Furniture Stores

SIC 5712

Industry report:

This classification covers establishments primarily engaged in the retail sale of household furniture, including beds and springs, cabinet work, juvenile furniture, mattresses, and outdoor furniture. These stores also may sell home furnishings, major appliances, and floor coverings.

According to figures from Dun & Bradstreet, 52,324 establishments were engaged in the retail sale of household furniture, including beds and springs, cabinet work, juvenile furniture, mattresses, and outdoor furniture in 2010. The industry employed 311,939 people and generated $29.3 billion in total sales. States with the most furniture stores were California with 6,580, Texas with 4,446, Florida with 4,202, New York with 3,060, North Carolina with 2,192, Pennsylvania with 1,989, Georgia with 1,977, Illinois with 1,761, Ohio with 1,537, New Jersey with 1,487.

About 69 percent of the establishments in the industry were classified by D&B as general furniture stores. Combined, they employed 227,442 people and generated sales of $22.3 billion in 2009. The remainder of establishments were classified as sellers of mattresses (7 percent); cabinet work (6 percent); beds, bedding, and accessories (5 percent); office furniture (4 percent); and various other types of furniture (9 percent). The industry is made up of both large national chains, regional stores, and small independent operations and is highly fragmented.

According to data from the U.S. Bureau of the Census, consumers spent $55 billion on furniture and other home furnishings in 1997. Throughout the 1990s, however, the fastest growing segment of the retail furniture trade was not furniture stores but rather other retail stores that sold household and office furniture, mattresses, and related consumer products. These included discount superstores such as Wal-Mart and Target, warehouse stores like Price Club and Office Depot, and one-stop department stores such as Sears and J.C. Penney. Catalog furniture sales also increased. This new competition made the marketplace a much more difficult one for traditional furniture stores. This trend continued into the 2000s.

Entering the 1990s, the retail furniture industry, like many other retail industries, slumped in the face of a general economic recession. Furniture purchases are considered major, discretionary purchases that can be deferred when tough economic times hit. In 1988, the percentage of disposable income spent for household furniture was about 4.6 percent, but by 1991 this figure had dipped to about 3.9 percent. Moreover, retail sales of furniture are historically predicated on new housing construction, which slumped in the late 1980s, a dry period that lasted until 1993. Although the recession of the early 1990s dragged down sales of household furniture and bedding, the economic resurgence of the middle and late 1990s brought a noticeable uptick in these sales.

Furniture typically used to house electronic components, known as ready-to-assemble (RTA) furniture, was one of the fastest growing consumer product categories during the 1990s, according to the Electronic Industries Association. Designed to hold audio, video, and home office products, this type of furniture is shipped unassembled to the store and then is either assembled by the store or the consumer. Products included home entertainment centers, television and VCR stands, home office furniture, and furniture designed to hold computers and related equipment. Due to the minimal labor in manufacturing, ease in shipping and inventory stocking, and perceived value versus price, the majority of sales of RTA furniture were made through mass merchandisers, specialty stores, and warehouse clubs. However, due to strong demand, many leading furniture stores also started to sell RTA furniture.

While the economic recession of the early 1990s dealt a blow to the retail furniture industry, primarily due to the bleak performance of the housing industry, increased demand was seen throughout most of the rest of the decade. New housing construction experienced a significant uptrend during the middle and late 1990s, a development that provided a shot in the arm for the retail furniture industry. In 1997, the number of establishments in the industry was estimated at roughly 48,000, and sales totaled roughly $55.2 billion. Employment in the industry stood at about 386,600 workers. The top 10 retailers of furniture and bedding were roughly split between stores in the traditional category and those from the department/discount store segment, according to Furniture Today. By 2003, according to the Home Furnishings Network, the channels of distribution for furniture retailers stood at furniture stores and chains with 21.9 percent, home improvement centers with 5 percent, specialty stores with 12.3 percent, mass merchants and clubs with 23.5 percent, department stores with 12 percent, and other segments with 25.3 percent combined.

The industry slowed again in the early 2000s before benefiting from the upsurge in housing starts in the mid-2000s. According to the National Association of Home Builders, single-family housing starts peaked at 1.7 billion in 2005 before dropping steadily throughout the rest of the decade. By 2008, the United States saw only 905 million housing starts, and in 2009 that figure further dipped to 445 million. Sales for furniture stores as well as most other retailers in the United States slumped along with the housing market and the U.S. economy. Because household furniture sales are closely linked to home sales, the slowdown in the housing market and tight consumer credit situation brought sales down. According to Furniture Today, 2008 was the first time since the publication had begun tracking furniture sales in 1990 that sales had actually declined. In 2009, consumer expenditures on furniture and mattresses fell again, 7.5 percent. Every category saw declines--some, such as wood furniture, fell as much as 22 percent. Upholstered furniture saw a 14.6 percent decline in domestic shipments and a 12.7 percent decline in imports, and metal furniture fell 20.6 percent and 19.5 percent for import and domestic shipments, respectively. Figures from Hoover's showed that furniture shipments for the 25 largest stores totaled $9.98 billion in 2009, a decline of 14.6 percent from 2008. By 2010, however, some were expressing hopes of a recovery, fueled by reports of upticks in furniture store sales. For example, industry leader La-Z-Boy saw a 17 percent increases in sales of upholstered furniture in the first quarter of 2010, whereas Select Comfort, a leading maker of mattresses and bedding, experienced a sales increase of 23 percent in the last quarter of 2009.

Although some of the leaders in furniture retailing in the 1990s remained the top performers into the 2000s, several had gone bankrupt by early in the decade, including Montgomery Ward, Heilig-Meyers, and Levitz. In 2002 Wal-Mart was the number one performer in furniture sales; according to a survey by Furniture Today, this was the first time in 10 years that a "nonconventional furniture store" sold more furniture than any other retailer. Wal-Mart posted furniture and bedding sales of $1.24 billion that year.

In 2009, however, Ashley Furniture HomeStores overtook Wal-Mart for the second time as the largest furniture store in the nation. Ashley registered $2.05 billion in furniture and bedding sales that year, $95 million more than Wal-Mart. Another leader in the industry was Furniture Brands International (St. Louis, Missouri), which sold brands like Broyhill, Lane, and Thomasville and had sales of $1.2 billion in 2009. Other major players the industry included La-Z-Boy Inc. (Monroe, Michigan), which specialized in upholstered furniture and recorded sales of $1.1 billion in 2009; Haverty Furniture Companies (Atlanta, Georgia), which launched its own line of furniture in 2000 and had sales of $588 million in 2009; and Ethan Allen Interiors (Danbury, Connecticut), with sales of $590 million in 2009. Rooms To Go Inc. (Seffner, Florida) specialized in low to moderately priced furniture and offered discounts for large purchases. It also had 45 Rooms To Go Kids branches in 2010. Large department stores that had a hand in the furniture industry included Macy's, J.C. Penney, and Sears. Additional retail furniture leaders included Berkshire Hathaway's furniture division; Sam's Club; and Costco Wholesale Corp.

As furniture retailers entered the second decade of the twenty-first century, they faced challenges but were modestly optimistic about the future. A report by IBISWorld summarized the state of the industry in 2010: "While intense competition from department stores continues to wage a war against furniture stores, operators will benefit from the improving economic forecast. As the housing market begins to climb slowly upward, the number of housing starts will increase, creating renewed demand for furniture. Additionally, consumers will regain confidence as disposable income rises, resulting in increased revenue."

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