Significant findings include the following:
Consumer shopping patterns are changing dramatically as the Baby Boomer generation leaves the stage.
The retail channel of distribution continues to fragment with traditional formats losing ground to new venues.
Superior product remains the most important variable, but information technology and logistical expertise are growing in importance.
Appallingly inadequate marketing continues to plague the industry. Having failed to establish meaningful brand names of their own, suppliers have been forced to “rent” licensed brands from designers and celebrities.
The industry remains unable to compete globally on the basis of price, but there may be an opportunity to compete on the basis of quality and customization.
Efforts to consolidate the industry continue to be met with fierce resistance. Agility trumps size.
The unprecedented macro-economic compression is distorting company performance
across the entire industry, masking the results of individual companies.
Consumers Decide “Pretty Good” Is Good Enough
As the Baby Boomers aged, they were expected to buy a lot of furniture. Instead, they shunned elaborate purchases of home furnishings. Even the most conspicuous consumers, after spending extravagantly on oversized homes, showed little interest in fine furniture. Instead, they furnished their million dollar homes with $599 sofas—or nothing at all. Many McMansions featured rooms completely devoid of furniture. When they did buy furniture, they often selected inexpensive ‘disposable’ items from stores like IKEA, Rooms-to-Go, or Pottery Barn.
Unlike automobiles, appliances, and electronics, well-made wooden furniture hardly ever wears out. It keeps occupying space and rarely needs replacing. New houses feature built-in cabinets and walk-in closets with enough storage room to eliminate the need for dressers and chests. Even the new flat screen televisions have made the armoire entertainment center obsolete. Unless there is a growing population with an expanding housing industry, the demand for new wood furniture all but disappears.
Style changes can trigger demand, but wood furniture styling moves with glacial velocity. In the last 50 years, casual styling has moved from Colonial to Country, a short trip, and formal styling has moved from early 18th Century to late 18th Century reproductions.
FURNITURE INDUSTRY WATCH REPORT SEPTEMBER 2009