For the first time since the financial crisis, Danish furniture companies' sales abroad have fallen. After several years of uninterrupted growth, exports fell by 11% last year. So from the record high level of over $3.3 billion in 2022, the furniture exporters' sales in 2023 fell below $2.89 billion - source borsen.dk.
Jimmi Mortensen, who is CEO of Lars Larsen Group's Actona, which is Denmark's largest furniture company, does not see a turnaround in furniture exports as imminent.
In 2023, furniture industry in various countries faced similar consequences (here's a blog post from 2023 where we highlighted this before). But there's a hope for the furniture industry in 2024 to recover from this situation with right strategies and focus to improve the customer's buying experience.
Why Does Danish Furniture Export Industry See a Downfall?
Saturated Markets
Chief consultant Mads P. Gede, Timber and Furniture Industry under DI, states in an email that the corona kept sales growth going in large local markets. People prefer to buy from local markets to support local communities ( a nice trend started since covid time). However this boosted the local businesses but eventually slowed down the sales for comparatively bigger furniture brands.
Competitor Industry Growth
Did you know that furniture industry's biggest competitor is the travel industry? Apparently since last year, the travel industry is booming again, causing slow down in furniture purchase. In 2021, world wide furniture industry experienced a faster growth curve since people focused to invest to redesign their interiors often. The biggest reason was to arrange home office setup at home and buying furniture for that - source statista.
Financial Sensitivity while Buying Online
People are more sensitive now a days while buying high priced products online. It's no difference with the furnirure industry since if the product is not as advertised, the headache of product return is even higher.
Some Other Examples
In 2023, several furniture companies were facing constant revenue dip. Mitchell Gold & Bob Williams, a $197M furniture company with 69 stores, had been shut down.
Many furniture brands were losing revenue like Wayfair, West Elm, Ottery Barn, Hooker Furnishing etc. CNN Business reported similar event in 2023.
Can Furniture Industry Improve the Situation?
In all of the above stories, there is a strikingly similar agenda. Companies are facing issues in selling furniture in non-native countries. Yes, they do have retail stores in the exporting countries. But people often look at furnitures online now a days. Looking at high priced items does not ensuring their imminent purchase. The pattern of shopping is changing fast and companies who do not get on top of it, will left behind eventually. This paradigm shift has started now.
However, furniture companies can change this notion and aim for higher sales in foreign countries (where the sales workforce is less) by adopting 3D ecommerce. 3D visualization and WebAR can provide a much better way for the customers to evaluate high priced luxury lifestyle furniture products and consider them buying more.
Furniture e-commerce is on the rise
Zooming into the furniture e-commerce realm, in 2023, the United States was the biggest market for furniture e-commerce worldwide, with estimated revenues exceeding 90 billion U.S. dollars. China ranked second, with furniture e-retail revenues reaching approximately 45.8 billion U.S. dollars. According to Statista, a fifth of global shoppers were purchasing home and garden products online on a monthly basis. Data shows that the highest user adoption of furniture e-commerce was in the United States, where 31% of shoppers were buying household furniture online on a monthly basis.
Consumers’ shift to digital has accelerated dramatically — especially in the furniture industry. Unlike in the past, when online browsing was more like window shopping, today, most customers searching for furniture products online are ready to buy. Data from Searchmetrics shows that almost two-thirds (62.3%) of searches in the furniture sector are transactional.
The European furniture market growth
The European homeware sector is a €40 billion industry, dominated by living and dining room furniture purchases, which account for €13 billion of these sales, according to the RetailX European Homeware 2023 report.
The homeware sector witnessed dramatic growth during the pandemic when 40% of European consumers invested in their homes. And while the surge had started to correct itself by 2022, the market is now more than €10bn larger than it was in 2019.
It’s interesting to note that e-commerce constitutes only a quarter of the sector’s revenue, which means there is still a lot of room for growth. Users are now increasingly comfortable buying online, which can be seen from the fact that one-third of the homeware online revenue comes from purchases made using mobile devices.
Furniture industry predictions and expectations
There’s no doubt that the world is in a complex economic situation. Furniture players have already felt the impact of the changing business landscape. The question is whether there’s a place for optimism.
According to a TD Bank survey, furniture businesses remain optimistic about purchase volumes. Results show that 63% of retailers surveyed believe that home furnishings purchasing will increase or remain steady in 2024.
Solving fundamental challenges with technology
Here's a good read on the same topic.
Success in furniture — or almost any line of business in a digital-first world — depends upon technology. And furniture brands and retailers are aware of this. According to a recent Forrester study, the appetite for emerging technologies is high. Results from the study show that 52% of furniture businesses are planning to adopt augmented reality (AR) in the next 12 months, 59% of furniture businesses are expanding the use of 3D product visualization, and 78% of furniture leaders see AI for customer support as impactful on sales.
How to prepare for 2024 and beyond
Companies are already expanding their horizons to capture future growth opportunities, with the understanding that bold steps now can increase the potential to lead in the future.
Results from a TD Bank survey show that 50% of retailers said they were planning to expand their product offerings, 19% are thinking about store redesigns, 16% will be hiring more staff, and 13% are considering vendor changes.
We took a closer look at the developments in the furniture industry to understand what leading furniture companies are doing now to prepare for 2024 and beyond. Here are the takeaways:
1| Understand the differences between generations
Furniture businesses are bullish because of an upcoming tailwind: Millennials. Despite the housing market challenges, Millennials will be the driving force for years to come. According to the 2023 Profile of Home Buyers and Sellers, published by the National Association of Realtors (NAR), the typical first-time buyer was 35 years old (the second-oldest age in four decades of NAR’s data).
However, after falling to a record-low 26% of buyers in 2022, first-timers made a comeback in 2023, comprising 32% of sales.
Although all generations are feeling the impact of the economy to a similar extent, Millennials and Gen Zs are more likely to take an optimistic view of the economy and its potential impact on their future spending. As reported by Furniture Today, younger generations account for a significant portion of furniture purchases, with 7 out of 10 purchases made by Gen Z and Millennials.
What does it mean for furniture businesses?
Tapping into the buying power will require some adjusting. Millennials are tech-savvy, and they digest media differently. As a digital native generation, they are prone to online shopping. Furniture businesses that want to capture Millennials and Gen Z's attention have to:
Introduce clean-lined furniture products (contemporary looks, with clean finishes and natural materials)
Focus on high-quality product visualization
Create fresh, visually appealing content for different channels
2| Redefine the furniture e-commerce experience using the power of technology
The rapid digitization of commerce has completely transformed customers’ expectations. To cater to their needs, retailers are improving the e-commerce experience to meet customers where they are.
What does it mean for furniture businesses?
Boost customers’ confidence with 4K product visuals
Remove friction from your checkout process
Focus on gathering social proof and use it to your advantage
3| Fuel your furniture marketing with 3D content
Furniture retailers have finally realized there’s no room for legacy website experiences and platforms never designed with our digital age in mind. Retailers will need to move beyond the current 2D focus of e-commerce to prepare for a more social and immersive future of shopping.
The need for fresh content across different platforms has hit an all-time high. Furniture brands, on the other hand, have been struggling to balance between the amount of content they produce and the total costs. With 3D technology, businesses can create 3D lifestyle imagery at scale without breaking the bank.
What does it mean for furniture businesses?
Furniture businesses that want to get ready for the new chapter of furniture shopping have to embrace 3D product visualization. In 2022, Google introduced 3D visuals of home goods to its search function. The results show that shoppers engage with 3D images almost 50% more than static ones. Moving forward, 3D product visualization will become the norm across industries.
Introduce 3D technology to your product visualization strategy
Create a balance between 3D lifestyle imagery and traditional photography
Use 3D lifestyle imagery to produce content for different channels at scale
4| Boosting furniture sales with advertising and marketing
Another thing furniture businesses need to change is their approach toward advertising and marketing. During the two pandemic years (2020–2021), there was no need to promote furniture because online sales were skyrocketing. Things have changed.
What does it mean for furniture businesses?
Understand what your target audience needs
Offer customers the ability to customize products
Use 3D technology to supercharge your furniture marketing campaigns
5| Invest in experiential retail
The unprecedented boom in furniture e-commerce sales forced many to believe that this would be the end of physical retail. Instead, we saw some of the leading retailers expanding their physical footprint. The reason? E-commerce has transformed the role of brick-and-mortar stores.
What does it mean for furniture businesses?
Marry up your in-store and online furniture shopping experience
Use technology in-store to create an endless aisle experience
Focus on creating a unique retail experience and compensate for the lack of square footage with tablets and kiosks equipped with 3D product viewers
Ready to reinvent your furniture business?
The consumer shift toward e-commerce has opened the door for a long-overdue great retail reset and digital transformation to create a seamless omnichannel shopping experience.
Thriving in this new furniture e-commerce landscape will require unique insight and action. It’s vital for Danish furniture businesses to understand what consumers expect when shopping online, their behavior changes, and their future expectations.
Investments in 3D commerce, rich e-commerce merchandising, and the store of the future can help companies address the rapidly shifting customer preferences. This will require furniture brands to transform their thinking and make long-term commitments, but it could also change the way they conduct business forever. Ready to adopt 3D product visualization as part of your business strategy?