Report On The Market For Ready To Assemble Furniture

Furniture World Magazine

The for ready-to-assemble (RTA) furniture is comprised of prefinished or unfinished, nonupholstered furniture that is purchased in component form and then assembled by the consumer. RTA furniture is typically made from particleboard or fiberboard that is laminated to resemble wood or other surfaces. The evolution of the RTA furniture industry has been driven by several factors. First, the quality of RTA furniture improved significantly during the last decade. Previously known as "knockdown" furniture, RTA furniture has become more comparable in quality and durability to wood furniture shipped assembled by the manufacturer. Second, both decorative and design innovations continue to widen the appeal of RTA products. Through technological advances, RTA furniture manufacturers have produced a finish that is almost indistinguishable from real wood. New design features, such as rounded corners and wood facings, have resulted in RTA products that are similar to much more expensive case goods. There have also been innovations in the assembly process, which previously scared many consumers away from purchasing RTA goods. New locking systems that allow for simple assembly without tools, as well as a reduction in the number of pieces requiring assembly, have contributed to reducing the amount of time required to put together these products. Some retailers are also offering add-ons such as assembly services to their customers. Demographic trends have been favorable. The baby-boom generation, which grew up with RTA furniture, is in the prime furniture-purchasing stage. Unlike older generations, these consumers are more readily accepting of RTA furniture for furnishing their homes. In addition, many of the next generation (those born a generation after the baby boomers) have turned to RTA furniture out of necessity because they are unable to afford the furniture that their parents own. Furthermore, the products offered by the RTA furniture industry have expanded significantly, with a wide range of furniture available for every room in the house. RTA products can range from a $20 television and videocassette recorder stand to a $1,000 computer work center. There has been a shift in the furniture-buying habits of consumers. An increased percentage of furniture is being purchased from discount retailers such as mass merchants, wholesale clubs, office supply stores, and home improvement centers, which now account for roughly one-fourth of all furniture sales. Historically, consumers only shopped for furniture in furniture and department stores. In addition, more case goods retailers have now enlarged their product offerings to encompass RTA products. The office superstore and mass merchant retail channels have had the most impact on the rapid growth and increased market share of the RTA furniture segment. In 1999, these two distribution channels accounted for over half of domestic sales of RTA furniture. Department stores and chains had an 11% share of the market, home improvement centers controlled 9%, and specialty stores and furniture stores and chains accounted for 6% and 9%, respectively. Lastly, lifestyle changes have favored increased purchases of RTA furniture. More people are working out of their homes, which is stimulating demand for reasonably priced office furniture. In addition, the demand for large-screen televisions and the preference for home entertainment are driving demand for home theater furniture. The RTA furniture industry includes a few large participants and many small manufacturers that operate in distinct areas. In 1999, the top five RTA furniture manufacturers accounted for more than 60% of unit shipments in the domestic market and for approximately three-quarters of retail dollar sales. Retail sales of RTA furniture have grown impressively, rising at an average rate of 14.1% per year from 1993 to 1999. This growth reflects new styles, enhanced assembly techniques, and broader distribution on the manufacturing side, as well as growing demand for RTA products on the consumer side. In 2005, retail sales are anticipated to reach $5.2 billion, up from $3.2 billion in 1999. The market for RTA furniture, with manufacturers’ shipments valued at $1.8 billion in 1999, is expected to grow at an average rate of 9.6% per year from 1999 to 2005, far outpacing the anticipated 5.7% growth rate for the wood household furniture industry as a whole. As a percentage of wood household furniture, RTA furniture will continue to expand its market share at the expense of other wood furniture, rising from 15.3% in 1999 to a projected 19.0% in 2005. This growth is expected to continue for several reasons. Manufacturers will continue to expand into different types of furniture; more consumers will recognize RTA furniture’s value and improved quality; and retailers will continue to enlarge their RTA product offerings. Source: HFN; Leading Edge Reports, The Leading Edge Group of Business Trend Analysts, Inc., 2171 Jericho Turnpike, Commack, New York 11725 (800) 866-4648