Why So Many Furniture Stores Are Going Out Of Business
The furniture industry has seen major changes in recent years, with many well-known furniture retailers shuttering stores across the country. If you’ve noticed empty storefronts where your favorite furniture stores used to be, you’re not alone – and you may be wondering why so many furniture stores seem to be going out of business.
If you’re short on time, here’s a quick answer to your question: Furniture stores are closing due to a combination of factors, including increased online competition, high real estate costs, and changes in consumer shopping habits and preferences.
In this comprehensive guide, we’ll explore the top reasons behind the wave of furniture store closures and what the future may hold for the furniture retail industry.
The Rise of Online Furniture Shopping
With the increasing shift towards online shopping, it’s no surprise that the furniture industry has also experienced a significant change. In recent years, there has been a noticeable rise in the number of traditional brick-and-mortar furniture stores going out of business.
This can be attributed to the growing popularity of online furniture shopping.
Increasing shift to online furniture purchases
More and more consumers are opting to purchase furniture online due to the convenience it offers. Online shopping allows individuals to browse through a wide range of furniture options from the comfort of their own homes, without the hassle of visiting multiple physical stores.
Additionally, online retailers often provide detailed product descriptions, customer reviews, and high-quality images, allowing shoppers to make informed decisions before making a purchase.
According to a recent study conducted by Statista, online furniture sales accounted for approximately 15% of total furniture sales in 2020, and this number is expected to continue rising in the coming years.
This data clearly indicates the increasing trend of consumers turning to online platforms for their furniture needs.
Amazon and other online retailers capturing market share
One of the major players in the online furniture market is Amazon. With its vast selection of furniture options, competitive pricing, and fast shipping, Amazon has become a go-to destination for many consumers looking to furnish their homes.
The company’s strong presence and reputation have made it a formidable competitor for traditional furniture stores.
In addition to Amazon, other online retailers such as Wayfair and Overstock have also gained a significant market share in the furniture industry. These platforms offer a wide variety of furniture styles and designs, catering to different tastes and budgets.
The convenience of online shopping, coupled with the extensive product range offered by these retailers, has contributed to their success and the decline of traditional furniture stores.
Online shopping provides convenience and price comparisons
One of the main advantages of online furniture shopping is the convenience it provides. Customers can easily browse through different websites, compare prices, read reviews, and make purchases without leaving their homes.
This eliminates the need to spend time and effort visiting multiple physical stores, allowing consumers to make quicker and more informed buying decisions.
Furthermore, online shopping allows for easy price comparisons. Consumers can quickly compare prices across various websites, ensuring they get the best deal possible. This transparency in pricing puts pressure on traditional furniture stores to offer competitive prices, as consumers are now more empowered to make informed decisions based on cost.
It is important to note that while traditional furniture stores are facing challenges with the rise of online shopping, there are still consumers who prefer the in-person experience of browsing and trying out furniture before making a purchase.
However, the convenience, extensive product range, and competitive pricing offered by online retailers have undoubtedly contributed to the decline of many brick-and-mortar furniture stores.
For more information on the rise of online furniture shopping and its impact on the industry, you can visit Statista’s website.
High Real Estate Costs
One of the main reasons why so many furniture stores are going out of business is the high cost of real estate. Brick-and-mortar locations can be incredibly expensive to rent and maintain. The cost of leasing a retail space in popular areas can be astronomical, making it difficult for furniture stores to turn a profit.
Brick-and-mortar locations expensive to rent and maintain
Operating a physical store comes with its own set of challenges and expenses. Not only do furniture retailers have to pay high monthly rent, but they also have to cover costs such as utilities, property taxes, and maintenance. These expenses can quickly add up and eat into the store’s profits.
In addition, the rising cost of real estate in prime locations makes it even more challenging for furniture stores to stay afloat.
Many furniture stores have large physical footprints
Furniture stores are typically known for their large physical footprints. They require ample space to display a wide variety of furniture pieces, from sofas and beds to dining sets and home decor. However, the larger the store, the higher the real estate expenses.
Maintaining a large showroom and storage facility can be financially burdensome, especially when sales are slow.
Real estate accounts for a significant portion of retailers’ expenses
Real estate costs often make up a significant portion of a furniture retailer’s overall expenses. A study conducted by the National Retail Federation found that retail occupancy costs accounted for an average of 10% of total expenses for retailers.
This includes rent, property taxes, and other real estate-related expenses. With the increasing prices of commercial properties, many furniture stores find it challenging to allocate a significant portion of their budget to real estate.
Furthermore, the rise of e-commerce has also affected the profitability of furniture stores. Online retailers can operate with lower overhead costs since they don’t have to worry about renting and maintaining physical stores.
This has put traditional furniture stores at a disadvantage, leading to many of them struggling to compete in today’s market.
Changes in Consumer Preferences
Consumer preferences in the furniture industry have undergone significant changes in recent years, which has led to the decline and closure of many furniture stores. These changes can be attributed to various factors, including evolving tastes, lifestyle changes, and advancements in technology.
Declining interest in living room furniture
One of the key factors contributing to the closure of furniture stores is the declining interest in traditional living room furniture. In the past, living rooms were often considered the focal point of a home, and consumers invested in large, bulky sofas and coffee tables.
However, modern lifestyles have shifted towards more open floor plans and multifunctional spaces, leading to a decreased demand for formal living room furniture.
Additionally, the rise in popularity of casual and informal living spaces has changed the way people use their homes. Many households now prefer a more relaxed and flexible approach to furniture, opting for comfortable seating arrangements that can easily be rearranged or repurposed for different activities.
Shift away from heavy, oversized furniture
Another reason for the closure of furniture stores is the shift away from heavy, oversized furniture. In the past, consumers often favored furniture pieces that were large and imposing, making a statement in their homes.
However, with the rise of minimalistic and contemporary design trends, there has been a growing preference for sleeker and more streamlined furniture.
Consumers now seek furniture pieces that are not only aesthetically pleasing but also practical and space-saving. This shift in preference has resulted in a decreased demand for bulky furniture items, such as massive dining tables or oversized entertainment centers.
Increased demand for modular and multifunctional furniture
One of the most significant changes in consumer preferences is the increased demand for modular and multifunctional furniture. As urban living spaces become smaller and more compact, consumers are seeking furniture solutions that can maximize limited space and serve multiple purposes.
Modular furniture, such as sectional sofas with interchangeable components or storage ottomans, allows consumers to customize their furniture arrangements to suit their needs. This flexibility appeals to modern consumers who value adaptability and versatility in their homes.
The rise of remote work and the need for home office spaces have also contributed to the demand for multifunctional furniture. Consumers are now looking for furniture pieces that can serve as both a workspace and a storage solution, combining functionality and style.
The Rise of Direct-to-Consumer Brands
One of the main reasons why so many furniture stores are going out of business is the rise of direct-to-consumer (DTC) brands. These innovative companies have disrupted the traditional retail model by bypassing middlemen and selling their products directly to consumers.
This shift in the industry has been driven by several factors, including changing consumer preferences and advancements in technology.
New DTC furniture brands gaining popularity
One of the key reasons behind the success of DTC furniture brands is their ability to resonate with modern consumers. These brands have emerged with fresh and innovative designs that appeal to a younger demographic.
They understand the importance of staying on-trend and offer furniture that aligns with contemporary interior design styles. This approach has allowed them to capture a significant portion of the market share and gain popularity among consumers looking for unique and stylish furniture options.
Additionally, DTC brands often prioritize sustainability and ethical practices, which is increasingly important to consumers. By using environmentally-friendly materials and implementing sustainable manufacturing processes, these brands are able to attract conscious shoppers who want to make a positive impact on the planet.
DTC brands offer flexible customization options
Another reason why DTC furniture brands are thriving is their emphasis on customization. Unlike traditional furniture retailers, these brands offer consumers the ability to personalize their furniture to suit their individual preferences.
This level of flexibility allows customers to create unique pieces that perfectly fit their style and space. Whether it’s choosing the fabric, color, or even the dimensions, DTC brands provide a level of customization that is often lacking in traditional retail stores.
This focus on customization not only enhances the overall shopping experience but also sets DTC brands apart from their competitors. By offering personalized options, these brands are able to cater to the diverse needs and tastes of consumers, which further contributes to their success.
DTC brands market directly to consumers vs retailers
One of the most significant differences between DTC brands and traditional furniture retailers is their marketing strategy. While traditional retailers rely heavily on brick-and-mortar stores and partnerships with other retailers, DTC brands prioritize digital marketing and direct communication with consumers.
These brands leverage social media platforms, online advertising, and influencer partnerships to reach their target audience directly. By cutting out the middleman, they can offer competitive prices and build a stronger relationship with their customers.
This direct communication allows DTC brands to gather valuable feedback, understand consumer preferences, and make data-driven decisions to improve their products and services.
Furthermore, the online nature of DTC brands allows them to operate with lower overhead costs compared to traditional retailers. This cost advantage enables them to offer more competitive prices and attract price-conscious consumers.
What’s Next for the Furniture Industry
With the increasing number of furniture stores going out of business, it is crucial to understand what lies ahead for the furniture industry. Several factors are shaping the future of this industry, including the projected increase in online furniture sales, the adaptation of traditional retailers with smaller stores, and the impact of new technologies like augmented reality (AR) and virtual reality (VR) on the shopping experience.
Projected Increase in Online Furniture Sales
The rise of e-commerce has significantly impacted various industries, and the furniture industry is no exception. Online furniture sales have been steadily increasing over the years, and this trend is expected to continue.
According to a report by Statista, online furniture sales in the United States alone are projected to reach $59.5 billion by 2023. This surge in online sales can be attributed to the convenience and wide selection offered by online retailers, as well as the growing comfort of consumers with making large purchases online.
Traditional Retailers Adapting with Smaller Stores
As online sales continue to dominate the furniture market, traditional brick-and-mortar retailers are adapting to the changing landscape. One strategy that many retailers have adopted is opening smaller stores.
These smaller stores allow retailers to reduce overhead costs while still providing customers with the opportunity to see and touch the furniture before making a purchase. Additionally, smaller stores are often located in high-traffic areas or within shopping centers, making it more convenient for customers to visit.
This shift towards smaller stores has helped some retailers stay competitive in the face of online competition.
New Technologies like AR/VR Changing Shopping Experience
Advancements in technology have revolutionized the way we shop, and the furniture industry is embracing this change. Augmented reality (AR) and virtual reality (VR) technologies are being integrated into the shopping experience, allowing customers to visualize how furniture will look in their homes before making a purchase.
This immersive experience not only enhances the customer’s decision-making process but also reduces the likelihood of returns. According to a study by Deloitte, 72% of consumers believe that AR/VR can help them make better purchasing decisions.
Conclusion
The furniture industry is undergoing a major transformation, with long-standing brands shutting down stores while new direct-to-consumer companies disrupt traditional models. As real estate costs remain high and more consumers opt to shop online, we can expect the decline of large furniture stores to continue.
At the same time, traditional retailers are starting to adapt with smaller-format stores and expanded ecommerce capabilities. Furniture shopping itself is also evolving through new technologies like augmented and virtual reality.
While the big-box furniture store may become a relic of the past, innovative retailers who can adapt to the changing times are poised to thrive in the future furniture market.
