The furniture retailers globally clocked a 545.78-billion-dollar business turnover across the world in 2020 (about 42 billion dollars were contributed by the eCommerce furniture Industry). From 2021 to 2027, the overall industry is expected to grow by a CAGR of 5.4%, turning into a 785-billion-dollar industry by 2021. Out of this, 785- 647 billion dollars are expected to be driven by the predominant traditional route. While the e-commerce channel would contribute around 138 billion dollars. The e-commerce segment of the furniture industry is expected to grow at a CAGR of about 20%
Current market trends
The furniture industry is primarily driven by consumer spending. And consumer spending takes into account such as per-capita income, household debt levels, and consumer expectations. The rise in disposable living and higher standard of living are key factors leading to constant growth in this industry. With the growth in digital penetration and more economical and accessible smartphones – the route to buying furniture is also changing from the traditional means to an online one. Ikea(a pioneer in low cost and modular furniture) – a late entrant into the e-commerce business of furniture (started only in 2018), has increased its online sales from a 7% to 31% contribution to overall Ikea sales in just three years.
Amazon was initially the sole player in the online furniture business. And after that, in 2019, Wayfair.com and Amazon.com were major players contributing to 63% of the market share. But today the e-commerce industry has many players like (players with their market share as of 2020). Today wayfair.com is the market leader having a market share of 33.4% (sales 14.1 billion dollars for 2020)
What are some of the key reasons that this industry is set to boom?
- Changing Trends :
- The changing trends in the home and living concepts are transforming the buying patterns of customers. Due to this, many customers are purchasing furniture in the remodeling of their homes. Their preferences are influenced greatly by the increasing access to blogs, digital content, homestyle, lifestyle, and fashion magazines.
- For instance, a real-time customer engagement program of IKEAs “Home Tour Squad” provides solutions to makeover tips to their customers. This is leading to incremental sales in the purchase of customized furniture of different sizes, materials, and colors to add value to the ambiance of a place and provide comfort.
- For instance, Fursys offers customized office furniture. It comes with additional lumbar support.
- Thus, the evolving home and living styles will boost the growth of the online furniture market.
- With the advancements in technology, concepts like Augmented reality and Virtual reality are taking over. With next to near perfect and immersive buying experience, customers now do not need the feel and need to go out of the shop. Applications are now offering the customers the liberty to completely set up their home or office through augmented reality or virtual reality and helping them visualize and select the best pieces of furniture.
- Operational Costs
- Growing rental and operational costs and added with that the uncertainty around Covid – has given the Furniture industry a big boost to transgress into the digital space. No longer do manufacturers and furniture sellers see the need to open big-box showrooms for display. Rather than that having smaller showrooms along with a detailed website/application can be better off.
- The usage of smartphones has completely changed the society we live in. It is impacting the daily lives of more than three billion users worldwide. When Covid had kicked in – it was assumed that laptops/personal desktops would dominate the space. But it was otherwise. The ease and convenience of smartphones saw a boom in customers using them for online shopping.
- As reported by eMarketer, by 2021, mobile phone e-commerce sales are slated to account for about 54% of total e-commerce sales. Though not all customers would buy via mobile – but it still forms a major chunk of sales – and cannot be ignored.
- According to Google Shopping Insights, 72% of searches about the furniture category in 2020 came from mobile devices.
- Thus, mobile phone users will expect an excellent user experience on their smartphones, especially when purchasing heavy-ticket items like furniture.
- Internet and Smartphones Cost
- Along with these benefits of mobile phones mentioned above, the overall cost of the internet and smartphones across the world has seen a reduction.
- With the increased penetration and more competent competitors, both these entities are seeing a downward trend in their costs.
- Thus, this also enables the market to be reached to a wider audience.
- Change In culture
- With companies now offering virtual consultations at the convenience of your home, more detailed information about the furniture being available online (the material, make, care instructions, life), 3D viewing of furniture, more detailed and high-quality imagery has only made the customers more comfortable with this rather than going to a physical store.
- Logistics and Shipping costs
- The logistics and shipping industry has overseen a massive change in these last few years. Using more complex optimization algorithms and data analytics tools, the overall logistics and shipping costs have been brought down – which is a key enabler for the last mile delivery to the customer.
Thus overall fuelled due to pandemic and organic growth – online furniture sales are here to stay and grow. The future lies in having an omnichannel business strategy.
As discussed above the future of the furniture business is bright. YRC can be your ideal choice of retail business management partners. YRC comes with all the necessary sets of experience in this field to guide and assist you at every step to start and grow your furniture business.