To say the year 2020 was challenging would be an understatement. The pandemic, resulting shutdowns and economic struggles were painful for many people. But through trials come opportunities, and the home furnishings industry showed its adaptiveness and endurance as we struggled to cope with extreme and unpredictable conditions.
As we gradually emerge from those conditions, we’ve noticed that the pandemic has served as a catalyst for new trends, several of which we believe will persist in the year ahead and beyond.
Shoppers have been moving online over the past few years, but last year’s lockdowns saw the trend grow 44%. In the U.S., Amazon absorbed about a third of online sales, but independent retailers also saw an uptick in activity. The ecommerce platform Shopify saw unprecedented growth, with the number of stores on the platform shooting up by 71%. It now boasts more than 1 million merchants — half in the U.S. — and most of them small businesses.
Even for luxury or larger goods, such as home furnishings, the online space has dominated the sales scene this past year. In a report published by Statista last November, U.S. furniture and home furnishings e-retail revenue is expected to rise from $42.29 billion in 2019 to more than $54.23 billion by 2024, a 28% increase.
In addition, during the most recently measured period, Statista found that furniture and home furnishing sales accounted for 12.3% of total retail e-commerce sales in the U.S.
All in all, this means that furniture manufacturers with a pure B&M play will be missing out on a revenue engine that will only get bigger.
The pandemic has put technology in a prominent position. Immersive solutions like augmented reality or virtual reality are allowing consumers to “experience” a product remotely, and this trend is expected to continue and grow this year. One study found that 61% of consumers would prefer making purchases on sites that offer AR technology, and 70% would be loyal to brands whose sites offer this capability.
Voice-assisted devices like Alexa, Siri and Google Assistant are also becoming increasingly important in ecommerce shopping. Some analysts expect voice commerce to reach $40 billion by 2022.
In addition, the pandemic has led to a surge in mobile shopping, which lends itself especially well to buy-online-pickup-in-store and curbside pickup. Mobile shopping also has played a vital role in facilitating contactless payments like Apple Pay, which saw a surge in usage as people sought to minimize interactions with PIN pads and cash.
With additional technology capabilities comes greater expectations from consumers. And the top expectation is convenience.
For some home furnishings items, two-day shipping just won’t cut it anymore. Same-day delivery is expected to hit 25% of the last-mile market share by 2025, and customers will be willing to spend more for speedy service.
Also, curbside pickup, which was accelerated by the pandemic, is also expected to expand. Some analysts predict creative solutions like multi-retailer curbside areas may soon pop up at shopping malls.
When Lowe’s partnered with designers like Rebecca Minkoff and Christian Siriano for New York Fashion Week, its social media mentions took off.
And these days, anything goes — even collaborating with the competition. A few years ago, Amazon teamed up with Kohls to offer in-person return hubs. During the first three weeks of Kohl’s accepting returns, foot traffic in the store rose by 24%. It didn’t hurt that consumers returning Amazon purchases are given Kohl’s coupons, adding further enticement to stick around and shop.
Don’t overlook the potential benefits of working with rivals. There’s some research that shows “co-opetition” can boost competitive advantage for both parties.
Buy-in from influencers will be increasingly important in the year ahead. Whether the influencer is a celebrity or a civilian who is able to leverage their home design and DIY skills, aspiration is a powerful medium.
Sites like LiketoKnow.it are populated by influencer photos, and Instagram has become a major player on the social commerce scene. Meanwhile, livestream shopping, which got its roots in China and has potential to grow globally this year, sees influencers use live video apps to take their followers shopping with them.
With consumers spending more time at home, they’re willing to wait for a higher quality, made-to-order product. Some also prefer to own and show off exclusive, one-of-a-kind pieces as opposed to mass-produced, commoditized products.
So customization is going to be a key differentiator, which means there are more opportunities to go big with private label offerings. Quality merchants know their customers best and will be valuable partners in identifying in-demand features and products.
While 2020 was quite a challenging year, new insights and opportunities did come from it. Given the lessons learned from the pandemic and economic challenges, as well as the new trends emerging from those trials and triumphs, we expect a dynamic 2021 year ahead.