Blueport Commerce Predicts Furniture Retail in 2018

December 21, 2017

2017 was a transformative year for furniture retail. Influencing over $4B in annual furniture retail sales across the platform, Blueport is given a unique perspective into data and trends that define how furniture retail will shape in 2018. We’ve pulled together some of our top experts in ecommerce strategy, marketing, merchandising and data and analytics to share our top predictions for 2018.

Kate Putnam, Office of the CEO

A New Breed of Retail Stores

While perception of the retail landscape is that stores are shuttering to make way for ecommerce, in tried and true bricks and mortars like furniture stores, shopper demand isn’t shifting away from the store. In fact, it’s shifting to include and support shoppers’ discovery throughout all shopping channels – in store, online and through smartphones. Amazon’s purchase of Whole Foods earlier in 2017 shows the proof points behind integrating store experiences, and technology even, where shopping in store is still valuable to the buyer. It doesn’t hurt that according to CBRE that globally over 70% of millennials prefer brick-and-mortar retail stores.

Kyle Marchesseault, Director of Marketing

No More Cookies  

The introduction of iOS 11 and its further restriction on cookies (small data files placed on your device by websites you visit) is the latest sign that many digital advertisers will have to find new ways to target display ads to potential customers.  This is not such a bad thing, however. Savvy digital advertisers are already moving from cookie-based campaigns to “people-based” campaigns that use information provided by the user for targeting.  The largest partners for these programs are Facebook and Google, which can use profile information and search data to create targets of likely customers for advertisers.  In 2018, advertisers will continue to test additional “people-based” campaigns that use device, IP address, and other information to create target audiences. Leading retailers in the digital marketing space will also use their own data to create target audiences of past customers and likely future customers. These target audiences are likely to be more accurate and generate better results than cookie-based targeting in the past.

Erica Nolan, Sales & Marketing Manager

2018 – The Year of (Continued) Consolidation

We’ve seen a significant amount of industry consolidation over the past year, and I expect 2018 to be no different. According to RBC Capital Markets, from 2009 to 2015 the market share of the top 20 furniture retailers has increased from 20% to 29%. According to Furniture Today, in 2016, sales of the top 100 retailers increased by 7.2% and sales of the top 10 furniture retailers increased by 9.8% compared to 2015. Take Art Van as an example. Earlier this year Thomas H. Lee purchased a majority stake in the retailer and since then they’ve acquired two top 100 retailers—Levin Furniture and Wolf Furniture—catapulting them to the top 10 with a projected $1.3 billion in sales in 2018. We’re also starting to see Wall Street infiltrate the manufacturer side. Monomoy Capital Partners purchased Klaussner Home Furnishings in February and in April Berkley Capital announced its purchase of Crypton Companies. As the big get bigger and this industry becomes less fragmented, it is going to become even more challenging for local brick and mortar retailers to keep up. The retailers who will win are the ones who embrace and invest in the technology that will enable them deliver a seamless omnichannel experience.

Bob Howland, General Manager

The Year of Reckoning

2018 will be the year of reckoning for furniture retailers and manufacturers when it comes to the online channel. Can they fully enable a rich customer experience that is consistent across all channels (e.g. online and offline) OR do they fall behind the rapid advances made by both online players (e.g. Amazon, HOUZZ, and Wayfair) and the national specialty brands that deliver an omnichannel experience across their stores and websites.

Retailers will Steer Clear of Shiny Objects

Furniture retailers will (correctly) avoid the urge to jump on the (still unproven) next generation technology shiny objects (e.g. Augmented Reality) to invest in their points of differentiation (e.g. store associates and local delivery) and invest in their largest store (e.g. their ecommerce-enabled website).

Lauren Gordon, Senior Director Ecommerce

Mobile Conversion will Increase

Mobile visit growth has continued to accelerate year over year, but mobile conversion and revenue have not increased at the same pace. In 2018, I expect mobile conversion to grow faster as customers become more accustomed to purchasing items on their phones and millennials start becoming a larger portion of the furniture customer base.

Simple and Strong Promotional Messaging will be Key to Engaging Shoppers

Promotions and strong promotional messaging will remain an important tactic in 2018. With the ability to price compare, customers are more and more sensitive to price and expect to get great deals. Simple, strikethrough promotions with strong offer messaging will be the most successful offers.