What are analysts saying are the biggest opportunities for growth (product or market) within the Furniture and home accessories (digitally native brands) industry over the next 5 years?
Thank you for your question on the biggest opportunity for growth within the furniture and home accessories industry over the next 5 years.
The short answer is that the trends and opportunities for growth in the online furniture and accessories market in the next five years are improved e-commerce penetration, increased environmental consciousness, increased urbanization, growing real estate market, technological advancement in raw material production, and increasing disposable income. In terms of unique omnichannel strategies, although such suggestion from market analysts are paywalled or offered at a fee, I found that a good omnichannel strategy that makes it easy for customers to transition from the "web-room" to the showroom (and vice versa) and a reasonable shipping fee and return policies are essential in such a strategy.
Below you will find a deep dive of this answer.
METHODOLOGY AND FINDINGS
To understand what analysts are saying are the biggest opportunities for growth within the online furniture and accessories market, I looked into market reviews and forecast between now and 2022. I then summarized common themes and trends mentioned or discussed by experts in this field. In terms of omnichannel strategies, I was able to find a few case studies and recommendations from experts, but most of them are on building a good omnichannel strategy in general, so they are not specific to the furniture and home accessories industry. Some of the market research analysis I relied on for the first part of the research may have more unique furniture and home accessories omnichannel strategies, but that aspect of the research is paywalled.
The global online home furniture market and global online home furnishings market was worth $39.9 billion in 2015 and the market is expected to grow at a CAGR of 8.9% in the next five years. The growth of the global online home decor market is expected to be even more rapid between 2016 and 2020, with an expected CAGR of 19.45%. The North America e-commerce furniture and homeware (includes kitchen and bathroom accessories, textile furnishings) revenue in 2017 is expected to hit $34.24 billion, according to Statista. And revenue is expected to grow at a CAGR of 7.0% until 2021.
TREND AND OPPORTUNITY THAT WILL DRIVE GROWTH
According to analysts, the trends that are expected to drive the growth in this sector are the increased penetration of smartphones and internet (smartphone users in North America is expected to reach 262.2 million in 2019) that will enable consumers to review furniture while on the move and the continued provision of hassle-free home delivery options to online consumers.
Analysts also expect the increased environmental consciousness to drive growth because it's expected to lead to increased demand for eco-friendly furniture and home accessories. Awareness of the effect of deforestation on climate change and the effects of toxic finishes in the air inside homes has led many furniture manufacturers to go green, and as customer awareness grows on these issues, the online home furniture and accessories market is expected to benefit.
E-commerce platform enables vendors to provide a detailed catalog and product sourcing explanation, and when combined with the ease and convenience of online shopping, analysts are optimistic that the opportunity the e-commerce platform presents will lead to growth. Furniture e-commerce and homeware user penetration in North America in 2017 is 19.9%. As these factors are improved upon in the following years, user penetration is expected to reach 22.7% in 2021.
INCREASED DISPOSABLE INCOME
Analysts expect the improving lifestyle and increased disposable income of people in North America to provide an opportunity for growth in this industry. The number of homeowners has increased significantly in this region and analyst expect it will also trigger growth. According to analysts, "home décor products have gained a high acceptance among homeowners who want to renovate the home interior and exteriors."
One of the challenges that is expected to slow the growth of this market is the cost of raw material such as high-quality wood, leather, glass, metal, plastic, glass, rattan, fabrics and stone used for manufacturing furniture. By 2020, it's expected that some of these raw materials, such as plastic and glass, will be cheaper due to advancements in production technology of these raw materials.
Increased urbanization (especially in Mexico) and real estate market positive outlook in North America is expected to boost the online furniture market.
OMNI CHANNEL STRATEGIES
The North America furniture and home accessories market is fragmented, with several national players. Technavio analysts say that vendors in the market will compete on the basis of product portfolio, differentiation, and pricing to gain maximum market traction. A successful player in this industry would need to differentiate their product and service offerings through a clear and unique value proposition. An omnichannel strategy can help in this regard.
According to Hub Spot, "an omnichannel approach accounts for each platform and device a customer will use to interact with the company. That knowledge is then used to deliver an integrated experience. Companies using this technique align their messaging, goals, objectives, and design across each channel and device."
This article details how several big brands have been able to build a strong omnichannel process and you may find some of the strategies employed inspiring. Furniture is usually heavy and bulky, so they are not easily returnable when the received product doesn't match the customer's expectation. So online consumers often research furniture online (called "web-rooming") and then visit a showroom in other to inspect their choice furniture. This means that an effective omnichannel strategy that enables a consumer to do this easily is a plus. It also works the other way as customers sometimes visit a showroom first and then go online to find a better price, with research showing that 57% of the post-showrooming purchase is made at Amazon. However, the first (web-rooming then purchasing at the showroom) is more popular, with 69% of US adult having engaged in it.
According to Big Commerce, online shoppers "appreciate stores that recreate the in-person buying experience using images (78%), reviews (69%), comparisons (46%), testimonials (42%) or video (30%). These immersive features help alleviate the fact that 49% of online shoppers dislike not being able to touch, feel or try out a product."
To make the most of both channel, analysts insist that it's crucial that a furniture company has both a "web-room" (e-commerce store) and a showroom. However, having both is not enough. An omnichannel strategy that connects both is required. Such strategy should include reasonable shipping charges and a workable return policy. It should also make it easy to connect with a customer service representative every step of the way. I also found an interesting furniture omnichannel strategy case study. The furniture business owners talk about how they have been able to integrate an e-commerce store into their business. The case study is detailed and talks about the pricing, handling inventory, the right stocking, reducing shipping cost, software, local SEO and the right customer service so I recommend you read it for more insight.
To wrap it up, the trends and opportunities for growth in the online furniture and accessories market are improved e-commerce penetration, increased environmental consciousness, increased urbanization, growing real estate market, technological advancement in raw material production, and increasing disposable income. In terms of unique omnichannel strategies, I found that a good omnichannel strategy that makes it easy for customers to transition from the "web-room" to the showroom (and vice versa) and a reasonable shipping fee and return policies are essential in such a strategy.
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