Is the ‘retail apocalypse’ coming for furniture stores?
July 8, 2017,
In the past few months we started seeing some multi-store home furnishings retailers call it quits. Erdos at Home, for example, the 12-store, Dallas-based retailer that used to be I.O. Metro, “A different kind of furniture store.”
Retail apocalypse. Retail Armageddon. Those are a couple of the doom-themed names for retail consolidation bandied about by news websites such as Business Insider and Fortune. They point to reports such as the latest from Credit Suisse, which projects some 8,640 stores will close in the U.S. this year (compared with 2,056 stores last year) and that 20% to 25% of retail malls will be shuttered by 2022.
They point to the store closings already by retailers such as Macy’s, JCPenney, Sears, Kmart, Radio Shack and Payless, and the bankruptcy and closing of Hhgregg. And they cite Amazon and e-commerce in general as the culprit, as consumers’ shopping habits shift to online. Why waste time hopping in a car and driving to a store when a much bigger store is right here at my fingertips, with competitive pricing and delivery in two days or less?
But you rarely if ever see a true furniture store in those accounts, at least not yet. Is it because the industry is so splintered that furniture retailers tend to be regional and super-regional players rather than national chains? Do the mom-and-pop closings simply get lost in the shuffle?
I’ll concede that’s part of it. But more significantly, the pure-play e-commerce companies haven’t been nearly as successful figuring out how to sell heavy, bulky furniture online and make a profit. Meanwhile, great furniture chains have been getting better at offering consumers the option of starting and finishing purchases online, offering consumers the choice — come sit on it or just click to buy.
Even at Dearden’s it doesn’t seem like the furniture side of the business had much to do with the decision to close. Bensimon said furniture sales were holding up well, despite growing competition. The planned closing had more to do with shifting consumer trends, he said, noting the electronics segment, for example.
The focus of the Credit Suisse report that hit recently was really soft goods — retail apparel and brands. But in it, the financial firm offers some “Keys for Survival” any retailer should consider: You need to bring your real estate and other fixed expenses down; invest in the fast-growing e-commerce segment; and transform your supply chain to better compete.
In one sense, the retail apocalypse has been going on in furniture for a very long time as continual consolidation takes out the weakest players — chains such as The RoomStore in Phoenix but mostly smaller independents that haven’t adjusted quickly enough or have no one to take over when Mom and Pop retire.
In another sense, it hasn’t come at all if you look at the examples we’ve see in the media lately. Now that doesn’t mean the Four Horsemen aren’t knocking on the furniture store door.
But in the meantime, brick-and-mortar retailers have been given ample opportunity to read the tea leaves and make adjustments before it’s too late.
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