Low per capita disposable income and consumer confidence continue to hurt the industry
New York, NY (PRWEB) March 10, 2015
Furniture stores in Canada continue to move away from the recession's aftermath, following in the footsteps of a struggling housing market. Total furniture sales in Canada were down during most of the five-year period due to the erratic performance of new residential construction. Most furniture purchases are made when consumers move homes; however, Canadians have found purchasing homes increasingly difficult over the past five years. According to IBISWorld Industry Analyst Will McKitterick, “affordability constraints tempered new home sales during the period and the looming threat of a real estate bubble scared off many investors in 2013.” Nevertheless, rising consumer confidence and higher disposable income levels have bolstered furniture sales during the past two years, despite the persistence of fears of a housing bubble. In turn, IBISWorld estimates industry revenue will rise in 2015. However, this boost will be insufficient to temper losses incurred over the past five years; consequently, revenue is expected to fall in the five years to 2015.
Rising prices are expected to help retailers achieve sales growth in 2015; however, industry operators are unlikely to reap the benefits of this growth. Competition in the Furniture Stores industry is at an all-time high, with a crowded field of competitors fighting over lower-than-average demand. Per capita disposable income levels and consumer confidence remain relatively low, forcing operators to price gouge to lure frugal consumers. As competition heats up within the industry, furniture retailers have felt added pressure from discount stores and warehouse outlets. Markdowns and discounts will likely squeeze operators' profit margins, forcing some small retailers to exit the industry.
Consolidation is not forecast to continue over the next five years; nevertheless, operators will continue to find it difficult to compete. “External competition from big-box and e-commerce retailers will continue to steal away customers and revenue from industry operators,” says McKitterick. At the same time, the housing sector in Canada is expected to cool as mounting levels of household debt and rising interest rates temper new home construction. Slow gains in income growth will contribute marginally to industry growth as consumers reduce their spending. These conditions will ultimately minimize the industry's recovery; IBISWorld anticipates revenue will increase in the five years to 2020.
For more information, visit IBISWorld’s Furniture stores in Canada industry report page.
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IBISWorld industry Report Key Topics
The Furniture stores industry sells household, outdoor and office furniture (except those sold in combination with office supplies and equipment), including living room, dining room and bedroom furniture, upholstered furniture, desks and home office goods, lamps, recliners, rugs and outdoor pieces.
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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