Furniture sales have resembled a well-used couch over the past five years. Trading conditions across the furniture market have been affected by volatile demand across the housing industry along with fluctuations in disposable income, consumer sentiment and consumer tastes and preferences.
These factors created mixed results for furniture retailers, which culminated in sales falling by 1.7% per annum in the five years through 2011-12. Sales were also affected by increasing levels of competition from department stores and online shopping websites. Despite this, the overall furniture market remained resilient, offering consumers the latest trends in furniture fashion displayed in clever store layouts, eye-catching catalogues and through offering flexible terms of payment.
Industry revenue is set to rise by 1.5% to $7.3 billion in 2011-12. Consumer demand for furniture goods will be driven by growth in disposable income levels of 4.4% and a more stable trading environment evidenced by a rise across the domestic economy. However, sales will be affected by a decline in house construction and almost static change in interest rates. Sporadic shifts in consumer spending patterns along with continued demand for heavily discounted and promotional products will also characterise industry sales for the year.
The industry will remain subject to intense competition from department stores and, in particular, online shopping sites, which have become a real threat to the future viability of the industry. In terms of total market size, merchandise retailed by furniture stores may also be purchased from department stores, fabric retailers, and online shopping and auction websites. IBISWorld estimates that the industry accounts for about 60% of total furniture retailing sales, with the remaining 40% of revenue derived from sales by other retailers. Hence, the total retail market for furniture items is estimated to average about $12.2 billion.
Industry at a Glance
Furniture retailers will experience a steady trading environment over the next five years, with sales rising 2.1% per annum to reach $8.1 billion in 2016-17. Demand will primarily be driven by solid growth in disposable income levels, which will influence the quantity and quality of merchandise purchased by consumers. As a result, retailers may experience a shift in consumer preferences toward middle-market furniture. Sales will also be boosted by a recovery in consumer sentiment, which is expected to fuel growth in consumer spending power. Despite the positive trading conditions expected during the next five years, furniture retailers will continue to experience intense competition from external players, such as department stores and online shopping sites eager to attract a larger share of the market.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
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