The broader global market for furniture is estimated to be worth $671.7 billion by 2021. Online furniture vendors make up a significant (and growing) portion of the industry. The report describes the online furniture market as “concentrated,” with few players occupying the market. Leading companies in this segment include Chinese company Alibaba Group Holding; American companies Amazon, American Signature, Ashley Furniture, eBay, Herman Miller, and Steelcase; Swedish company IKEA; and German company Steinhoff International Holdings.
Despite years of expansive growth, many of these companies saw significant sales declines during the COVID-19 pandemic as consumers saw their income drop amid widespread unemployment. IKEA, for example, reported in its Q4 earnings that UK sales for 2020 dropped by 10% ($2.7 billion) as a result of the pandemic. The Q4 report revealed that online sales remained a strong point, surging 31% year-on-year, meaning online sales now represent 27% of total UK sales compared to 10% the year before. American online retailer Wayfair reported a similar phenomenon: the company fell short of revenue projections ($3.67 billion instead of the $3.76 billion expected) but saw a comeback in Q4 with its number of active customers rising 53.7% to 31.2 million.
The pandemic has been difficult for online furniture companies and is projected to have an impact during the forecast period through 2024. The report says this impact will be “significant” during the first quarter, but will gradually lessen in subsequent quarters. In total, the market is expected to grow $82.26 billion between 2020 and 2024. The COVID-19 pandemic has, as mentioned, had a tangible impact on growth, however, slowing the compound annual growth rate (CAGR) by 16%. Nonetheless, the market will see expansion over the next few years, with Asia-Pacific serving as a major contributor to growth.
Factors Driving Growth
A number of cultural factors will drive growth in the online furniture industry, including a general rise in online shopping using online devices. As the ecommerce market has matured, more advanced methods for online shopping and purchasing goods have developed, a trend that is expected to continue in the immediate future. “As the global online furniture industry rises, growing online purchases serve as the main market driver,” the report explains.
Another factor that will drive growth, according to the report, is a growing preference for customizing furniture. More and more people project their individual preferences onto their shopping choices, which has given rise to a subset of new online companies catering to these demands.
The online furniture market is one of many industries knocked by the COVID-19 pandemic. However, this report predicts recovery for the market, while a number of shifting consumer trends reveal that online furniture shopping is increasingly becoming the dominant preference among consumers.
About the Author
Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.