High unemployment, volatile consumer confidence and restrained spending stifled industry growth.
New York, NY (PRWEB) January 13, 2014
In the five years to 2013, the Home Furnishings Stores industry's revenue growth almost stagnated as deteriorating economic conditions stemmed consumer demand. During the recession, declining incomes and rising unemployment suppressed consumer sentiment, with the consumer confidence index plummeting 8.1% in 2009. “With less disposable income in their pockets and increased uncertainty, people avoided unnecessary purchases causing consumer spending to slow and demand for home furnishings to decline,” according to IBISWorld Industry Analyst Maksim Soshkin. Moreover, elevated unemployment levels, volatile consumer confidence and restrained consumer spending led to lacklustre revenue growth. Additionally, a fragile housing market diminished demand as homeowners held off purchases for their homes. Therefore, in the five years to 2013, industry revenue is expected to increase at an annualized rate of only 0.7% to $3.9 billion, and just a 0.2% rise in 2013.
In addition to slowed consumer spending, industry operators had to endure substantial external competition. Large discount department stores and supercentres were able offer customers both lower prices and a diverse product selection, beyond just home furnishings. Consequently, increasingly price sensitive consumers shopped at these retailers in order to save money and time. “More people started to buy home furnishings from online retailers because the lack of brick-and-mortar costs allowed them to offer low-priced merchandise,” says Soshkin. Increasing competition and squeezed profit margins greatly impacted small companies, with many exiting the industry. However, because of their size and large product selection, large big-box home furnishing stores were better able to withstand market conditions with some even expanding.
In the five years to 2018 industry revenue growth is forecast to increase. Accelerated economic growth will reduce unemployment and boost wages and as a result, consumer confidence and spending will increase, leading to higher demand for home furnishings. Moreover, the housing market will strengthen, thereby encouraging homeowners to invest in furnishings once again. However, companies will continue to face strong competition from large discount department stores, supercentres and online retailers, thereby, mitigating the potential revenue growth.
For more information, visit IBISWorld’s Home Furnishing Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
Operators in the Home Furnishings Stores industry retail a range of home furnishing goods, including curtains, draperies, blinds, shades, cookware, glassware, dinnerware and decorative accessories. Merchandise is purchased from domestic (and in some cases international) manufacturers and wholesalers and then sold to the public. Retailers that primarily operate as home furniture stores, used merchandise stores, electronic shopping outlets, or mail-order houses are not included in this industry.
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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