re curious) is rubbing shoulders with Nebraska Furniture Mart (17th). Apples are very much compared to oranges—this is a big-picture look, and it would be missing the point to read too much into it.

However, there are interesting takeaways to be found. One is how stratified the market is: The top 10 players on the index account for more than 70 percent of goods sold. Even the disparity between first place and second is extreme. According to YipitData’s analysis, Wayfair sells twice as much as its nearest competitor, Bed Bath & Beyond, which eats up 8.5 percent of the market.

But while Wayfair’s e-commerce focus has won it the top spot, a strong online presence doesn’t matter that much for many of the other names on the list. “A lot of the players that have the largest market share are by and large brick-and-mortar businesses,” says Turley. “HomeGoods, which is the third-place brand on the index, just launched direct-to-consumer e-commerce last year. It’s interesting to think about how they can have such a huge market share with such a minuscule online business.”

Another takeaway, says Turley, is the hollowing out of the middle market. The index compares data from the first quarter of 2021 with the same period in 2022, so YipitData can track a year’s worth of change. “Arhaus saw a lot of growth year over year. Ethan Allen too, which is also a little bit more at a higher price point—luxury brands tended to grow,” she says. “But so did discount furniture retailers like HomeGoods and Big Lots. Maybe there’s less demand for midpriced brands.”

Looking ahead, Turley says YipitData plans to update the index quarterly and potentially develop data sets that analyze specific dynamics of the market, perhaps comparing like-for-like businesses more directly. It’s impossible to predict what the next ranking will show, but if current trends continue, Wayfair may not be at the top forever. Though it’s comfortably number one for now, the e-commerce giant also led the pack in a less auspicious metric: Over the past year, it showed the biggest loss in market share. The higher you climb, the harder you fall.

Homepage image: ©06photo/Adobe Stock

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