Furniture

SIC 5021

Companies in this industry

Industry report:

This classification comprises establishments primarily engaged in the wholesale distribution of furniture, including bedsprings, mattresses, and other household furniture; office furniture; and furniture for public parks and buildings. Establishments primarily involved in the wholesale distribution of partitions, shelving, lockers, and other store fixtures are classified in SIC 5046: Commercial Equipment, Not Elsewhere Classified.

Industry Snapshot

The wholesale distribution of furniture industry is subdivided into two categories: establishments engaged primarily in the sale of household and lawn furniture and establishments primarily engaged in the sale of office and business furniture. According to statistics compiled by Dun & Bradstreet, 13,707 establishments employed 81,426 people in this industry in 2009. Combined sales totaled $13.5 billion. The top four states--California, Florida, Texas, and New York controlled more than 42 percent of the market.

Background and Development

This industry is affected by interest rates and the housing market. When these economic indicators are stable and strong, the furniture industry generally has higher retail sales. The furniture industry experienced a slump from 1988 until mid-1992 when a "stop-and-start" recovery process began. Conditions within the furniture industry reflected the nation's general economy as consumers postponed purchases. As a result, when the economy began to improve, there was a pent-up demand for industry products a resulting increase in furniture shipments.

Following a slump in the early 1990s, the International Wholesale Furniture Association found more than 90 percent of survey respondents reported sales increases in 1993. Sales continued to climb in 1994 and 1995. Throughout 1995, monthly sales for furniture and home furnishings were between $3.1 and $3.4 million.

In the late 1990s, much of this industry's strength came from the industrial (offices, hotels, restaurants) side of the market. The office furniture market was estimated at $12 billion. A rise in the number of home offices boosted the industry into the 2000s, with sales of home office furniture reaching $4.8 billion n 2008, according to Furniture Today.

The rise in housing construction in the mid-2000s also aided the industry. According to the National Association of Home Builders (NAHB), single-family housing starts increased every year from 2000 to 2005, hitting a high of 1.72 million before starting on a downward trend. The subprime mortgage crisis as well as the slowing of the U.S. economy slowed the housing industry to almost a standstill in the late 2000s, with less than a half a million single-family housing starts in 2009, according to the U.S. Census Bureau.

In the early 2000s, the largest type of customer for furniture wholesalers was furniture stores, which represented 69.4 percent of sales. Other types of customers included rental dealers (19.2 percent of sales), manufactured homes (4.9 percent), specialty stores (2.5 percent), interior designers (1.4 percent), and institutional buyers (0.5 percent). The two largest product categories, living room/upholstered and bedroom, accounted for half of all sales.

The industry was serviced by the American Home Furnishings Alliance (AHFA; formerly the American Furniture Manufacturers Association) and the National Wholesale Furniture Association, the International Furniture Suppliers Association, and the Business and Institutional Manufacturers Association, among others.

Current Conditions

In the early 2010s, one of the biggest challenges the industry faced was manufacturers' trend toward internalizing wholesale functions and bypassing wholesalers. To reduce costs and improve efficiency, many manufacturers increased their direct sales to retailers and rental dealers. As a result, wholesalers faced a shrinking number of traditional customers, and innovative wholesale concepts, such as warehouse clubs and electronic shopping networks, emerged. Wholesalers were also threatened by large discount department stores such as Wal-Mart. A report by IBISWorld predicted that furniture wholesalers would respond to these challenges by focusing on stronger customer service, better inventory management, and technological advances.

The home furnishings segment continued to be directly affected by home sales levels, whereas office furniture sales remained a reflection of the overall health of the economy. Neither of these were bright spots in 2010, although some predicted a recovery further into the decade. For example, the BIFMA predicted an 8.7 percent increase in production of office furniture by 2011.

Industry Leaders

Although the mattress and office furniture segment of the industry was fairly concentrated in 2010, the furniture industry as a whole was highly fragmented, with the top 50 companies accounting for about 40 percent of revenues, according to Hoover's. Some of the top manufacturers of home furnishings in 2010 included Ashley Furniture Industries Inc. of Arcadia, Wisconsin, with sales of $3.0 billion; La-Z-Boy Inc. of Monroe, Michigan, with $1.1 billion in annual sales; and Furniture Brands International Inc. of St. Louis, Missouri, with sales of $1.2 billion. Major makers of office furniture were Steelcase Inc. of Grand Rapids, Michigan, with 2009 sales of $2.2 billion; HNI Corp. of Muscatine, Iowa, with $1.6 billion in sales; Herman Miller Inc. of Zeeland, Michigan, with sales of $1.3 billion; and Haworth of Holland, Michigan, with $1.6 billion in sales.

Workforce

According to Dun & Bradstreet, of the 81,426 employees in the industry in 2010, a majority worked for small companies with fewer than 25 employees, representing the fragmentation in the industry. California employed the most workers in the industry, with 12,918, followed by Texas (6,026), New York (5,848), North Carolina (5,115), and Florida (4,617).

America and the World

Imports--worth $26 billion in 2010--continued to provide significant competition for the domestic furniture industry, and many of the larger companies in the industry had manufacturing plants overseas where labor and production costs were lower. As of 2010, Canada was the largest importer of office furniture, with about 40 percent of the market share, whereas China's share had grown to almost as much, up from only 13 percent in 2000. Canada also received about half of the U.S. exports of office furniture, according to the Business and Institutional Furniture Manufacturers Association (BIFMA). According to BIFMA, office furniture imports had risen dramatically in the 1990s and 2000s--from $394 million in 1991 to a decade high of $2.5 billion in 2008. Exports during the 2000s, on the other hand, fluctuated from a low of $307 million in 2003 to a high of $679 million in 2008.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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