Demand and revenue will get a boost, but increased competition will pressure growth
Los Angeles, CA (PRWEB) February 29, 2012
Demand for the Home Furniture Rental industry's services dried up in the past five years due to the subprime mortgage crisis and high unemployment. The subprime mortgage crisis resulted in drastically lower real-estate property values, which led to a freeze in home sales. Banks recorded substantial losses as the housing bubble burst and caused a financial meltdown, which limited the credit available for new home buyers. IBISWorld industry analyst Agata Kaczanowska says that rental vacancy rate also spiked as consumers saved money by sharing living space. Unemployment also increased, which led to fewer people who could afford to rent furniture. As a result, industry revenue slid for three consecutive years, resulting in a 1.6% five-year annualized decline to $2.1 billion in 2012. Before employment began to rebound, the industry faced a bedbug scare in 2010, which limited demand for furniture rental because the bugs live in furniture. However, the scare has largely blown over and rental furniture operators are quick to reassure consumers that they do not have bed bugs. Consequently, revenue is anticipated to grow 4.2% in 2012.
There is a moderate level of market share concentration in the Home Furniture Rental industry. The largest three companies are Rent-A-Center, Aaron’s Inc. and Berkshire Hathaway Inc. Industry mergers have been more frequent among the larger and more-established retailers, which has increased market share. According to Kaczanowska, in 2008 and 2009, competitive pressure in a crowded market resulted in operators merging or exiting the industry. However, the industry is still made up of many small and medium-size businesses.
In response to the steep drop in furniture rental, the industry was forced to take significant cost-cutting measures to remain profitable. IBISWorld estimates that industry employment declined over the five years to 2012. Mainly as a result of cost-cutting measures, but also due to unprofitable operators exiting the industry, profit is expected to rebound. As consumer spending and the housing market rebound in the next five years, they are expected to boost consumer demand for furniture rental. As the job market also recovers, IBISWorld anticipates an increase in business professionals who have temporary needs for furnishings. Also, an increase in employment is forecast as the industry works to meet the growing demand for residential furniture rental. For more information, visit IBISWorld’s Home Furniture Rental in the US industry page.
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IBISWorld industry Report Key Topics
This industry includes companies that rent or lease household furniture to lessees and homeowners. Rental furniture includes dining room, living room and bedroom furniture, as well as lamps, tables and television stands. This industry does not include companies that primarily rent household appliances, electronics or office furniture.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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