Channel Surfing: Discount department stores
By Dana French -- Furniture Today, May 13, 2007
High Point — Discount department stores grabbed an estimated $5.9 billion in sales of furniture and bedding last year, or 7% of the retail total.
That's the word from Furniture/Today's exclusive Consumer Buying Trends Survey.
The top three players in the channel are Bentonville, Ark.-based Wal-Mart, Minneapolis-based Target and Columbus, Ohio-based Big Lots. Together, these three recorded over $4 billion in furniture and bedding sales in 2005.
Other majors include Kmart, ShopKo, Meijer, Fred Meyer, HomeGoods, T.J. Maxx, Tuesday Morning, Kohl's, Dollar General and Family Dollar. The channel includes general merchandise stores, closeout stores and off-price retailers. Discounters may be national, regional or local retailers.
Furniture and bedding sales for 2006, across all channels, are estimated at $83.8 billion. These figures were based on data available through March 2007 and are subject to revision as additional data become available.
In this exclusive special report, households buying furniture and bedding at discount department stores are compared with households buying at traditional furniture stores. A traditional furniture store is one where furniture and bedding is the store's total business or single largest category. Leaders within the channel include Rooms To Go and the Berkshire Hathaway furniture stores of Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan's Furniture. Traditional furniture stores were the industry's No. 1 channel of distribution last year, pulling in an estimated $42.7 billion in sales.
Baby boomers: Purchasing stars
Baby boomers were the biggest buyers in both discount department stores and traditional furniture stores, according to Furniture/Today's Consumer Buying Trends Survey. In both channels, they accounted for about four out of 10 households that bought furniture last year. At discount department stores, boomers' favorite purchases were desks, entertainment furniture and occasional tables. They spent a median of $100 for desks and entertainment furniture and $150 for occasional tables.
With low prices and convenience as their strengths, discount department stores were more successful in reeling in younger consumers than traditional furniture stores. Generation Y, with adult members currently between 18 and 31, accounted for 23% of all discount buyers in 2006, compared with only 10% of furniture store buyers. Top buys for Gen Y households at discounters were entertainment furniture, master bedroom and desks.
Other demographic characteristics of discount department store buyers:
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69% have high-speed Internet access
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70% are married
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58% are under age 45
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59% live in a house, 25% live in an apartment and 6% each live in a condo or mobile home
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46% are in families with children
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In addition to buying furniture and bedding in 2006, 34% also bought a car, 49% took a U.S. vacation and 17% took a vacation abroad.
Top products bought
Entertainment furniture and desks were the two most frequently purchased products at discount department stores in 2006, which makes sense given that a large portion of a discounter's merchandise mix is RTA.
One-third of discount department store buyers bought entertainment furniture last year, spending a median of $100. Nearly three-fourths of buyers spent less than $200 and only 6% spent $500 or more. Entertainment buyers in traditional furniture stores spent 2.5 times more on their purchase, a median of $500. More than one-fifth of traditional furniture store buyers spent between $500 and $799, and two-fifths spent $800 or more.
Desks were bought by 30% of all discount department store buyers in 2006. The median ticket was $80, with more than three-fourths of households spending less than $100, 26% spending between $100 and $199 and only 11% spending $200 or more. Traditional furniture store buyers spent a median of $325 on a desk last year, four times more than their discounter counterparts.
| Discount department stores | Traditional furniture stores | |
|---|---|---|
| Household income | ||
| Under $30,000 | 32% | 22% |
| $30,000 to $49,999 | 17% | 15% |
| $50,000 to $74,999 | 26% | 25% |
| $75,000 to $99,999 | 13% | 18% |
| $100,000 or more | 12% | 20% |
| Generation | ||
| Generation Y born 1976–1988, 18+ only | 23% | 10% |
| Generation X born 1965–1975 | 29% | 26% |
| Younger Baby Boomer born 1956–1964 | 23% | 20% |
| Older Baby Boomer born 1946–1955 | 15% | 20% |
| Happy Days Generation born 1936–1945 | 7% | 15% |
| Senior Senior born 1935 or before | 3% | 9% |
| Race/ethnicity | ||
| White | 79% | 88% |
| African-American | 9% | 7% |
| Asian-American | 6% | 2% |
| Hispanic | 7% | 4% |
| Home ownership | ||
| Own or are buying | 59% | 75% |
| Rent | 35% | 22% |
Lessons from the discounter channel
05/19/2007Wal-Mart, Target lead Top 5 discounters
08/24/2008Furniture stores see market share slipping
08/19/2006
