Triple Whammy Hits Home Retailers
By George Anderson
Traditional furniture and related home furnishings retailers are getting hit from pretty much all sides.
According to a piece by the Fort Worth Star-Telegram, companies such as Pier One Imports and The Bombay Co. are finding that increased competition from discounters such as Target, economic issues facing the middle class and new style preferences are creating stiffer challenges for them than those faced before.
“It is a confusing time in home retail,” said Karin Miller, principal of Miller Merchandising and a member of the RetailWire BrainTrust. “Our jobs as merchants have been pretty easy for the last decade because the customer has told us time and time again that they want more of the same. Now that has changed.”
Richard Hastings, senior analyst for Bernard Sands, said it has become increasingly difficult for retailers to differentiate from the competition.
“There’s an enormous shaking out taking place,” said Mr. Hastings. “These are some of the most discretionary expenditures imaginable, and they’re ubiquitous — there’s absolutely no marketing advantage to be had at this point. If the same styles are available everywhere, then what do you do?”
While many businesses have struggled, some are doing relatively well. Williams-Sonoma’s West Elm business emphasizing modern designs has performed well, as have Ethan Allan Interiors and J.C. Penney with its Chris Madden designer line.
“The modern look is growing by a larger percentage than any other look, but it’s off a small base,” said Ms. Miller. “Modern customers are estimated to be about nine percent of the total population.”
Moderator’s Comment: Why do you believe so many furniture and home goods retailers have been seemingly caught unaware of the shifts in the consumer marketplace?
Do you agree with Richard Hastings that the same styles are available everywhere? If yes, how do retailers create a point of difference in the minds of consumers? –
George Anderson – Moderator
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7 Comments on "Triple Whammy Hits Home Retailers"
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After spending 3 days trying to “visualize” a media wall configuration for my home with Ikea products, assembling for hours and hoping for the best, it occurred to me yet again that this vertical has serious competitive opportunity if they get closer to their consumer needs. Of all categories, home furnishings stands to benefit by making it easy on their customers. Why do we still not have easy to use “design tools” to create virtual rooms and receive proactive product recommendations? Or, on-site or virtual design assistance?
Shopping for the home is often incredibly overwhelming and although we are getting better at offering ranges of on-trend, price conscious products, I would personally love to see technology put to better use for shoppers. Yes, the home retailers are getting hit from all sides…but they have plenty of opportunity to respond.
The article and Karen Miller’s comments are spot on. The world is shrinking and retailers need to learn faster than ever before. One only needs to look at the growth of international sourcing offices to see this. Who would have thought that grocery chains (regionals, not just nationals) would get into the sourcing market? They are, with a passion, and the likes of Pier 1 and IKEA have everything to lose from this phenomenon.
Both Pier One and The Bombay Company lost their fashion/styling leadership years ago. Pier One hasn’t had a consistent unique appeal for a long time, and The Bombay Company’s styling, once fresh, now appears stagnant. Neither retailer has a low cost location structure, so both need high margins, which are only possible if the styling is fresh and appealing. In contrast, Ikea has low cost sourcing as well as a low cost location structure.