A slide in housing developments will hinder the Furniture Stores industry's recovery
Los Angeles, CA (PRWEB) June 03, 2013
When the Canadian economy sunk into a recession in late 2008, the Furniture Stores industry faltered as well. Unemployment spiked in 2009 and per capita disposable income growth slowed substantially. Consequently, consumers drastically decreased their spending on furniture. “Existing homeowners made do with what furniture they had, despite condition, and high income renters put off making their first home purchase,” IBISWorld industry analyst Eben Jose says. In the five years to 2013, IBISWorld expects the Furniture Stores industry revenue to decline at an average annual rate of 1.7% to $9.9 billion, with a 0.2% decline in 2013. Further complicating the situation for industry operators has been the increasing pressure from big box and e-commerce retailers that have easily undercut industry prices, resulting in lower revenue and profit for the industry.
With economies across the globe still struggling, Canada has failed to make significant progress despite a steady recovery in the United States. Per capita disposable income levels and consumer confidence remain low, and the housing market is expected to slide over 2013, further hindering a recovery in the Furniture Stores industry. Along with a decline in the number of housing starts in 2013, the value of housing is also expected to fall, which will limit current homeowners' ability to switch homes. Such headwinds have made consumers cautious to spend on large items such as furniture. “The steady decline in revenue over the past five years forced many furniture stores to increase the number of promotions and discounts, which has eaten into profit margins, causing them to fall in the years to 2013,” Jose says. Many industry operators reacted by cutting employees and wages; however, it was not enough to stop consolidation from taking place. In the five years to 2013, the number of enterprises declined. Consequently, the Furniture Stores industry has a low level of concentration with the four largest players expected to account for a very small portion of industry revenue in 2013. Currently, the industry’s largest payers are Leon’s Furniture Store and Ikea.
Consolidation is not forecast to continue over the next five years, however, new operators will find it difficult to enter an increasingly competitive industry. External competition from big-box and e-commerce retailers has and will continue to steal customers and revenue away from industry operators. With their pricing advantages, their presence will offset industry growth and keep profit low over the next five years. As a result, revenue is forecast to rise during the period. For more information, visit IBISWorld’s Furniture Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry sells household, outdoor and office furniture (except those sold in combination with office supplies and equipment). Sales for living room, dining room and bedroom furniture dominate the industry, followed by demand for upholstered furniture. Desks and home office goods, lamps, recliners, rugs and outdoor furniture make up the rest of sales.
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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