Understanding Homeware Market Shifts

The Products Stocked

There has been a move away from home accessories – 2021’s most-stocked category driven by curtains, rugs and wall art. Investment has since been reallocated into larger pieces, evident by living room items making up the highest proportion of US assortments, with retailers backing sofas. While kitchen accessories are a significant percentage of the UK’s top category, assortments are geared toward more costly kitchen furniture and fixtures. This reflects a departure from encouraging consumers to personalize their spaces with small, affordable touches, which was commonplace during the pandemic. Meanwhile, home office furniture has been waning as people return to work, with this category sinking to 1% and lower across global assortments.

Niche categories are on the rise, with retailers buying into the booming pet economy. Products described as pet care have risen 96% in the US and 58% in the UK, with Dunelm, Target and John Lewis & Partners some of the top stockists. Ahead of the festive period, seasonal decorations swelled 172% and 25% in the US and UK, respectively. Rising costs have shaped retailers’ assortments to focus on keeping customers warm and energy bills low. The number of throws and blankets available has increased by 42% in the US and 30% in the UK. Across both markets, lighting described as LED or battery-powered jumped 70% YoY.

US Homeware Breakdown 2021In Stock Dec 2, 2021
US Homeware Breakdown 2022In Stock Dec 2, 2022
UK Homeware Breakdown 2021In Stock Dec 2, 2021
UK Homeware Breakdown 2022In Stock Dec 2, 2022

The Categories Impacted by Inflation

52% of UK consumers intend to spend less on furniture ahead of Christmas, compared to 47% planning to cut back on clothing and electronics expenses.1What the softening of the homeware market means for fashion players – Drapers Meanwhile, the annual inflation rate for furniture and household goods has risen by more than 10% YoY in the US. Analyzing the current average prices reveals which homeware areas bear the brunt of inflation – office furniture and kitchen and dining experienced the highest market-wide increases YoY between 32%-114% and 21%-104%, respectively. Home accessories are more expensive YoY in the US, up 23%, while bathroom products rose 109% YoY in the UK.

While prices are climbing, second-hand furniture listings have remained flat, according to resale site Chairish.22022 Home Furnishings Resale Report – Chairish The platform revealed that pre-loved bed frames and sofas have the highest demand due to the increased costs of buying these items new. While the bedroom category noted a YoY decline in average price points, diving deeper reveals frames are 15% more expensive YoY in the US and 13% in the UK (excluding children’s beds). And while sofas prices held YoY at US retailers, they are 10% more expensive in the UK. This makes the resale market attractive for homeware shoppers purchasing larger items during the current economic climate and calls for homeware retailers to explore partnerships with second-hand sites if they can’t compete on prices for big-ticket furnishings.

US Current Prices By CategoryIn Stock Dec 2, 2021 vs. 2022
UK Current Prices By CategoryIn Stock Dec 2, 2021 vs. 2022

Discount Evolution

Overall discounting at US retailers is more conservative for home goods. On Black Friday, 49% of fashion ranges were marked down at an average of 49%. 3Black Friday 2022 Analysis – US – EDITED In comparison, 35% of homeware was reduced for the event, a 3pp increase YoY, with an average discount depth of 31%, shallower than 2021’s rate of 48%.

Across all categories, retailers discounted a higher percentage of stock compared to Black Friday last year at the same time as pulling back on the depth of markdowns, using the sale to move products in this struggling category, while avoiding bullish reductions eating into margins. At 39%, home accessories received the steepest discounts, suggesting retailers wanted to bypass heavy reductions on higher-costs items.

US Black Friday Advertised Discount ProportionsIn Stock Nov 25, 2021 vs. 2022
US Black Friday Advertised Discount DepthIn Stock Nov 25, 2021 vs. 2022

Similarly, Black Friday in the UK doesn’t yield as hefty markdowns for homeware. 65% of fashion products were reduced for the event, clocking an average discount of 36%.4Black Friday Analysis 2022 – UK – EDITED Homeware retailers in this region discount deeply rather than broadly, with only 4% of stock advertised on sale on Black Friday, up 1pp YoY. While the depth of price cuts fell 2pp to an average of 20%, this was influenced by shallower discounting for living room items, which was the only category with more pared-back reductions YoY.

Living room items instead experienced a significant rise in the percentage of products reduced YoY. Differing from the US, the most aggressive markdowns were applied to office and outdoor furniture, averaging 26% and 29%, as consumers are clearly avoiding paying full price on big-ticket homeware items as living costs fluctuate.

UK Black Friday Advertised Discount ProportionsIn Stock Nov 25, 2022 vs. Nov 26, 2021
UK Black Friday Advertised Discount DepthIn Stock Nov 25, 2022 vs. Nov 26, 2021

Key Communications Stories

Over the past three months, homeware retailers have geared their communications towards power-saving tips illustrating how customers can stay warm this winter as living costs increase. Soft, cozy furnishings have become the center of campaigns featuring statement throws, heating appliances and cozy soft-touch textiles. Low-impact homeware was called out at B&Q, which promoted sustainable bathroom swaps to save water and energy, while Toast educated consumers on its sourcing processes and fiber selections.

Following the slew of Christmas and Black Friday advertising, homeware retailers should be preparing to make some noise around fresh arrivals in 2023. Already, Urban Outfitters, Loaf and Amara are tapping into idiosyncratic designs, a key trend for 2023 encapsulating the Weird Girl aesthetic through clashing colors, fabrics and patterns and irregular-shaped objects.

Further Reading:
Cost Of Living – Retailer Support & Communications
Daily Tracker – Visual Merchandising & Discount Codes

Staying Warm

Saving Energy

Weird Girl Aesthetic

Festive Decorations

Sustainable Materials

Black Friday

Appendix

Date analysis
Products in stock Dec 2, 2021 and 2022
Products in stock Nov 26, 2021 and Nov 25, 2022
Price analysis including prices up to $/£10,000

Abbreviations
Avg Disc. Proportion = Average Discount Proportion / Avg Disc. Depth = Average Discount Depth

Retailers considered:
Anthropologie, Arket, Bed Bath and Beyond, Crate & Barrel, Dunelm, H&M, Habitat, IKEA, John Lewis & Partners, Madewell, Pier 1, Pottery Barn, Target, The White Company, Urban Outfitters, Zara Home