Digital Strategies for Furniture Retailers
Sep 20 2023
Consumers drive the economy and determine the industries that thrive. In particular, these consumers are likely to spend on furniture, appliances, and other home furnishings and decor that make their living spaces more comfortable. U.S. consumers shell out a hefty amount on these major categories — and that’s not even including home electronics.
Despite a high level of spending, there could be troubled waters ahead as the percentage of U.S. homeowners planning to purchase furniture has fallen for the third year in a row and has dipped below 10% of that consumer market. Keep reading for a closer look at the current trends, challenges, and opportunities we’re seeing for digital marketers in the furniture industry.
2023’s Trends for the Furniture Industry
Currently, the furniture industry is experiencing a slowdown in overall spending overall. This slide began in September 2022 and continues now due to stresses in the economy and on individual households.
In 2022, the average household spend was largely elevated thanks to increased demand and revenge shopping (the need to spend more to make up for lost time after being unable to spend due to causes like the pandemic). Per-household spend was also skewed as a result of inventory problems, elevated costs, and shipping issues.
Here’s what we’re seeing so far in stores across the country:
-Spending at furniture stores is up 1% (in contrast to a 26% increase in 2021)
-Spending in appliance stores is down 3% (compared to a 17% increase in 2021)
There’s always hearty competition in this industry as well since there’s a high level of shared shoppers between furniture retailers. The shared shoppers among stores mean there is an average conversion rate of just over 50%.
Despite how people have traditionally purchased furniture — visiting a major department store or specialty furniture retailer and seeking items in person — not all furniture sales have to take place in-store. There’s a noticeable growth in the digital space, making ecommerce a viable option for many furniture retailers. In 2022, one in five furniture shoppers went online to look at products, and over half of those people went on to make their purchases online.
Market Challenges in 2023
Despite furniture being something that everyone needs, there are challenges when you’re the one trying to sell furniture in this competitive market.
First, there’s the fact that a large segment of buyers in the furniture market is home buyers. Within the first six months of changing addresses, the likelihood of purchasing furniture increases by nearly double and continues at that elevated likelihood for at least two years. While this sounds like it should be good news, a closer look shows that as of January 2022, the number of pre-existing home sales was in rapid decline, dropping by an estimated 38% by the end of the year.
As people deal with tighter budgets and higher interest rates, you may also find a decline in demand and foot traffic in your retail locations. That, combined with declining spend per household, can have a significant (and negative) impact on your business.
Additional challenges include:
-Reorganizing data segments and keeping them updated
-Leveraging value propositions to reach possible customers
-Growing sales in other core categories
-Mitigating the costs associated with high-LTV buyers who may repurchase in the future
Fortunately, there are ways to respond to these challenges. In our case study, we show that data drives revenue growth. With a customized approach using closed-loop measurements, weekly analysis, and optimized digital media investments, our client saw its revenue grow. The results speak for themselves: they saw 39% more purchases in-store, 59% more revenue, and a 200% increase in ROAS in the mattress and bedding category.
Opportunities for Furniture Retailers
There are opportunities for furniture retailers who want to increase their sales and get a better return on investment, even when foot traffic and in-store purchases are down.
Remember that ecommerce is still growing. Analyst research has shown that commercial channels may grow by two to three times compared to the core residential furniture industry. Essentially, you can take advantage of direct-to-consumer marketing and delivery in 2023.
Increasing the amount you’re spending on digital advertising and moving advertising to social media, mobile devices, search engines, and streaming TV are all good options for getting your ads in front of the shoppers most likely to buy. By optimizing your digital media investments, you can see an improvement both in-store and online.
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