Furniture retailers have been on a joy ride since the pandemic. Armed with Covid stimulus checks, consumers took to the streets to refresh, repurpose and redecorate their homes after months trapped inside where their home’s shortfalls became painfully obvious.
Furniture retailers happily enjoyed the windfall. Their sales grew from $64.2 billion in 2019 to $79.9 billion in 2022, a 24% increase.
But now the bloom is off the rose, and furniture retailers must adjust to a new normal. Through the first half of this year, furniture retail has declined by 4.4% from last year, not a big drop so far, but continued month-after-month declines are in the offing.
Consumers have spent most of their savings from the pandemic, according to the Federal Research Bank of San Francisco. Households started with an accumulated excess savings of $2.1 trillion, but now have less than $190 billion left, and by the end of the third quarter, it is expected to be fully depleted.
Combined with credit card debt that now stands at over $1 trillion, rising interest rates and consumers’ budgets squeezed by inflation to cover day-to-day expenses, furniture retailers that deal in discretionary purchases are in a precarious position.
Already, three prominent furniture manufacturers and retailers – Mitchell Gold + Bob Williams, Klaussner Home Furnishings and United Furniture Industries, parent of Lane Home Furnishings – have shuttered.
Similarly vertically integrated Ashley Furniture Industries is not about to let the same thing happen. It recently rebranded stores from Ashley HomeStore to Ashley and is refreshing its fleet of U.S. and Canada stores – 118 company-owned and 850 licensee-owned and operated in North America. Its website remains AshleyFurniture.com.
The new store designs were unveiled in the Atlanta, Los Angeles, Orlando, Tampa and Salt Lake City markets to attract younger, design-conscious and value-oriented customers.
“Ashley has always been budget-friendly, but our consumer-led research told us we needed to be a bit more modern and meet the needs of a younger audience,” Kelly Davis, vice president of marketing strategy at Ashely Global Retail, told me.
“Our CEO likes to say, ‘We’re in the fashion business,’ so your home must represent your personal style. Affordable fashion is how we describe it. We can serve those amazing looks that you would see from a West Elm or RH, but at a price-point that is affordable to the masses.”
Leading The Furniture Retail Industry
As a privately owned company, detailed data is sparse, but Furniture Today ranks Ashley as North America’s number one furniture retailer, followed by Williams-Sonoma
By comparison, Forbes estimates Ashley Furniture Industries brought in $10.3 billion in revenues, putting it at number 43 on its list of America’s Largest Private Companies. It has some 3,400 employees and is a global business with 1,125 locations in 67 countries.
Online, Similarweb ranks AshleyFurniture.com as the number two most visited furniture website in the U.S., second only to Ikea. From May to July, it racked up 17.2 million visitors, evenly split between those 18 to 44 years and 45 years and over.
Shifting that split toward a younger consumer cohort is Ashley’s aim.
Psychographics And Demographics
Ashley used consumer research to take a bead on younger consumers where its future lies. It conducted a consumer segmentation study that focused not so much on demographics but on psychographics and attitudinal insights.
“We have a good blend among Gen Zs, Millennials and GenX customers, but the average age of our customers is a little older, about 50 years, so we want to shift that down,” Davis explained. “Millennials are where the buying power is, but we don’t want to ignore our core Boomer audience either.”
It found core customers tended to shop for furniture as immediate needs arose, like replacing a worn-out chair. Besides making mostly unplanned purchases, they were also drawn to Ashley through its heavy promotional activities and didn’t spend much time shopping the market. Once-and-done was their preferred shopping method.
However, the younger customers are more interested in shopping around. “They’re constantly refreshing their homes and have growing families so their needs expand,” she said. “They’re looking to change it up more often and willing to spend a bit more when looking for quality furniture with style.”
Ashley is meeting their needs with more trend-forward designs showcased in an open-concept retail setting, supported by trained sales associates to help guide customers rather than put on the “hard sell.”
“We are providing a more breathable shopping experience for customers so they can navigate the stores easily,” she added, explaining that stores were densely merchandised in the past and could be overwhelming. “We want the product to really shine and allow customers to see the way it would look in their homes.”
Customers are greeted at the front entry with the most current trending styles, like modern rustic. To the left are more traditional looks, and to the right are more contemporary styles, including mid-century modern and transitional looks.
And its “luxury for less” promise is backed up by new lower price points and special financing options to help customers stretch their wallets.
Only The Beginning
So far, only five markets have been introduced to the new Ashley shopping experience, but by the end of next year, its entire fleet will be made over, including company and franchise stores.
Some of the newer stores will get only a “refresh” including new paint and flooring, new façade and signage and a make-over of the mattress gallery, but older ones will get a complete remodel.
Recognizing that all retail is local, Ashley will host in-store special events through partnerships with other local companies at their grand openings. For example, a local company offered a how-to workshop at one Tampa store to craft custom-made bath bombs. And another hosted a local candle company to teach people how to make scented candles.
“We’re a different Ashley today, and we want people to feel that difference immediately,” she concluded. “Despite so much furniture business pulled forward by the pandemic, we see a massive opportunity to capture the customers that are in the market now and in the future.”