WHAT PEOPLE BUY: FURNITURE AND OCCASIONAL FURNITURE

Purchase incidence of furniture was the same in 2003 (41 percent) as in 2001. The purchase of furniture can range from inexpensive occasional tables and ready-to-assemble and unfinished furniture to major furniture acquisitions that are often bought on credit and paid for over time.

Industry Snapshot

Personal consumption of furniture, including mattresses and box springs, reached $69.8 billion in 2002, up 3.2 percent over 2000 levels of $67.6 billion (see Figure 8.11). The key growth categories in furniture were kitchen and dinning room furniture and outdoor furniture. Infant furniture, wall units and cabinets, and occasional furniture also were growth categories in 2002. During that year, sales were off for major furniture pieces, as consumer demand for occasional and smaller investment pieces was up.

	2000	2002	% CHG '00-'02
Total Personal Consumption in millions	$67,596.0	$69,777.0	3.23
Mattresses and box springs	9,152.3	9,200.3	0.52
Other bedroom furniture	11,959.0	11,881.6	-0.65
Sofas	15,426.9	14,837.7	-3.82
Living room chairs	7,586.2	6,818.1	-10.13
Living room tables	2,974.6	3,135.2	5.40
Kitchen, dining room furniture	8,039.6	10,655.7	32.54
Infant furniture	1,076.3	1,123.3	4.37
Outdoor furniture	2,623.4	2,919.5	11.29
Wall units, cabinets, occasional furniture	8,757.7	9,205.5	5.11
Source: U.S. Department of Commerce, Bureau of Economic Affairs; Bureau of Labor Statistics Consumer Expenditure Survey Diary, 2002

Figure 8.11: Total Furniture and Mattresses Industry Snapshot

Retail Overview

The furniture industry has been undergoing a retrenchment in the past several years. Furniture retailing is evolving, with many large chains of independently owned furniture stores, such as Heilig-Meyers, going out of business or through bankruptcy and major reorganization, such as Levitz. National specialty chains, including Pottery Barn, Restoration Hardware, Pier 1, and Bombay Company, are also capturing a greater share of the furniture market, offering affordably priced imports manufactured to their specifications. Many branded furniture companies, facing the loss of retail furniture stores, are opening dedicated, often franchised gallery stores to ensure continued distribution at the consumer level. La-Z-Boy, for example, has built a chain of 300 dedicated furniture stores and launched 315 in-store galleries to showcase the company's furniture line. La-Z-Boy is following in the footsteps of furniture manufacturer Ethan Allen, which has long controlled retail distribution through their own chain of 300 stores.

But while the long-established, well-respected Ethan Allen watches its sales erode below the $1 billion mark in 2003, the upstart Rooms to Go, with only 90 stores, has taken over the position of the nation's number-one furniture retailer with sales estimated at $1.3 billion. As its name implies, the concept of Rooms to Go is simple and perfect for our time. It offers instant decorating solutions one room at a time in moderately priced packages that include the furniture and decorative accessories. It has recently expanded the concept to target tweens and teens with 20 Rooms to Go Kids stores. The specialty child, tween, and teen market is also getting attention from Pottery Barn through new niche-focused catalogs and targeted stores cropping up in malls across the country.

According to the Census Department's monthly retail census, retail sales at traditional furniture stores, such as Ethan Allen and Rooms to Go, totaled $52.6 billion in 2002, up 4 percent over 2000 results (see Figure 8.12). Home furnishings stores that sell a wider selection of more decorative home furnishings, such as Pottery Barn, Bed Bath & Beyond, Bombay Company, and Pier 1 to name a few, generated retail sales of $42.4 million, an increase of only 3.1 percent over 2000.

	2000	2002	% CHG '00-'02
Total retail in millions	$91,662	$94,978	3.6
Furniture stores	50,539	52,563	4.0
Home furnishings stores	41,123	42,415	3.1
Source: Department of Census, Monthly Retail Census

Figure 8.12: Retail Furniture and Home Furnishings Stores

Purchase Drivers

While consumers frequently turn to less expensive decorative accessories to update their room décor, they often buy furniture to replace a worn-out piece. After all, upholstered furniture gets worn before case goods and wooden furniture do. But when consumers go out to replace a worn-out chair or sofa, shoppers often end up making a cascade of additional furniture purchases. With the justifier of replacing an existing item, they don't want to stop there but want to create a whole new look for the room, so they add curtains, rugs, tables, and all the rest.

Moving and buying a new home is another primary motivator for consumers to get out and shop for furniture. The past few years have been very positive for the housing market as mortgage interest rates have dropped, thus giving consumers extra cash to trade up to larger, more expensive homes with more rooms to furnish.

Often thought of as a necessity, one focus group respondent views all furniture purchases as discretionary: "We have all the basics [furniture] that we need. I view all [furniture purchases] as discretionary. I just bought a grandfather clock. It is fun. It is the first thing you see when you walk into the house." After moving to the Midwest from Florida, one respondent needed to change her home décor to be more compatible with the local neighborhood: "We used to live in Florida and had very contemporary furnishings. Then we moved to Ohio, and it didn't have the same feeling. We needed to buy all new furniture to match our new home."

Demographic Variables

Furniture purchases often represent major household expenditures, so that men and women are equally involved in the purchase. Men, in fact, report a higher purchase incidence of furniture (44 percent) than women do (39 percent). Furniture buying tends to skew toward a more youthful market, with households aged 18 to 24 reporting the highest purchase incidence. Furniture purchasing remains elevated through age 54 and then declines sharply among those aged 55 and older.

Purchase incidence is highest among households with incomes of $75,000 and above, though it is elevated too for the $50,000-to-$75,000-income households. Larger households of two or more members and those with children have a higher purchase incidence of furniture than do single-person households and those without children.

Key Demographics of Buyers of Furniture and Occasional Furniture.

• Furniture purchases are considered joint purchases.

• Purchase incidence rises with income, with the highest income households buying the most.

• Incidence skews toward a youthful market, and drops after age 55.

• Larger households and those with children buy more.