Sofa so good

This week we take a look at the furniture market, which has been significantly affected by a number of factors in recent years, including changing customer priorities, fluctuations in the economy and of course, the pandemic.

The replacement cycle of many furniture items can be up to ten years, and with a downturn in the economy imminent, consumers may delay replacing their furniture even longer, presenting a significant challenge to furniture retailers, leading to revisit and reassesses their core business strategies.

In the 2010s several online furniture businesses launched and recently some like, Made.com, have gone into administration (the brand was bought by Next last week). Is being strictly limited to selling furniture online still a viable option, and what strategies can furniture retailers adopt to ensure survivability?

We explore 3 key trends within the furniture industry to help future-proof their businesses:

Partnerships
The global online furniture market has grown by 8% in 2022 and is forecasted to grow at an accelerated CAGR of 16% between 2022 and 2026. Whilst this growth will mainly be contributed by the Asia pacific region (37%), it highlights the degree of pressure furniture retailers are often under in terms of meeting spikes in consumer demand. One way to manage consumer demand is through forming partnerships between online furniture businesses and physical store retailers.

Diversifying retail channels will reduce the risk of dependency on one channel only and improve the scale and discoverability of a brand. For example, Britain’s largest bed retailer Bensons for Beds has recently agreed to buy Eve Sleep, an online mattress retailer, to save them from administration. Benson Beds believes in utilising their advantage of scale and reach through their 166 physical stores in the UK to support Eve Sleep by unlocking their potential as an already well-established brand.

Rental business models
Through adopting furniture rental services, businesses will be able to cater to the needs of consumers who are not willing to invest in buying furniture for uses such as short-term work assignments, property staging purposes or temporary living arrangements. This strategy also helps companies utilise excess inventory and increases the possibility of customers choosing to buy the furniture after the rental period expires.

A company that has taken advantage of the rental model is John Lewis, who decided to expand their range of rental furniture after seeing all the furniture in their first trial run with Fat Llama rented out in just 48 hours. This shows customer behaviour towards usership rather than ownership. John Lewis reports that this scheme is also in line with their goal of offering customers a more sustainable solution to furniture shopping.

Eco-friendly furniture
To further improve a furniture brand’s sustainability, eco-friendly furniture can be developed through utilising recycled materials, sustainably sourced wood, and rapidly renewing materials such as bamboo. As of 2019, the global eco-friendly furniture market was valued at approximately £27.5 billion and is expected to grow to £46.8 billion by 2027. This growth is mainly driven by the demand and growing adoption of green building projects across the globe.

The prominence of environmental regulations across countries such as Australia, China, Singapore and the U.S. intensifies the need for environmentally friendly furniture in commercial and residential sectors. Sustainability has been continuously influencing customer choices across all industries and is a key trend for retailers to consider moving forward.

For furniture businesses to successfully navigate through times of economic instability, it is crucial to build resilience towards fluctuating customer behaviour and needs. Through strong partnerships, diversifying business models, and adopting product sustainability, furniture businesses can continue flourishing in this growing market.

Mukhriz Mustamir