Home Furnishings Stores
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Industry Overview
The US home furnishings store industry includes 22,000 stores with combined annual revenues of over $23 billion. Major companies include Bed Bath & Beyond, IKEA, and Williams-Sonoma. The industry is concentrated: the 50 largest companies have about 70 percent of industry sales.
Competitive Landscape
Demand is driven by consumer income. Large companies compete through volume purchasing, breadth of products, and effective merchandising and marketing. Small companies focus on a market segment and compete through depth of products and superior customer service. The industry is labor-intensive: average annual sales per employee is $125,000.
Competition for home furnishing stores includes department stores, mass merchandisers, home improvement stores, and mail order retailers.
Products, Operations & Technology
Major product categories are domestics (20 percent of sales); decorative accessories (20 percent); dinnerware (10 percent); cookware (10 percent); other kitchen and bathroom accessories (15 percent); and window treatments (10 percent). Domestics are towels, sheets, blankets, and table linens. Decorative accessories include lamps, mirrors, pictures, clocks, and desk sets. Dinnerware includes china, glassware, and flatware. Window treatments are curtains, draperies, blinds, and shades.
Home furnishings retailers include national chains and independent stores. Major chains, such as Bed Bath & Beyond, offer “superstores” that vary from 20,000 to 70,000 square feet and are located in suburban strip malls. Other chains, such as Williams-Sonoma, operate stores of 5,000 to 15,000 square feet located primarily in enclosed shopping malls. Independent stores range from 2,000 to 20,000 square feet.
Large format stores typically carry 15,000 to 40,000 different items and can generate $5 to $8 million in annual sales or $200 to $300 per square foot. Smaller stores have annual sales of $1 to $4 million and generate $250 to $400 per square foot.
Stores store inventory in attached warehouses. Chains usually have their own distribution facilities with centralized purchasing and inventory management. Goods may be purchased from distributors, importers, or directly from manufacturers. Independent retailers typically buy from several hundred suppliers, while large chains have several thousand suppliers. Most chains use third-party logistics companies for shipping goods to stores. To reduce inventory costs and respond quickly to demand shifts, some retailers are replenishing store inventories daily.
Home furnishings retailers use computer systems to manage point-of-sale (POS) transactions and inventory and warehouse operations. To improve customer service, many also use hand scanners and bar codes to look up prices on the store floor. Computers are also used to store customer data, handle credit approval, and manage bridal gift registries.
