Understanding potential challenges for the furniture industry empowers companies like yours to strategize for the future, addressing weaknesses and building upon strengths to take hold of market share. Read on to learn the most pressing challenges facing furniture companies in 2023 and how you can take advantage of unique market opportunities to secure your success this year.
Maintaining stock levels ensures that furniture companies are allocating their resources most effectively. Conversely, Underpreparing for customer demand can lead to disappointing and frustrating shopping experiences.
However, the current and projected inventory management issue isn’t a problem with undersupply but an oversupply.
An August 2022 report from Bloomberg revealed that furniture sales dropped 2.9 percent in June while stockpiles rose. The same report notes that unsold furniture inventory sits at 2.06 months, setting unfortunate records for the industry. And despite excess inventory, prices haven’t dropped to adjust for supply and demand ratios.
Furniture companies have too many products without the customer base to keep inventories flowing, causing nationwide oversupply problems. Overstock issues lead to higher costs for storage and run the risk of trends coming and going before pieces can be sold. Therefore, proper furniture inventory management is essential for companies to manage resource input and output to succeed.
Poor inventory management poses a severe threat to furniture companies of all sizes. As a result, these businesses must find ways to move their inventories to prevent further back stocking issues affecting their bottom lines.
Slow of the Housing Market
The pandemic caused significant economic shifts and consumer shopping behavior within the housing sector. Historically low-interest rates caused a real estate boom that rocked the housing market –– in a good way. More than 6 million homes will be sold in 2021, up from 5.6 million in 2020. Homeowners wanted and needed furnishings to fill their new spaces. As a result, furniture companies flourished.
Early 2021 saw an 8.6 percent increase in furniture and furnishing sales in the U.S. A combination of home sales and stimulus checks paved the way for people to outfit their homes with new furniture.
However, as we enter 2023, those trends are in reverse. The housing market has significantly slowed, with the Fed raising interest rates to more than double what we saw in 2020. That means fewer people are buying homes, drastically reducing their interest in new furniture for those spaces. Pandemic furniture purchases combined with greater spending consciousness resulted in less consumer spending on furniture in late 2022 and 2023.
Furniture companies must understand consumer shopping behaviors relating to the economy, specifically the housing market. In addition, knowing customer motivation for purchase –– and withholding purchase –– will enable you to create marketing and sales strategies to help you sell more in 2023.
Competing in an Omnichannel Market
Online furniture retail has changed the market for shoppers and companies alike. An ever-expanding digital shelf allows furniture companies to reach more shoppers than ever. But that also means you face greater competition within the market.
A primary challenge for furniture companies in 2023 is winning sales from their competition. Optimizing for omnichannel sales is the key to competing in today’s retail landscape.
Many, if not most, consumers ventured in-store to shop for furniture before the pandemic. However, when COVID-19 struck, and consumers shifted to embracing online shopping, furniture stores and companies had to adapt to a new marketing and sales method. Now that we’ve entered a post-pandemic retail space, furniture companies must optimize their product content for omnichannel retail.
Omnichannel optimization enables you to deliver personalized experiences to consumers regardless of their preferred shopping channel. An omnichannel strategy helps you target customers wherever they shop. Statistically, it’s the most effective avenue for retail sales: 61 percent of omnichannel retailers outperformed other furniture companies with only brick-and-mortar or e-commerce stores.
Inflation Affecting Shopping Behavior
Inflation costs affect every market and the companies and shoppers within those markets. For example, the last couple of years have seen steep increases in furniture prices. Many of these increases can be traced to inflation costs.
The key to overcoming the challenge of inflation is providing consumer financing options for your furniture customers. Recent consumer research shows that every demographic wants payment alternatives for big-ticket purchases. Gen Z (42 percent) and Millennials (69 percent) are more likely to purchase when given installment loan options.
Early integration of POS lending combats shopper purchase hesitations. Around three-fourths of buyers who finance big-ticket items like furniture determine to do so early in their buyer’s journey. And 76 percent of shoppers are more likely to buy if a simple, seamless POS experience backs their payment plan.
Partnering with a firm like United Consumer Financial Services can provide depth of financing to your customers. Financing allows you to overcome the challenges presented by inflation, empowering your shoppers to confidently select and bring home their new furniture today using low monthly payments for two or three years.
Furniture Industry Prediction for 2023
While the last few years have seen many ups and downs for furniture companies, the future looks optimistic. A survey among industry professionals found that 40 percent of respondents predicted increased furniture purchases for 2023. Despite inflation, supply chain issues, and economic uncertainty, consumers always need a place to sit and a bed to rest their heads. So it’s up to furniture companies to create marketing and sales strategies that engage the consumer and make purchases possible.
By partnering with UCFS, you provide affordable payment plans that empower shoppers to bring home their furniture pieces today. Reach out to the team at UCFS to learn how our furniture financing options can help you serve customers and sell more details starting now!