The Changing Furniture Landscape
Over the past decade we have slowly been watching the retail landscape transform from traditional brick and mortar stores to online shopping. However, as a result of the COVID-19 pandemic, 2020 not only experienced the greatest shift towards online shopping, but for the first time direct-to-consumer e-commerce sites have taken the largest share of the furniture market. After leading in growth rate for the past seven years, these online retailers grew by an incredible 47% in 2020. According to Furniture Today, online retailers now have a 20.8% market share of the furniture market, where traditional furniture stores only have a 20.5% market share. After that, lifestyle furniture stores have a 14.3% share of the market, discount department stores have a 13.4% share, manufacturer-branded furniture stores have a 11.5% share, bedding specialists have a 8.7% share, warehouse clubs have a 7.4% share, and finally rental centers only have a 3.4% share. This shifting marketplace can be seen by taking a look at the top 10 furniture retailers for 2020.
Leading the change in direct-to-consumer was Wayfair, which supplanted Ashley HomeStore as the number one furniture store in terms of total sales, ending an 11-year streak of Ashley holding the top spot. However, Wayfair didn’t just sneak past Ashley but rather skyrocketed past them. Wayfair’s furniture sales were over $6.66 billion in 2020, a 54% increase over 2019’s $4.34 billion in sales. Ashley on the other hand was much more stable with sales growing from $4.75 billion in 2019 to $4.8 billion in 2020, while adding 30 more stores to their retail footprint.
The other huge increase was made by Amazon who knocked Walmart out of the number 3 spot for total furniture sales. Amazon experienced 38% growth in furniture as sales increased from $3.16 billion in 2019 to $4.37 billion in 2020. Walmart, who in addition to their large retail footprint also sells online, only experience 9% growth in furniture as sales increased from $3.19 billion in 2019 to $3.48 billion in 2020. Of course, unlike Wayfair and Ashley where furniture makes up the majority of their total sales volume (56% for Wayfair and 95% for Ashley), furniture makes up a trivial percentage of both Amazon and Walmart’s total sales. Furniture accounted for only a little over 1% of Amazon’s total sales, and for less than 1% of Walmart’s total sales.
Remaining in the number 5 spot was Mattress Firm, the only bedding specialists to make it into the top 10. Mattress Firm experienced 10% growth with sales rising to $2.95 billion despite reducing their retail footprint by over 3%.
For the number 6 spot, Rooms To Go passed IKEA as their sales grew by 11% to reach $2.79 billion. IKEA actually experienced a nearly 8% decline in sales. There total sales were $2.51 billion in 2020, which places them at number 7.
Costco just barely jumped ahead of Williams-Sonoma to claim the number 8 spot after experiencing 28% growth in 2020. Williams-Sonoma didn’t do bad however, their sales grew by 20% in 2020. Both companies had approximately $2.44 billion in furniture sales, although It is important to note that furniture only accounts for 1.5% of Costco’s total business, while it accounts for about 36% of Williams-Sonoma. Costco’s overall sales increased by 9% as they expanded their footprint by 7%. Williams-Sonoma saw their overall sales increase by 23% as they actually reduced their retail footprint by 5%.
To round out the top 10 came another big winner of 2020, Target jumped up 4 spots since 2019 to claim the number 10 spot. Their furniture sales increased by 28% to hit $1.99 billion in 2020. Furniture only accounts for approximately 2% of Target’s total sales, which rose by a similar 29%.
What’s perhaps most interesting here is the fact that the top 10 furniture retailers experienced 19.5% growth in 2020, a year that was defined by lockdowns and a devastated economy. At the same time, Wayfair, Amazon, Walmart, and Target are four of the nation’s largest online retailers, while Walmart, Costco, and Target were all deemed essential businesses and remained open throughout the entire pandemic. It should come as no surprise that direct-to-consumer retailers experienced 47% growth in 2020, while warehouse clubs experienced 21% growth, and discount department stores experience 14% growth. Traditional furniture stores only experienced 2.2% growth in 2020 while manufacturer-branded stores only had 1.7% growth. The big loser of 2020 however was rental stores who saw sales slide by an incredible 34%.
Whether or not these trends continue in 2021 remains to be seen. It is clear that this pandemic is far from over, but it seems unlikely that we will be seeing any additional lockdowns for the remainder of the year. It seems unlikely that the big winners of 2020 will see sales numbers decline, although they also may not grow as quickly as they had over the past year. We also don’t know if regular furniture sales will start to see increasing sales again this year, or if the rental sector will bounce back. It is possible with 2021 still being defined by the pandemic that we won’t start to see change until 2022 or later.
What this means for the furniture industry is that selling to major retailers, especially online retailers is more important than ever. In analyzing our data over the past year and a half, it was very clear that most of our clients who were selling to the correct places (Wayfair, Amazon, Walmart, Target, TJX, and Costco) had a very good 2020, while most that sold primarily to normal furniture stores saw sales slide in 2020.
Of course, getting into the major retailers isn’t easy, and should you get in, coming up with the finances to support large orders could present an even greater challenge. At DSA Factors, we can help. With our roots in the furniture industry going back over 60 years, there is no other factoring company who understands the furniture industry as well as we do. We can provide you with purchase order financing and accounts receivable factoring, so that you will have the financial ability to take on any sized order. If you are looking to grow your business in 2021, give DSA Factors a call today at 773-248-9000, email us at info@dsafactors.com, or chat with us right here on this website. At DSA Factors, we have money to make your company grow!
