Furniture - US - August 2005

Contents

Introduction and Abbreviations

Introduction

Other relevant reports

Definition

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Lifestages shape consumer demand for furniture

Style, taste and status also shape purchasing

Home ownership and housing sales drive market

Younger, more diverse homeowner base in U.S.

Imports reshaping furniture market for suppliers and retailers

A competitive market with limited growth

Youth, infant, RTA and niche segments are fastest growing

Supply structure is highly fragmented

Brand promotion and in-store marketing

Mass merchandisers and specialty importers show strongest growth

Family-oriented demographic groups drive furniture consumption

Consumers use a variety of retail channels

Attitudes towards furniture and furniture buying

The future--younger consumers, continued competition and consolidation

Market Drivers

Introduction

Economy and consumer confidence

Economic Indicators

• Figure 1: Key economic indicators (GDP, DPI, savings, unemployment), 1999-2004

Consumer confidence

• Figure 2: Historic consumer sentiment index, 1999-2005

Household income

• Figure 3: Households with discretionary income, by age of head of household, 2000
• Figure 4: Median household income, by age of head of household, 2003
• Figure 5: Household income distribution, by age of head of household, 2003

Purchasing context

Needs and resources of different lifestages shape furniture buying

• Figure 6: All furniture categories purchasing, by top five furniture buying consumer cohorts, January-September 2004

Reasons for making discretionary purchases

• Figure 7: Justifiers for buying discretionary products, 2004

Housing and home ownership

Housing situation and the home as an investment, inside and out

Low interest rates spur home sales and furniture purchases

• Figure 8: Average interest rates on 30-year fixed-rate mortgages, 1999-2004
• Figure 9: Per capita disposable personal income, 2004

Housing sales, moving and furniture uptake

• Figure 10: Sales of new and existing homes, 1994-2005

Changes in home ownership profile

• Figure 11: Incidence of home ownership, by age and race/ethnicity, 1993-2003

Population trends

• Figure 12: U.S. population, by generation, 2004 and 2010

Generation X

Baby Boomers

Supply dynamics

Manufacturer trends: imports reshaping furniture market

Retail trends

Media trends

Interest in decor sparked by television programs

Sponsorships

Drivers for specific segments and niche markets

Presence of children

• Figure 13: Households with children under age 18 present, by age of householder, 1994-2004

Growth of Millennials

College and students

High-end furniture

Other niche market: Alternative, organic and special materials

• Figure 14: Alternative, organic furniture materials as replacements of traditional materials
• Figure 15: Purchases of organic furniture, by consumer type, 2000 and 2005
• Figure 16: Projected sales of organic mattresses and pillows, 2004-09

Market Size and Trends

• Figure 17: Total U.S. retail sales of furniture, at current and constant prices, 2000-05
• Figure 18: Graph: Total U.S. retail sales of furniture, at current and constant prices, 2000-05

Market Segmentation

Introduction

Segmentation by type of furniture

• Figure 19: U.S. retail sales of furniture, segmented by furniture type, 2003 and 2005
• Figure 20: Graph: U.S. retail sales of furniture, segmented by furniture type, 2005

Upholstery

Bedroom (adult and youth)

Bedding (including futons)

Dining (formal and casual)

Entertainment centers

Home office

Infant (ages 0・)

Other piece types

Supply Structure

Introduction

Foreign trade

• Figure 21: U.S. imports from China: furniture, household items and baskets, 2000-2004

Company and brand sales

• Figure 22: Manufacturer sales of furniture in the U.S., 2002 and 2004
• Figure 23: Graph: Manufacturer sales of furniture in the U.S., 2002 and 2004

Company profiles

Furniture Brand International (FBI)

Ashley Furniture Industries

La-Z-Boy

Klaussner

Ethan Allen

Sauder Woodworking

Dorel

Berkline/BenchCraft

Lacquer Craft

Natuzzi

Advertising and Promotion

Brand promotion through national and local media

Advertising and marketing through branding of collections

National and regional retailer advertising and marketing

Major retailer advertising

• Figure 24: Advertising expenditures of major traditional and specialist furniture retailers in the U.S., 2002 and 2003

Yellow page usage

• Figure 25: Yellow pages used to search for furniture and mattress stores, by select demographics, 2004

Expanding youth departments and catering to families

Outreach to Hispanics

Ad campaigns of three largest manufacturers

Furniture Brand International

Ashley Furniture Industries

La-Z-Boy

Retail Distribution

Introduction

• Figure 26: U.S. retail sales of indoor furniture, by channel, 2003 and 2005
• Figure 27: Graph: U.S. retail sales of indoor furniture, by channel, 2003 and 2005

Conventional furniture stores

• Figure 28: Top ten conventional furniture stores, by sales, financial years ending 2003 and 2004

Rooms To Go

Ethan Allen

Berkshire Hathaway Furniture Division

Levitz Home Furnishings

Ashley Furniture HomeStores

American Signature

Havertys

Art Van

Raymour and Flanigan

Mass merchandisers

• Figure 29: Top mass merchandiser operating statistics, latest fiscal year-end

Wal-Mart

Target

Kmart and Sears

• Figure 30: Sears stores, by type and number, 2004

Specialty furniture retailers

• Figure 31: Top ten specialty stores by sales, 2003 and 2004

Pier 1 Imports

IKEA

La-Z-Boy Furniture Galleries

Pottery Barn (Williams-Sonoma)

Select Comfort

Crate and Barrel

The Bombay Company

Cost Plus World Market

Restoration Hardware

Slumberland

Bedding specialists

• Figure 32: Top ten bedding specialists, by sales, 2003 and 2004

Discount warehouse clubs

• Figure 33: Number of warehouse club locations in the U.S., 1999-2004

BJs Wholesale

Costco

SAMs CLUB

Home Centers

• Figure 34: Top home improvement centers operating statistics, latest fiscal year-end
• Figure 35: Percentage change from latest financial year-end versus year prior

Home Depot

Lowes

Office supply stores

Office Depot

Staples

Other retail channels

Internet retailing

The Consumer

Introduction

Household furnishings bought in the past 12 months

• Figure 36: Household furniture purchases in the last 12 months, January-September 2004

Living room furniture

• Figure 37: Living room furniture purchases in the last 12 months, by household income, January-September 2004
• Figure 38: Living room furniture purchases in the last 12 months, by presence of children and marital status, January-September 2004
• Figure 39: Living room furniture purchases in the last 12 months, by age, January-September 2004

Bedroom furniture

• Figure 40: Bedroom furniture purchases in the last 12 months, by household income, January-September 2004
• Figure 41: Bedroom furniture purchases in the last 12 months, by presence of children and marital status, January-September 2004
• Figure 42: Bedroom furniture purchases in the last 12 months, by age, January-September 2004

Dining room

• Figure 43: Dining room furniture purchases in the last 12 months, by household income, January-September 2004
• Figure 44: Dining room furniture purchases in the last 12 months, by presence of children and marital status, January-September 2004
• Figure 45: Dining room furniture purchases in the last 12 months, by age, January-September 2004

Childrens room

• Figure 46: Childrens room furniture purchases in the last 12 months, by household income, January-September 2004
• Figure 47: Childrens room furniture purchases in the last 12 months, by presence of children and marital status, January-September 2004
• Figure 48: Childrens room furniture purchases in the last 12 months, by age, January-September 2004

Furniture purchasing by consumer lifestyle cohorts

Lifestyle segment shopping patterns

• Figure 49: Top five furniture buying consumer cohorts, by type of furniture purchased, January-September 2004

Dining room

• Figure 50: Top five furniture buying cohorts, by dining room furniture purchased, January-September 2004

Bedroom

• Figure 51: Top five furniture buying cohorts, by bedroom furniture purchased, January-September 2004

Living room

• Figure 52: Top five furniture buying cohorts, by living room furniture purchased, January-September 2004

Children痴 furniture

• Figure 53: Top five furniture buying cohorts, by children痴 furniture purchased, January-September 2004

Retail channels used in furniture purchases

• Figure 54: Sources of furniture purchased in the previous two years, July 2005
• Figure 55: Sources of furniture purchased in the previous two years, by gender, July 2005
• Figure 56: Sources of furniture purchased in the previous two years, by age, July 2005
• Figure 57: Sources of furniture purchased in the previous two years, by household income, July 2005
• Figure 58: Sources of furniture purchased in the previous two years, by marital status and presence of children, July 2005
• Figure 59: Sources of furniture purchased in the previous two years, by type of area, July 2005

Attitudes towards furniture and furniture buying

• Figure 60: Attitudes towards furniture and furniture buying, July 2005
• Figure 61: Attitudes towards furniture and furniture buying, by gender, July 2005
• Figure 62: Attitudes towards furniture and furniture buying, by age, July 2005
• Figure 63: Attitudes towards furniture and furniture buying, by household income July 2005
• Figure 64: Attitudes towards furniture and furniture buying, by marital status and presence of children, July 2005
• Figure 65: Attitudes towards furniture and furniture buying, by type of area, July 2005

Summary

Consumer purchasing patterns based on category of furniture

Living room furniture

Bedroom furniture

Dining room furniture

Children痴 furniture

Retail channels

Attitudes towards furniture and furniture buying

Future and Forecast

Future trends

Integrating style and trends of other household products

Youth, infant, RTA and niche segments fastest growers

Trend towards foreign production

Seniors, minority groups, and women the largest growth areas, but not necessarily the best

Economic volatility

Higher interest rates and slower home sales

Home ownership and home improvement will continue to drive sales

Market forecast

Furniture

• Figure 66: Forecast of total U.S. retail sales of furniture, at current and constant prices, 2005-2010
• Figure 67: Graph: Forecast of total U.S. retail sales of furniture, at current and constant prices, 2005-2010

Forecast Factors

Appendix: Cohort Definitions

• Figure 68: Description of lifestyle cohorts in the married couples segment, 2004
• Figure 69: Description of lifestyle cohorts in the single females segment, 2004
• Figure 70: Description of lifestyle cohorts in the single males segment, 2004
• Figure 71: Description of nonclassifiable lifestyle cohorts, 2004

Appendix: Trade Associations

Appendix: Research Methodology

Consumer Research

Sampling & Weighting

Technometrica TechnoExpresssm

ICR Surveys EXCEL

Simmons National Consumer Surveys

Greenfield Online

Presentation & Definition

Further Analysis

Trade Research

Informal trade research

Formal trade research

Desk & Internet Research

Sources

Definitions

Forecasts

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