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The Home Furnishings
Industry
Due to a booming economy,
the home furnishings industry had stellar years in both 1998 and
1999 and is considered one of the fastest growing segments of the
retail market. US manufacturers shipments totaled 28.5 billion in
1998. Overall, the home furnishings wholesale industry is a $90
billion dollar market. Trends that portend a continued bright future
for the home furnishings industry include a gowing stock market
and consumer confidence strength combined with inflation, interest
rates, and low unemployment. US demographics are also making home
furnishings manufacturers and retailers happy since the main group
they target - 35 to 64 year olds - is the fastest growing segment
of the population and is comprised of individuals who have reached
thier peak spending years (S&P, 1999). Other favorable factors
include:
- Increasing size of
new homes
- A rise in housing
starts
- Sharp increase in
demand for small office/home office furnishings (SOHO)
All of these forces will
continue to push demand for home furnishings and will contribute to
manufacturers and retailers growth.
TOP 10 MANUFACTURERS
| Name |
1997 Revenue(in
millions) |
1998 Revenue |
%Change |
| Furniture
Brands Int'l |
1808.3 |
1960.3 |
8.4 |
| Lifestyle
Furnishings Int'l |
1693.6 |
1744.7 |
3.0 |
| La-Z-Boy |
1074.0 |
1244.0 |
15.8 |
| Klaussner |
668.0 |
725.0 |
8.5 |
| Ashley |
530.0 |
651.0 |
22.8 |
| Ethan
Allen |
520.7 |
610.8 |
17.3 |
| Ladd |
525.5 |
571.1 |
8.7 |
| Sauder
Woodworking |
475.0 |
530.0 |
11.6 |
| Bassett |
446.9 |
397.6 |
(11.0) |
| Bush |
302.3 |
384.3 |
27.1 |
source: FurnitureToday
TOP 12 RETAILERS
| Name |
1997 Sales (in millions) |
1998 Sales |
% Change |
| Heileg-Meyers |
1729.9 |
2060.0 |
19.1 |
| Ethan
Allen |
844.7 |
962.2 |
13.9 |
| Pier
1 Imports |
563.7 |
781.1 |
38.6 |
| Rooms
To Go |
585.0 |
705.0 |
20.5 |
| Levitz |
856.2 |
703.9 |
(17.8) |
| HomeLife |
650.0 |
644.0 |
(.9) |
| La-Z-Boy |
506.2 |
593.1 |
17.2 |
| Haverty's |
490.0 |
540.3 |
10.3 |
| Value
City |
475.0 |
511.2 |
7.6 |
| Art
Van |
440.0 |
490.0 |
11.4 |
| Ikea |
423.2 |
458.0 |
8.2 |
| Berkshire
Hathaway |
386.0 |
426.0 |
10.4 |
source: FurnitureToday
The Industry relies on
forming relationships between manufacturers (sellers) and retailers
(dealers or buyers) to secure trade; with the number of buyers and
sellers in the market, identifying trade partners can be onerous.
The home furnishings industry is characterized by severe endemic
problems which include:
- Fragmentation
- Difficulty identifying
new business partners
- Slow inventory turnover
- Slow delivery cycles
from manufacturer to retailer
- Poor order tracking
systems
- Inconsistent logistics
Home furnishings manufacturers
and retailers communicate orders and order confimation using a paper
based sytem via fax machine; it is estimated that over 30% of orders
are simply lost in this process. This creates hostility for both the
retailer and consumer that ultimately will purchase those goods. Although
efforts are undertaken to curb these issues, the industry is an old-boys
network that is severely resistent to change and streamlining of processes.
The factors that have contributed to the industry's slowness to adopt
the Internet as a distribution channel are:
- Concerns about the
cost of delivery and return of heavy items
- Fears that consumers
would need professional assistance in purchasing decisions
- Fears that manufacturers
would alienate retailers by selling direct to consumers
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