Furniture spending to grow 23% by 2010

Baby boomers, and their kids, will drive growth

By Kay Anderson -- Furniture Today, December 25, 2005

Spending for furniture and bedding, estimated at $77.7 billion in 2005, is projected to increase 23% by 2010 according to statisticians at Easy Analytic Software Inc., based in New York.

While imports have kept prices low, demographics continue to favor growth in furniture sales. During the five-year period, baby boomers, known for their acquiring ways, will be in their peak earning years. Their kids, sometimes called echo boomers, other times called Generation Y, are entering their household formation years and, with better educations than their parents, frequently have more money to spend at an earlier age.

As in recent years, the best prospects for sales growth for furniture are in the West and South. In both regions, sales are expected to outpace the national average. In the West, spending is expected to rise by 25%; in the South, by 24%. Sales in the Northeast and Midwest are expected to lag the national average, growing by 19% in the Northeast and 20% in the Midwest.

Of the 18 states expected to exceed the national average in growth of furniture and bedding spending, only one, New Hampshire, is outside the Western or Southern sphere. Eight are in the South and nine are in the West.

As it has for the past several years, Nevada is expected to have the greatest sales growth, reaching $837 million in furniture and bedding sales by 2010, a 36% increase over 2005. The bulk of those sales will be in the Las Vegas-Paradise area, expected to grow by 39% and hit nearly $600 million in 2010 sales.

Nevada's other two major metropolitan areas, Reno-Sparks and Carson City, will also exceed the national average in furniture sales growth, according to the EASI projections, as will two (Pahrump and Gardenerville Ranchos) of the four minor metro areas. Fallon is expected to just about match the national average in furniture sales growth, while Elko is expected to lag behind.

No wonder several Top 100 furniture stores have units in Nevada. R. C. Willey has two, including a recently opened 170,000-square-foot store with 40,000 square feet of warehouse space in Reno. McMahan's also has one store in Reno.

Others with a Nevada presence include Sofa Express, operating as Sofa Connection, Jennifer Convertibles, La-Z-Boy Furniture Galleries, Walker Furniture and Mor Furniture for Less.

Arizona, starting from a higher base of furniture and bedding sales, also is projected to increase sales by more than 30% in the next five years. It's largest city, Phoenix, is expected to reach $1.3 billion in furniture and bedding sales by 2010, a 34% increase, and double the dollar figure projected for Las Vegas.

Arizona's other large metro areas also are projected to grow furniture sales at rates exceeding the national average: Prescott by 33%, Yuma by 29%, Tucson by 27% and Flagstaff by 24%. Among the smaller Arizona metros, only Payson and Safford are expected to lag the national average in furniture sales growth. The other small metros, Sierra Vista-Douglas, Nogales and Lake Havasu City-Kingman, have projected growth rates ranging between 24% and 34%.

Quite a few Top 100 furniture stores operate in Arizona. Among them are Tucson-based Sam Levitz, which planned this year to add an Ashley Furniture HomeStore to its three-store lineup, and Phoenix-based Room Store/Room Source, with nine stores in metro Phoenix and plans to add another unit in Avondale. In August, Robb & Stucky augmented its two Scottsdale units with a dedicated Robb & Stucky Interiors Henredon store, dedicated to Furniture Brands International's Henredon and Hickory Chair brands. Fast-growing Ikea entered the Arizona marketplace in November 2004 with a store in Tempe. Crate & Barrel has two stores in Phoenix and one in Tucson; the Mattress Firm has a unit in Phoenix; and Mor Furniture for Less has four units in Phoenix, opening one in 2004 and one in 2005. American Home, based in Albuquerque, which had two stores in Tucson, opened a third 86,000-square-foot store there early this year, and a 110,000 square-foot unit in Prescott later in the year.

Florida leads South

In the South, Florida leads the growth projections, followed by Texas and Georgia. EASI projects Florida's furniture and bedding sales will increase 28% to $6.1 billion by 2010; Texas, 27% to $7.1 billion; and Georgia, 27% to $2.9 billion.

Long a haven for retirees, Florida boasts the nation's oldest median age, 39.2 in 2005, and 17% of its population was 65 or over. Many of Florida's seniors are affluent, with about 31% of senior households having annual incomes of $75,000 or more. Florida isn't just for seniors, however. Twenty-eight percent of its 2005 population was in the acquisitive 35–54 age bracket, and another 21% was in the household formative years between 18 and 34.

More proof that Florida is a hotbed of retail activity: The state is home base for eight of the Top 100 furniture stores, and 13 more of the Top 100 have stores there. Florida is home base to No. 1 Rooms To Go, based in Seffner, as well as Baer's, based in Pompano Beach; Carls, based in Coconut Creek; City Furniture, based in Fort Lauderdale; El Dorado, based in Miami Gardens; Kane's, based in Pinellas Park; Robb & Stucky, based in Fort Myers; and W.S. Badcock, based in Mulberry.

Miami-Fort Lauderdale-Miami Beach, with $1.4 billion in furniture and bedding sales in 2005, one of the nation's 12 largest furniture markets, is projected to have $1.8 billion in sales by 2010. Taken together, Florida's 19 large metropolitan areas are expected to average a 28% increase in furniture and bedding sales between 2005 and 2010, with the fastest growth, at 38%, expected to be in the Naples-Marco Island area, and the slowest in the capital, Tallahassee, projected to lag the national average, growing furniture and bedding sales by 21%.

Smaller Florida metros are expected to grow furniture and bedding sales at a slightly slower rate than the large metros, an average of 27%. Among the smaller Florida metros, the biggest increase in furniture sales is projected for Palm Coast, 52% to $30 million; The Villages, 34% to $23 million; Lake City, 29% to $20 million; Homosassa Springs, 28% to $49 million; and Arcadia, 27% to $10 million.

Big growth in Texas

Texas, which accounted for about 7% of the nation's furniture and bedding sales in 2005, is expected to grow sales by 28% between 2005 and 2010. The state's two largest metros, Dallas-Fort Worth-Arlington and Houston-Baytown-Sugar Land, are expected to increase sales by 30% and 29%, respectively. Both are among the nation's 12 largest furniture markets and together accounted for $2.8 billion in furniture and bedding sales this year.

Furniture sales in metro Dallas should exceed $1.96 billion in 2010, while Houston should see sales topping $1.68 billion.

Even faster sales growth is projected for the McAllen-Edinburg-Pharr, Texas metro, projected to grow by 35% to $154 million. Larado should grow by 33% to $50 million; Austin-Round Rock by 31% to $505 million; and Brownsville-Harlingen by 30% to $90 million.

Of the furniture stores listed on Furniture/Today's Top 100, six have their home base in Texas: Louis Shanks, a midpriced to high-end retailer, in Austin; Mattress Giant, in Addison; Pier 1 Imports and The Bombay Company, both in Fort Worth; Lack's, in Victoria, serving central, southern and western Texas; and Lack's Valley Stores, in Pharr, serving the Rio Grande Valley, with stores in Mexico as well.

In Georgia, Gainesville is projected to have the biggest increase in furniture and bedding sales, 35% between 2005 and 2010, growing to $52.5 million. Furniture and bedding sales in the state's largest metro, Atlanta-Sandy Springs-Marietta, will top $1.7 billion in 2010, a 30% increase over 2005.

Three other large Georgia metros are expected to grow furniture and bedding sales by more than 23%: Warner Robbins by 33% to $43 million; Athens-Clarke County by 30% to $1.7 billion; and Dalton by 26% to $39 million.

Among Georgia's 23 smaller metros, seven are projected to increase furniture and bedding sales more than the national average. In this group, Douglas is expected to see the greatest increase, reaching nearly $16 billion in 2010, an increase of 31%.

New Hampshire, the lone Northeastern state expected to exceed the national average in sales of furniture and bedding, will top the national average by one percentage point, according to EASI's projections. The huge Boston metroplex spills over into New Hampshire, but furniture and bedding sales in the Boston metro area are expected to grow by slightly less than 18%. On the other hand, sales growth projections for New Hampshire's smaller metro areas, Keene, Claremont, Concord and Laconia, range from 23% (the national average) to 29%. Three Top 100 stores have units in New Hampshire: Jordan's Furniture and Bernie & Phyl's in Nashua, and Bob's Discount Furniture with four, including a 35,000-square-foot unit opened in Manchester in 2004.

While no Midwestern state's sales are expected to top the national average in furniture sales growth between 2005 and 2010, several metro markets are. Among the large Midwestern metros — those with core populations of 50,000 or more — the biggest furniture and bedding sales growth, 28%, is projected for Sioux Falls, S. D., growing from $55.1 million in 2005 to $70.3 million in 2010. Furniture Outlets USA, No. 75 on Furniture/Today's Top 100 ranking, with stores in the Dakotas, Minnesota and Iowa, is based in Sioux Falls; No. 39, HOM Furniture, based in Coon Rapids, Minn., also has a unit there.

Of the Midwest's 89 large metro areas, 22 are expected to grow furniture and bedding sales by more than 23%.

The region's largest metro, Chicago-Naperville-Joliet, spanning parts of three states, ranks third among the nation's metropolitan areas in terms of furniture sales. It is expected to grow its furniture sales by 21%, slower than the national average, from $2.5 billion in 2005 to $3 billion in 2010. The size of the Chicago metro market has attracted a large number of Top 100 furniture stores. Based in the Chicago suburbs are America's Mattress, Bay Furniture, Crate & Barrel, Darvin Furniture, Harlem Furniture, USA Baby, Walter E. Smithe and Wickes. Room & Board, Rhodes, Design within Reach and Ikea also have stores in Chicagoland.

Detroit, another billion dollar market, is projected to grow furniture and bedding sales by 18% over the next five years, from $1.2 billion to $1.5 billion.

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