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Kurt Salmon Study Looks At Online Furniture Purchase Intentions

Furniture World Magazine

Furniture Industry News Update -

Furniture retailers are in danger of missing a growing opportunity to sell their goods online. Retail sales online are predicted to grow from $231 billion in 2012 to $370 billion by 2017, driven in large part by Millennials—digital natives very much at home with online shopping—who wield as much as $1.3 trillion in buying power. While one in 10 consumers has already purchased a piece of furniture online in the last year, according to Kurt Salmon’s 2014 Consumer Shipping Survey, there is still significant opportunity for furniture retailers to further engage shoppers and capture additional sales via the online market. This is especially true when considering the fact that 52% of consumers are willing to shop online for furniture, according to a study by Mississippi State University.

The furniture industry, however, has yet to dive full force into the online space, likely due to the fact that buying furniture has largely been perceived as dependent on the visual and tactile in-store experience. But shifting consumer behavior means that furniture retailers must capitalize on the growing e-commerce market to drive sales among the increasing number of tech-savvy Millennials to remain competitive.

To do so, furniture retailers must answer these three key questions: “Why should I enter the furniture e-commerce market now?” “Who’s winning in the space?” and, finally, “How can I get there?”

“Why Now?”

The market for furniture e-commerce is growing.

Overall consumer comfort levels with online shopping and the benefits of e-commerce, including convenience and low shipping costs, have increased receptivity to shopping secondary categories, such as furniture. According to Kurt Salmon’s survey, more than a third of individuals indicated that they would shop for furniture online over the next few years, whereas only a quarter of respondents expressed similar sentiments in 2008. Additionally, Kurt Salmon’s study found that, on average, consumers spent over $500 on their last online furniture purchase and nearly half of all purchasers bought multiple times within the last year—further proof of the opportunity the online market presents for furniture retailers.

Millennials are the prime demographic furniture retailers should target when honing their e-commerce strategies. These consumers tend to over-index in online furniture purchasing, according to Kurt Salmon’s survey, likely reflective of their current life stage and digital-savvy nature.

And though Kurt Salmon’s study found that consumers of all ages are at least “comfortable” purchasing furniture online, generational differences are especially prominent when looking at consumers’ intentions to shop for furniture online in the next few years. While almost half of Millennial shoppers and a quarter of Gen X consumers indicated that they would do so, less than one-third of Baby Boomers and only 17% of Depression/pre-Depression consumers agreed, according to Mississippi State’s study.

Millennials’ predilection for mobile shopping and browsing is another critical factor to consider when crafting e-commerce strategies. Seventy percent of Millennials use their mobile device to make online purchases, and more than one-third are comfortable purchasing household items, including furniture, from a smartphone or tablet, according to MediaPost. A desktop-, tablet- and mobile-friendly website that is aesthetically pleasing and up to date in terms of assortment, pricing, store locations and other details is therefore key to connecting with this demographic.

Social media also plays an important role in consumers’ search for and discussion around furniture items. For example, Pinterest is used to generate room decorating ideas for more than a quarter of Millennial consumers, according to Mississippi State’s study. Consequently, savvy furniture retailers could grow their presence on social media to not only track consumer sentiment toward assortment, pricing, etc., and adjust strategies accordingly, but also to bolster awareness among and engagement with shoppers.

What are the results of a strong digital and e-commerce presence? Activating consumers online has been shown to increase store traffic and consumers’ interactions with brands. Additionally, store and associate recommendations based on consumers’ online behavior have been found to increase basket size in stores. “Next visit” digital recommendations have also been linked to increased sales, especially when promotions are predictive and personalized based on consumers’ online and in-store behavior.

“Who’s Winning?”

Identifying the market leaders in online furniture sales.

According to Kurt Salmon’s Consumer Shipping Survey, about 40% of respondents made their last online furniture purchase from Amazon.com, a brand in which consumers indicated they have a strong trust. In fact, over 20% of survey respondents had purchased only furniture from Amazon.com in the past year.
But Amazon.com is not the only market leader. A major challenge facing furniture companies looking to enter or further penetrate the e-commerce world is strong competition from big-box retailers, such as Walmart and Overstock, which, together with Amazon.com, comprise more than half of respondents’ most recent online furniture purchases, according to Kurt Salmon’s study. Online furniture sales, on average, represent 6% of total furniture sales for these brands, making them leading online furniture retailers. Other retailers in the furniture e-commerce space who pose potentially tough competition include Wayfair, which excels in product variety; IKEA, whose strength lies in its strong brand recognition; and Ashley Furniture, which stands out for its logistics and delivery capabilities.
Ultimately, emerging players wishing to enter or expand their presence in the e-commerce market should look closely at these leaders’ online furniture strategies when crafting their own approach.

“How Can I Get There?”

How furniture retailers can effectively penetrate the online market to bolster sales and customer loyalty.

Today’s online purchasing process is often supported by multiple channels. Retailers who can provide a compelling omnichannel journey through each phase of the e-shopping experience—including consideration, evaluation, purchase and post-purchase—will drive sales (e.g., by transforming more “considerations” to “purchases”) and bolster brand loyalty (e.g., by improving post-purchase strategy).
While current customer satisfaction with the online furniture shopping experience is high, at 83%, it drops below 50% when shoppers are asked specifically about retailers’ flexibility in delivery date and time, ability to reroute packages and options for “green”/eco-friendly shipping.
  
Today’s shoppers seek a variety of flexible options from retailers—Kurt Salmon’s survey found that 62% want the ability to purchase items online and make in-store returns, and 44% want to buy furniture online and pick up their purchase in-store. According to Kurt Salmon’s survey, offering flexible fulfillment services is crucial to attracting and keeping customers, in which consumers want to:
  • Track the status of delivery online (29%)
  • Have next-day delivery (18%)
  • Pick up or return a purchase at a physical store (17%)
In addition to these fulfillment options, furniture retailers should consider refining the following capabilities as they enter the e-commerce space:

  • Data analytics to underpin enhanced customer experience and engagement—Technology’s ability to store and retrieve customer information can facilitate and enhance the customer relationship by helping retailers learn more about and develop stronger relationships with customers. Honing data and analytics capabilities can offer retailers insights into consumers’ past purchases, brand loyalty and online vs. in-store shopping behavior. With today’s consumers moving away from simply needing things to demanding authentic and personalized brand experiences, this information can enable furniture retailers to personalize assortments, offerings and promotions; design merchandising operations; and connect more deeply with consumers.

  • Cross-channel inventory and fulfillment vision—Furniture retailers should have one inventory vision spanning all channels, in which an increased assortment should be available to customers online vs. in stores. Additionally, retailers should aim to offer consumers a broad range of fulfillment options, as detailed above. This, candidly, may require changes to their supply chain logistics, often in the form of additional distribution centers and “dark stores.” Ultimately, end-to-end supply chain visibility is key to optimizing supply chain operations—without it, seamless fulfillment is nearly impossible. The transportation element of supply chain logistics is especially important to consider, as large furniture items will likely need to be locally delivered. As a result, implementing a “hub” concept through leveraging final-mile deliveries may be strategic.

  • Omnichannel experience—Ultimately, operationalizing omnichannel, or providing a seamless shopping experience to consumers across online and physical channels, is an exercise in change management, which requires a company-wide transformation in organizational structure, IT and supply chain. Successful change management should start at the top, where company leaders make their sponsorship of the initiative clear to everyone, both inside and outside of the organization. 

It’s Time to Dive In

The e-commerce opportunity for furniture retailers is significant. By looking closely at industry leaders and adapting, tailoring and enhancing fulfillment, customer engagement and omnichannel e-commerce strategies, furniture retailers can capitalize on this growing opportunity. Ultimately, leveraging e-commerce will enable retailers to drive sales, heighten brand loyalty and garner the competitive edge needed to thrive in today’s retail marketplace.

Authors:  Frank Layo is a partner and retail strategist in global consultancy Kurt Salmon’s Retail and Consumer Practice. He can be reached at frank.layo@kurtsalmon.com.

Sekar Sundararajan is a senior manager and retail strategist in global consultancy Kurt Salmon’s Retail and Consumer Practice. He can be reached at s.sekar@kurtsalmon.com.

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