housewares

Home Goods & Housewares Retailers

Industry Insight

Date August 2015

Approximate net recovery on cost

Synopsis

Current trends

  • As of August 21, 2015, shares of industry leader Bed, Bath & Beyond were down more than 20% year-to-date

Key statistics

  • Industry revenues: $100 billion (U.S. home furniture & housewares stores)
  • Major product categories: Small appliances, home softlines, decorative items, kitchen utensils, home storage containers, dishware, clocks
  • Significant companies: Bed Bath & Beyond, Ashley Furniture, Pier 1 Imports, Restoration Hardware, Williams-Sonoma, IKEA
  • Market share of top: The top 50 companies generate approximately 35% of industry revenue
  • Recent sales trends: U.S. retail sales for furniture and home furnishings stores increased 5.6% in the first seven months of 2015 compared to the same period in 2014

Anna’s Linens exits the marketplace: 2015 marked the demise of the California-based home decor retailer, Anna’s Linens, which disposed of its inventory and closed its stores after filing for Chapter 11 bankruptcy protection in early June. The company blamed overexpansion (it reached a high of 309 stores in 2013) and the changing tastes of younger shoppers for increased debt and ultimately a default with its longtime lender. At the time its closure, Anna's Linens operated a total of 252 retail locations throughout 19 states and Puerto Rico. Going-out-of-business sales were conducted by Gordon Brothers and its joint venture partner in all locations to dispose of the total inventory, adding to the extensive disposition experience Gordon Brothers maintains in the home goods space.

Competition from mass merchants increasing: While traditional home furnishings retailers still generate the largest majority of industry revenue, those stores are losing market share to other retailers, such as specialty chains and mass merchants. Retailers such as Target expanded their furniture selection, and discount chain Big Lots features furniture showrooms at select locations. However, with rising levels of consumer confidence in the economy, and a growing demand for higher-quality products, dedicated home goods stores are predicted to gain a competitive advantage. It remains to be seen how mass merchants will stack up against traditional home goods retailers in the long run. However, when a customer is not seeking a customized or high-end product; big-box and mass merchants can offer lower prices and ease of accessibility, making it tough for traditional retailers to compete at the mid- to- low-end of the range. Internet retailers have also made impressive gains in market share in the recent years.

Canadian retailers suffering from growing competition from U.S. chains: The American home goods market is not the only area feeling the impact of increasing competition from big-box retailers and e-commerce. In early August 2014, three family-owned Canadian housewares chains, Bombay & Co. Inc., Bowring & Co. Inc., and Benix & Co. Inc., all filed for bankruptcy protection, adding to a growing array of Canadian stores faltering in the wake of pressures from foreign mass merchants and online retailers, in addition to falling exchange rates and the lackluster recent performance of the Canadian economy. As the U.S. industry sees decreases in the number of independent outlets holding their own against big names, the Canadian industry also faces competition from U.S.-owned rivals that have moved in, such as Bed Bath & Beyond, Home Sense, Williams-Sonoma, Pottery Barn and Crate & Barrel. Additionally, as they do in the U.S., big name mass merchants Wal-Mart Stores Inc. and Costco Wholesale Corp. now operate sizable home goods sections in their Canadian locations. As it gets harder for independents to survive against big-box stores, and younger customers shift toward the convenience of online shopping, the industry will continue to face challenges, which may ultimately impact recovery rates for faltering independents. The three Canadian chains’ collapse underlines the fragile nature of the retail landscape as larger, global players expand their operations in Canada, often with an e-commerce component.