Blog: The return to ‘normal?’

Our home furnishings industry has enjoyed tremendous growth during COVID, as consumers are spending more time at the “home” to work and enjoy time together. Better interior furniture, home office arrangements, and outdoor patio settings have been the big winners. And while local stores have rebounded nicely from the forced closures of last March-May, many consumers have increasingly gone online to make purchases (and are staying there). 

Many executives are trying to assess what the “new normal” may be in a year or so once Covid has subsided (Moderna CEO recently suggested this nightmare would be contained by the second half of 2022). 

Here is our collective view, based on a straw poll of over 25 clients and friends:

  • The industry growth rate will stay materially above the 3-4% historical rate, perhaps 7-8% for several years. 
  • E-commerce will continue to grow and seize market share, as smart retailers (there are many) will deploy more proprietary e-commerce strategies. 
  • “Made in America” is gaining some attention due to the global supply chain issues and costs. But casegoods will not return due to environmental concerns and labor shortages. Upholstery may shift some to Mexico, but the US will continue to face rising labor costs and a dearth of workers. Asia will remain a core part of our industry. 
  • Fashion and style will continue trending towards contemporary / transitional looks to meet the more casual lifestyle of today’s consumers. 
  • Work from home will continue to be an option for many Americans. The consequences of this are vast and difficult to fully predict.
  • Data will increasingly be a differentiation between the strong and weak companies. Technology will continue to accelerate and improve connectivity between suppliers, manufacturers, retailers, and end-consumers. This relationship chain is rife for disruption – and technology will drive it. 
  • Home decor will be a trend, focusing on broader assortment of furnishings rather than just upholstery or casegoods. Forward-thinking companies will expand into additional products such as lighting, rugs, art, and other accessories to complement the whole home presentation. 
  • Markets will rationalize into shorter and less fixed expense venues as Zoom and other digital presentation tools make their way into the mainstream selling proposition. However, more year-round face-to-face meetings will occur to build relationships and to present new ideas. 
  • Private equity will continue to pursue this broader industry given these favorable growth trends and burgeoning e-commerce angle. Big PE firms are already looking closely at investing in or adding on to their holdings. Perhaps these investments could lead to IPOs for the industry, which hasn’t occurred in many years. 

Bo Stump is a partner in Charlotte, N.C.-based Stump & Co., a mergers and acquisition specialist for the home furnishings industry. The company will celebrate its 50th year of M&A advisory services to the furniture industry in 2022.

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