Survey Insights from STORIS Retailers
This year, STORIS surveyed retailers to produce first-party home furnishings industry insights. With this valuable change, STORIS shares first-hand research from your peers throughout this Home Furnishings Trend Guide. Read on for never-before-seen industry statistics collected from numerous STORIS retailers and shared in this furniture industry analysis.
Thank you to those retailers who took the time to share their voices to help the home furnishings industry navigate 2022.
Forward
Writing a meaningful Trend Guide in the current environment is an evolving experience. In the last few months, phrases like Metaverse and Non-Fungible Tokens made headlines. It feels impossible to keep up. Ironically, that IS the takeaway. Tomorrow there will be new buzzwords and new challenges.
The world, and therefore your consumers, change on a dime.
Being ready to quickly adapt is currently a consistent business practice we can all rely on. What changes have you considered for your organizational structure that enable you to keep your ear to the ground and develop proactive strategies? When the pandemic began, the retailers that were flexible in how they allowed their customers to shop won with higher sales. As market conditions continue to cycle through phases, it is time to master all channels: eCommerce, mobile, social, marketplaces, curb-side, and today’s in-store.
A critical goal of a retailer is to be ready to adjust strategy as swiftly as the world changes.
Market Factors Impacting 2022
“2022 will be the year of investment & new partnerships as retailers position their business models, strategy, marketing, stores, & operations to flourish in a post-pandemic world.” Forrester
Permanent Consumer Changes
STORIS asked our own home furnishings retailers, what are the biggest changes seen in your customers since the pandemic?
26% Expanded Category Interest
22% Buying via eCommerce
16% Virtual & Store Appointments
14% Less Time Spent In Store
Many current customer experience trends began or accelerated out of necessity.
Forrester found that “customers will want more than 1/2 of pandemic-era services to become the “new normal.”Our retailers’ responses support this finding.
In alignment with consumer changes, 43% of retailers cited eCommerce growth as their biggest opportunity in 2022. Combined, these results show that while customers are less reliant on brick-and-mortar stores, they are shopping for furnishings. Therefore, in 2022 it will be important to review how your online experience is meeting demand for expanded product categories and offering a convenient user experience. If, as a retailer, you believe your eCommerce experience hasn’t reached its full potential,you are not alone. As eCommerce is still a rapidly growing segment, the time to optimize is now.
Sustained Supply Chain Challenges
Not surprisingly, 50% of retailers stated “On-Going Supply Chain Issues” would be their greatest challenge in 2022. Further, the next 21% cited the related challenges of inflation and price increases. The global supply chain has been incredibly inconsistent over the last several years. While tariffs on China were a catalyst to diversifying sourcing, the pandemic pushed alternative nations over the edge. While 28% of our surveyed retailers still primarily source from China, 40% have shifted to Vietnam. As we have seen the virus ebb and flow in different
geographic areas, having diversified sources can be valuable to offset location-specific challenges.
For shorter lead times & sustainability, the increased cost of producing closer to North America may be justified to secure inventory faster and reduce carbon emissions. Furniture Today provided a striking example of, “a 40-foot shipping container from China costing $20,000 and taking 9 months to arrive while a 53-foot truck trailer from Mexico to Los Angeles costs $800-$1100 and is delivered in 4-5 hours.” While our survey found that Mexico is not currently a primary source, it may be on the horizon. Notably, we found the USA as the top source for 21% of our surveyed retailers.
Inflation and Rising Prices
When “dollar store” base prices are no longer actually a dollar, it’s hard to ignore inflation. Inflation is a direct result of rising labor costs, increased freight and gas expenses, and an imbalance of supply and demand. The “good” news is that inflation is a widespread issue impacting all sectors. Therefore, as a furniture retailer, you will not be alone and the customer likely won’t be surprised when you raise your prices in 2022. 85% of retailers surveyed will raise prices in 2022.
Some retailers felt price increases may reach the ceiling of what customers are willing to pay in 2022, especially if they are balancing price increases throughout their daily purchases.
Reuters echoed this in a survey stating: “Rising inflation is starting to influence consumers’ spending decisions.” Buying tools can help you identify price points your customers are responding to in the market. In the end, margin matters. If customers are gravitating towards a certain price point, work backward to determine your target cost of goods & a feasible mark up to balance the needs of your business & consumers.
Employment Challenges
At 19%, the third most anticipated challenge of 2022 is attracting, hiring, and retaining talent in an employee-led labor market.
A survey respondent keenly noted, “without talent, we can’t execute on our vision” highlighting how all operational roles are needed to perform optimally.
With work-from-home & hybrid opportunities, as well as Amazon offering steeper starting wages, retailers are finding it difficult to hire for retail and warehouse roles. While wages are important, flexibility and benefits are also driving employment decisions. Providing greater shift flexibility and opportunities to conduct some responsibilities remotely may be key. However, because that becomes a significant challenge in physical showrooms, the attractiveness of these roles may have to lean more on salary.
Yet, with the aforementioned inflation, there is little margin to offset wage increases. Corporate culture is critical to retention. Providing career paths for retail and warehouse positions can support the retention of talent within your brand. Another place to look at is process
efficiencies. What are activities where labor expenses can be streamlined or automated to provide more opportunities for competitive benefits & wages for jobs requiring human resources?
The State of the Home Furnishings Industry
“Resurgence of the brick-&-mortar store is definitely upon us. It’s important that retailers in every category ensure their omnichannel experiences are in excellent working order. It’s critical to streamline every step in the shopper’s journey.” Total Retail
Home Furnishings Industry Economics
The National Retail Federation projects full-year GDP growth to approach 7%. Chief economist for the NRF, Jack Kleinhenz, “sees clear signs of a strong and resilient economy, with incoming data suggesting that U.S. economic activity continues to expand rapidly.”
Despite challenges, the outlook on furniture industry growth is incredibly strong. Home Furnishings Business’ 2022 Forecast predicts 2021 furniture industry sales will end up +18.8% and forecasts 2022 at +5.9%, with the furniture and bedding industry totaling over $160 billion by the end of 2022.
Our retailers confirm this trend indicating growth into new markets, a larger pool of buyers, higher average tickets, and stronger conversion rates as positive market changes.
The Lasting Value of Home
An Axios News Report found “Americans have $2.3 trillion more in savings today than pre-COVID-19 and they are putting it to use in their homes.” (Furniture Today)
Our retailers echoed that sentiment, with only 5% predicting competition for discretionary income as a top challenge for 2022. Why? A study by RetailDive found the attributes that made home furnishings and appliances growth markets during the pandemic will persist into the near future even with an increase in spending in categories such as travel, restaurants, and clothing. Consumers established the meaning of their homes. They made investments in their kitchens and dining rooms, home offices and gyms, and outdoor entertaining areas that aren’t going to be tossed by the wayside.
Cooking will persist for better nutrition, home office due to the rise of hybrid work, and indoor/outdoor entertaining for comfort. For many, home as their central domain is simply convenient. In the rapid suburb migration, many customers purchased larger homes they are still furnishing. For the sizable millennial population, those rooms may soon become nurseries. These factors all present continued market opportunities. It is important to use customer relationship management to support your business in earning these customer retention opportunities.
Sustainability and Resale
The conversation around sustainability has reached a fever pitch. 41% of consumers in the US prefer to buy environmentally sustainable products. (Forrester) Highlighting environmentally-friendly materials and practices used to craft your furnishings can be a powerful differentiator. A trend in sustainability is branded resale. Thanks to influential marketplaces like The RealReal, secondhand is not just environmentally conscious, it’s cool. Like “Certified Pre-Owned” vehicles, the trend has caught on in home furnishings. Many brands are buying back their own second-hand products and providing these customers with an incentive to purchase their next furnishings from their
brand.
Instead of giving the buying power to third-party businesses, retailers are incentivizing the return of goods to their ownership to create a curated resale market. This instills consumer confidence in the product’s authenticity and keeps your business earning throughout a product’s complete life cycle.
Further, these brands may have the capabilities to repair or refurbish goods in their own factories to restore them to their original glory. Not looking to resale? Offer your customers a special incentive if they donate their old home furnishings to charitable organizations you partner
with to encourage the re-use of products and create marketing that does good.
The Role of Stores & Return of Browsing
26% see customers returning to stores as their greatest 2022 opportunity.
76% stated that their customers spend an hour or more in their stores.
44% of our surveyed retailers plan to open at least 1 new store in 2022.
Our research supports the growth of stores with many retailers planning to open new showrooms in 2022. With 3/4 of customers spending over an hour in store, browsing is back.
The treasure hunting experience of shopping has rebounded after years of transaction-driven time in store.
Merchandise curation and storytelling through product vignettes are roles of the showroom that reaffirm the social aspect of shopping.
Furniture eCommerce Acceleration
The NRF reported, “in 2020 alone, consumers around the world spent $900 billion more online than in previous years.” Forbes reports on the stickiness of this trend finding that, “74% of global retail and consumer brand professionals said they expect the crisis-led rise in online
shopping to become permanent.”
Our survey found that for…
34% noted eCommerce integration as their top tech initiative.
22% see customers buying via eCommerce as their greatest opportunity in 2022.
As Digital Commerce 360 estimates a “16.2% increase in 2021 U.S. online retail sales to $886.20 billion,” continuing to become an even stronger online player is key.
While customers are comfortable shopping online, ironically, direct-to-consumer brands are rapidly opening stores. The competitive landscape requires a truly holistic, Unified Commerce experience. This is why eCommerce integration is the top tech initiative. Continuing to blur the lines between channels, offering consistent inventory and fulfillment data without extra effort, and providing customers with a single hub for brand interactions enhance the value of your website. Further, this customer data empowers features such as online self-service options and personalized recommendations.
10 Technology Trends for 2022 in Home Furnishings Retail
“The most successful retailers will be those that connect with customers in new ways by leaning in on their digital, omni-channel, and in-store ambitions. Technology will likely double store profitability.” McKinsey & Company
Retail On-Demand
The world is on-demand & it’s conditioning customers to expect to shop when they want, where they want. To handle the when, eCommerce was a first step in opening retail 24/7. To meet the where, customers are now seeking out brands on expanded channels.
“The social commerce market is poised to grow by +$2 billion during 2020-2024, progressing at a compound annual growth rate of almost 31%. The companies that get it right will be omnipresent for shoppers – connecting online, in stores, and over social commerce and making sure every touch-point is frictionless.” (Retail Insider)
38% of our surveyed retailers are primarily advertising via traditional print & TV media. While it’s important to keep effective mediums in the mix, social media at 24% and on-demand streaming at 2% have untapped potential. Brainstorming for your next, on-demand market opportunity can help retailers meet customers through new channels.
In the past year, on-demand streaming shows have gone from simple product placement to fully integrated sponsored content with retail opportunities. Take Hulu’s photography series, “Exposure,” promoting the Samsung Galaxy or Amazon’s Next in Fashion that releases winning outfits for purchase on Amazon immediately following an episode. What organic brand alignments could you form on entertaining, social channels?
Merchandising & Visual Media
Expanding your eCommerce and social presence requires strong digital content. Social media is an excellent channel to showcase product visualizations and inspire customers to invest in their homes. 3D product modeling and digital renderings are becoming more accessible. They are also often indistinguishable from staged photography enabling the ability to create high volumes of beautifully curated content. As more customers are shopping online, product imagery is important to capture the shopper’s interest.
Anthropologie launched its exclusively digital catalog “AnthroLiving” on Pinterest and drove huge growth in searches on the platform. Creating shoppable, lifestyle content on Pinterest can be a hidden gem of opportunity. Unlike a traditional catalog that requires the customer to find the product online or in-store, shoppable pins take the customer directly to the product’s page, shortening the path-to-purchase.
AdWeek found, “the number of Pinners engaging with shopping rose 80% year-over-year in the U.S. in 2020, with 85 million actively engaging with home content on the platform every month.” While Forbes found that, “just 23% of boomers shop on social platforms, 77% of millennials and Gen Z” do.
Given exponential growth & generational usage, social strategy is important.
Mobilize for Consumer Confidence
Another step toward channel expansion is thinking about point of sale outside of a physical checkout counter. Mobilizing your sales team and empowering transactional independence for your customers are foundational to selling anywhere.
A report from McKinsey found ”more mobile deployments for store associates…improve efficiency & [allow for] better management of critical tasks such as checking inventory levels.”
Our retailers agree. 33% are prioritizing Mobile POS as 2022’s top technology initiative.
We’ve heard from our retailers that an unexpected benefit of mobilizing their sales force is consumer confidence. Customers love to self-service, so when they choose to engage with your team, they desire an expert that can add value to their shopping experience. When your sales team has access to all customer history and up-to-the-minute product knowledge, the value they bring to the relationship is tremendous. Further, with mobile, your RSAs can access this information in-store, from home, or on the go to always be ready to support your customers.
Relationship Nurturing
In addition to where you reach your customers, it’s important to find the messaging that resonants. Lifestyle marketing around the home is high. The value of self-expression and curating functional spaces is top of mind for home furnishings consumers. Continue to inspire the evolution of their spaces by capitalizing on form and function. Promoting upgrades of heavily-used furnishings can keep your hard-earned customers engaging with your brand and increase their lifetime value. Technology can help you track your customers’ purchases and one retailer noted, “integrate data to maximize revenue.” By recording opportunities for future design aspirations in your CRM, you can strategically market to those needs.
As discussed, many customers purchased large, suburban houses, but may not have had the upfront budget to furnish their entire home at once. Instead, some customers prioritize room by room. Technology can be used to record the details and set timed reminders to personalize engagement and touch base on upcoming projects. The goal is to retain that customer’s business throughout their home design.
Communication with Automation
Communicating with your customers consistently can be the difference between a disgruntled customer and brand loyalty. It is important to stay in touch regarding follow-up opportunities and post-sales communications, especially with delayed fulfillments. More touch-points can be time-consuming, but it is time well spent. To help use your time efficiently, automated communications can ensure that customers are in the know while reducing manual efforts of your team, especially for routine messages.
When you collect critical data points on your customers and products via Unified Commerce technology, personalized automation becomes possible. By setting critical trigger points along the buying journey, you can automatically send appropriate messages to your customers, such as when their order is ready to schedule or to touch base on an open order. Field merges can add personal touches within standard brand templates.
Did you know customers are more receptive than ever to text messages from retailers?Glossy notes that “SMS is twice as effective at converting to sales as the brand’s next best channel: social. (…) Texts reminding customers that they have items still in their cart have a 45% conversion rate,” – an impressive ROI.
1st-Party Data
Facilitating the initiatives discussed thus far relies on strong data. However, data is going to be a pertinent challenge in upcoming years. Many companies have traditionally used data collected from third-party cookies to learn about their audiences and target advertising. A cookie is a small data file that tracks customer web usage. With the Cookiepocolypse coming in 2023, how you learn about and advertise to your customers will change. The Cookiepocolypse refers to Google phasing out the use of third-party cookies on Chrome and, “Chrome is the leading internet browser in the world with a global market share of 65%.” (Oberlero)
How can you prepare for Cookiepocolypse? Although the change seems far off, when the 3P cookie is inevitably gone, you don’t want to be left in the dark. While data is still accessible, consider conducting a customer analysis with current third-party analytics to inform a near-term strategy. Long-term, strengthen your collection of first-party consumer data. Utilize your relationship management tools to collect data about your customer from multiple sources such as conversations, emails, surveys, and your own website. A silver lining is first-party data is your data. Strengthening 1P data usage can become a key competitive differentiator.
Google Ranking Changes
34% of our surveyed retailers said eCommerce Growth was their greatest opportunity in 2022. To facilitate this, your website has to be in it to win it! Google isn’t just leading changes to data collection. Its new ranking factors aim to better reflect attributes the customer values in an online experience.
Released in 2021, Google’s Page Experience update is now a leading ranking factor to organic search. It measures KPIs called “Core Web Vitals” that include Largest Contentful Paint, First Input Delay, and Cumulative Layout Shift, as well as analyzes mobile responsiveness and security. Essentially, Google is reviewing technical elements like site usage, speed, security, and accessibility when determining ranking order on its Search Engine Results Pages.
As eCommerce grows, online competition will only increase. This makes it important to create web pages with excellent customer experiences. Optimizing for “Core Web Vitals” can help your website outrank your competitors. Use the Google PageSpeed Insights Tool and Light House Developer’s Tools for real-time scores across these KPIs. Further, these tools provide specific ways to improve your results. Reviewing your performance here is a priority project for 2022 to optimize your eCommerce website.
Promoting In-Stock Options
50% of our surveyed retailers stated supply chain issues would be their biggest challenge in 2022. We wanted to gauge how many weeks behind their lead times were. The data shows that as of December 2021, 58% of these retailers had lead times that were more than 4 months behind. Retailers are looking at every opportunity to trim their time delays once the product is in their control, therefore 17% of these retailers are prioritizing warehouse management solutions.
25% are 4-8 weeks behind in lead times.
17% are 8-16 weeks behind in lead times
36% are 16-24 weeks behind in lead times.
22% are over 24 weeks behind in lead times.
Another finding is that customers are buying based on what is in stock. Those that may have placed a backorder or ordered a custom piece know wait times are exceptionally long. Therefore, many customers are choosing from immediately available options. Take-with sales are also increasing. Real-time logistics and inventory control can help you stay on top of your on-hand inventory, monitor the timing of your supply, and plan marketing campaigns to promote products as they come in stock.
Nimble Price Adjustments
Balancing your retail prices against rising freight costs requires nimble action. Manually re-tagging a showroom floor is time-consuming. Today, with such dynamic cost factors impacting the industry, digital price tags are the optimal way forward.
Twice notes, “digital tags offer a number of benefits, including higher margins than stores employing paper tags…digital tags also bring the online experience in store by offering the customer greater detail about a product, including review ratings, in-stock availability and more.”
This technology is a simple solution to combat many industry challenges. By integrating digital tags into your unified inventory management system, you can adjust your prices more often and match them to your website pricing without extra effort. This also allows you to adjust prices more frequently, such as if they need to be raised to offset your freight costs or if you want to lower them temporarily to be competitive. When combining digital price tags with QR codes, your customer can have a true multi-channel experience. A quick scan provides instant access to peer reviews, additional lifestyle photos, and product details that can support closing sales.
Technology Expansion
Technology is intersecting increasing aspects of the customers’ shopping journey. Being able to seamlessly connect your business’ core technology to other value-adding solutions becomes critical. In the home furnishings industry, there are many technology partners that are leaders in their sectors. Growing areas of importance include reputation management, text marketing, eCommerce features, and expanded payment options. Having a centralized Unified Commerce Solution that is able to integrate with other valuable industry solutions to operate with continuity is vital.
APIs or Application Program Interfaces allow retailers to seamlessly connect the technologies your business relies on. By automating the exchange of data used across these tools, your technology network will operate as a fluid ecosystem.
According to Harvard Business Review, “digital innovators use ecosystem thinking to chart strategies for sustainable growth and use APIs as conduits for value exchange within the value network. Companies that want to stay adaptable enough to survive and thrive in the digital economy should embrace this ecosystem way of the API.”
Technology gives staff tools to support customers in their journeys across multiple channels.” Retail Insider
While demand in the home furnishings industry is strong, we appreciate the challenges retailers like you must navigate to operate your businesses. As the dedicated solutions partner to furniture retailers, STORIS delivers technologies to help your business achieve success in any retail environment.