While many in the home furnishings sector continue to report sluggish sales at brick-and-mortar stores, statistics just released from Adobe’s Adobe Summit paint a far more optimistic picture for online sales of home furnishings
Billed as “The world’s largest digital experience conference,” the event, held March 21-23 at The Venetian Resort Las Vegas, released a report detailing new domestic e-commerce insights into recent changes in the digital economy.
The report reveals resilient online shopping demand for groceries and home furnishings, categories that previously struggled to gain traction, and reflects the lasting impacts of pandemic-related habits.
Commenting on how the statistics were compiled, Adobe said that, based on Adobe Analytics data, the report provides the most comprehensive view into U.S. e-commerce by analyzing commerce transactions online, covering over 1 trillion visits to U.S. retail sites, 100 million SKUs and 18 product categories.
Based on those online transactions, the report concluded that online sales of home furnishings and groceries were the two top categories.
The report concludes that in 2022, consumers spent over $126 billion on home furnishings, a 10.2% increase year-over-year, as well as $86.8 billion on groceries, a 10.8% increase YOY.
This strong growth contrasts with electronics, which remains the top category by total spending ($202 billion), but only grew 4% YOY. Similarly, though apparel was another major category and drove $171.8 billion in 2022 spending, the number actually fell by 3.8% YOY.
According to Adobe, these trends carried over into 2023. In February, the home furnishings category grew 12.9% YOY, driving $9.4 billion in spending for the month. Groceries grew even more substantially at 26.7% YOY, driving $8.4 billion in spending. Demand for electronics slowed following a record holiday shopping season, falling 5.4% YOY to $13.6 billion, while apparel fell 0.6% YOY, driving $11.3 billion in February spending.
“E-commerce demand has remained resilient in an uncertain economic environment, driven in part by lasting pandemic habits where consumers had no choice but to leverage online food and home furnishing shopping services,” said Vivek Pandya, lead analyst of Adobe Digital Insights.
“Now consumers have embraced the rich e-commerce experiences that made them feel comfortable getting these necessities delivered to their doorsteps, making these categories new growth drivers in the digital economy,” Pandya observed.
Further, the report found that ongoing rising costs of living have prompted consumers to embrace a buy now, pay later mentality, which consumers have long used when buying furniture.
In 2022, the share of online purchases using BNPL grew by 14% YOY, with revenue from BNPL growing 27% YOY. In the first two months of 2023, BNPL order share was up by 10% YOY, though revenue fell by 19% YOY, indicating that consumers are using this payment method for smaller purchases.
To get a better handle on the actual types of goods that shoppers want to delay payment for, Adobe also looked at BNPL usage across major categories, including groceries, home furnishings, apparel and electronics.
The company found that during the first two months of 2023, groceries’ share of BNPL orders grew a staggering 40%, while home furnishings grew by 38%. By contrast, apparel only grew by 8%, and electronics fell by 14%.
“The rise of buy now, pay later usage for groceries tells us that consumers are likely making bigger purchases online to take advantage of special promotions and stock up on staples, thus managing living expenses in more flexible ways,” explained Pandya. “The strong online growth of home furnishing purchasing is expected to bolster buy now, pay later adoption, given the higher ticket prices in this category.”
The report also shared additional insights into consumer shopping patterns online. What follows is a summary of some of those findings from Adobe:
- Mobile shopping is expected to overtake desktop in 2023. As consumers embrace new categories and ways to make payments online, they’re also doing so on smaller screens. The last holiday season was a turning point for mobile shopping, where the majority of sales (51%) on Cyber Week came through smartphones for the first time. In 2022, smartphones drove 45% of overall online sales, but on the current growth trajectory, Adobe expects that every month will see smartphones drive the majority (over 50%) of online sales by December 2023.
- Smaller retailers struggle on mobile. Larger retailers (over $1 billion in annual sales) are seeing more success with mobile shopping, driving 38% more visits that result in purchases compared with smaller retailers (between $10 million and $50 million in annual sales). The share of revenue from sales through smartphones is also 8.6% lower for smaller retailers — an opportunity for these brands to connect with customers on smaller screens.
- Demand slumps for curbside pickup. In 2021, 23% of online orders used the curbside pickup option (for retailers who offered the service). This fell to 19% in 2022, and it fell further to 17% in the first two months of 2023. Consumers tend to use the service more for groceries, which saw its share of curbside pickup orders grow 8% YOY in early 2023, compared to a category like electronics, which grew by only 2% in the same period. Once considered a safety necessity during the Covid-19 pandemic, curbside pickup is struggling to provide lasting value to consumers. This presents an opportunity for retailers — shoppers who use curbside pickup rather than shipping to their homes may buy additional items once they’re at the store.
The final takeaway, at least for me, is that Adobe’s study absolutely confirms the need for brick-and-mortar retailers to have a strong online presence as well.
I agree with the study’s conclusion that pandemic-related buying patterns, i.e. are here to stay, at least for the immediate future.
It only makes sense (and dollars) for retailers planning to stay in the game to afford customers the option to purchase online.