Understanding Homeware Market Shifts
- Investment has pivoted away from home accessories into big-ticket items, such as kitchen fixtures and sofas. Given the financial challenges consumers are facing, refocus assortments to prioritize value homeware, cost of living essentials such as throws and battery-powered lighting or niche categories like pet care.
- Inflation has primarily impacted office furniture, kitchen and dining, bathroom and home accessories. Keep costs low for larger articles by partnering with second-hand furnishing platforms, which are experiencing cost stability.
- Furniture for the office and outdoors was targeted for Black Friday reductions at UK retailers, while home accessories bore the steepest markdowns in the US. As economic headwinds continue, build discounts into cost price negotiations to minimize margin impact during peak sale events.
- Continue communications around saving money and reducing bills into 2023. The bleak economic conditions will also influence decor trends such as the contrasting Weird Girl aesthetic and minimal Scandi style, which should be spotlighted in campaigns.
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.
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.
While prices are climbing, second-hand furniture listings have remained flat, according to resale site Chairish.
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%.
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.
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%.
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.
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.
Cost Of Living – Retailer Support & Communications
Daily Tracker – Visual Merchandising & Discount Codes
Weird Girl Aesthetic
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
Avg Disc. Proportion = Average Discount Proportion / Avg Disc. Depth = Average Discount Depth
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