Insight Flash: US Home Furnishings Market Experiencing Small Rebound, Led by Appliances/Electronics and Renters
The US home furnishings market started showing signs of a small rebound, as waning inflation puts less pressure on consumer wallets. Among different home furnishings classifications, kitchen and diversified companies performed the worst, whereas appliances/electronics drove the rebound. Renters saw significant sequential growth, likely due to their need to maximize space and personalize their living areas.
Breathing New Life into Home & Garden
Following a disappointing 2023 for the Home & Garden industry, there are signs that the industry might be starting to experience a small rebound in 2024. For the home furnishings sub-industry, CE Data shows that the decline moderated to -8% in Q2 2024, a 250 basis points improvement from Q4 2023. This could be due to easing inflation putting less pressure on consumer wallets, enabling them to spend on discretionary items to improve their living spaces.
The home-improvement sub-industry, meanwhile, continued its recent trend of low single digit declines, contracting -3% in 2024Q2. The stability in the home improvement sector may be attributed to a saturation point reached following the pandemic-era surge in renovations. As a result, the immediate need for large-scale home improvements has waned.
Kitchen Underperforms, Appliances/Electronics Outperforms As Consumers Manage Home Spending
Diving deeper into the home furnishings market, we can classify companies by product (furniture, mattresses) or function (kitchen, decor). Some companies, such as Wayfair, offer a wider range, acting as diversified one-stop shops. Among the different home furnishings classifications, kitchen companies saw the most significant decline in Q2 2024 (-10%), followed by diversified companies (-10%).
The kitchen decline was driven by WSM’s namesake Williams-Sonoma banner, with smaller retailers such as BBQ Guys and Keurig also experiencing large declines. This drop might indicate that, despite easing inflation, consumers are wary of spending on discretionary items such as new kitchen equipment while choosing to prioritize more budget-friendly and multifunctional items.
As for diversified companies, large drivers of the decline included Conn’s, which recently filed for bankruptcy, and Crate and Barrel’s CB2. Smaller brands Grandin Road and Ballard Designs also felt the pain from the tough macro environment.
Appliances/electronics, a relatively small portion of the home furnishings category, was the only classification posting positive growth at +5%, driven primarily by PC Richards. SN’s SharkNinja and AJ Madison were among the top-performing smaller brands benefiting as consumers opted for minor improvements to their living spaces.
Average Spend Per Customer Accelerates Among Renters
Average spend per customer for home furnishings has surged among renters, significantly outpacing that of homeowners. The disparity could be because renters often occupy smaller spaces which require them to maximize functionality and style. Greater housing mobility could cause renters to prioritize personalizing their living spaces with furnishings. Homeowners, however, often weigh the long-term benefits of home improvement projects against the immediate satisfaction of new furnishings.
The relative strength of the renter category could be a positive sign for companies that are geared towards renters. Ikea, WSM’s West Elm, and The Container Store stand out here. Smaller brands that could benefit are Brooklinen, Dyson, and Nectar Sleep. Could renters sustain the sequential growth in the home furnishings market as inflation and interest rates decline?
Consumer Edge is the leading provider of alternative data for consumer spending and the sole source of global revenue signals. To gain insights into home furnishings, market intelligence, and trends, request a demo of CE products.
About the Authors
Harsh Masher is an Insights Analyst for the CEIC.
