HIGH POINT — The 25 largest furniture and bedding retailers in the nation combined for a 7.5% increase sales in the category last year, fueled largely by the two e-commerce giants on the list.
Estimated 2018 furniture and bedding sales for Furniture Today’s Top 25 popped up to $45.7 billion from $42.5 billion for the same companies last year. The increase came despite a slight dip in how much furniture and bedding revenue it took this time to make the cut.
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That 7.5% combined growth rate fell short of the 10.3% increase for the previous Top 25 list but bested the 3.3% increase for retailers on Furniture Today’s 100 U.S. Furniture Stores survey, which ranks companies a bit differently by including sales for the broad home accents category.
This was the fourth time in five years that the Top 25’s growth rate beat the Top 100’s rate (they tied one year with the same 2015 sales gain), arguably reflecting that many of the biggest furniture players continue to getter bigger and grab more market share.
As if to prove it, the Top 25 also beat the 6.8% growth rate in 2018 for all U.S. furniture stores (which happened to be the first time 10 years at all-stores growth beat the Top 100’s growth rate; still not enough to beat the Top 25).
There are 10 channels of distribution represented on the Top 25 ranking, the same as last year and ranging from traditional furniture stores to manufacturer-dedicated stores to warehouse clubs, to pure-play e-commerce companies, the latter referred to here as the direct-to-consumer channel.
And it’s that direct-to-consumer channel — consisting of Boston-based Wayfair and Seattle-based Amazon — that enjoyed the largest gain in market share and the best percentage sales growth of any channel. Amazon and Wayfair combined for an estimated 35.8% increase in estimated furniture and bedding sales last year. The channel has led the growth parade every year for the past five years, every year since the channel first debuted on this ranking with Wayfair’s first appearance.
This year’s direct-to-consumer channel growth rate pales in comparison to the 128.9% increase the previous year, but that’s because No. 6 Amazon was added to the Top 25 for the first time last year, effectively doubling the channel’s representation and juicing its combined revenues by some $2 billion.
Last year, direct-to-consumer was the only channel that managed to outpace the Top 25’s combined sales growth rate, but this year it was joined in the feat by the rental stores channel (up 10.2%) and manufacturer-branded stores (up 8.3%). Two channels were in negative territory: bedding specialty stores and office supply stores, down 1.2% and 1.3%, respectively.
The Ashley HomeStore dedicated store network repeated at No. 1 on the Top 25 for the 10th consecutive year. Its 658 U.S. stores — a mix of company-owned and licensed units — did an estimated $4.34 billion in sales last year, up 9% from the year before when Ashley’s U.S. HomeStore network consisted of 607 stores.
There were no changes in the makeup of the list this year, but there was a fair amount of shuffling in the ranks, most notably by Boston-based Wayfair, which ascended to No. 2 spot from No. 6 the year before. The publicly held company posted the greatest sales gain of any Top 25 retailer, with furniture and bedding sales up 40% to an estimated $3.25 billion.
Amazon posted the next best gain, with estimated furniture and bedding sales increasing 30.9% to $2.62 billion, according to an estimate developed by Strategic Insights, the research arm of Furniture Today.
The only other Top 25 retailer with a double-digit sales gain last year is No.15 Bob’s Discount Furniture, the Manchester, Conn.-based conventional furniture store chain that has been expanding rapidly into major metro markets across the country.
Bob’s ended the year with 104 stores — up 15 from the year before — and a nearly 12% increase in furniture and bedding sales to $1.42 billion. The company already has opened more than 15 stores this year.
Once again, the e-commerce channel carved out more market share than any other, picking away at most of the other channels. Its share grew to 12.9% of total Top 25 sales vs. 10.2% for the channel and same companies a year ago.
Most other distribution channels represented in the ranking saw a slight decline in market share, unlike the year before when six of the 10 channels experienced share growth. The other exceptions to declining share this time: manufacturers-branded stores, which includes La-Z-Boy Furniture Galleries in addition to Ashley HomeStore, holding flat with a 12.1% share; and rental stores, which gained a little ground to a 5.7% share vs. 5.6% the previous year.
The bedding store channel, comprised of No. 3 Mattress Firm and No. 16 Sleep Number, lost the most share, down nearly one percentage point to 10%, thanks to troubles last year at Mattress Firm and its estimated sales decline of 4.1% to $3.24 billion.
Despite a 6.5% sales gain for Sleep Number to an estimated $1.34 billion, the bedding channel was one of only two suffering sales decreases over the year before. The other was the office supply stores channel and its lone representative Staples, where sales in the category were off 1.3% to an estimated $738.5 million.
The traditional furniture stores channel, represented by seven companies and led by No. 7 Rooms To Go ($2.51 billion in furniture and bedding sales), continued its reign as the largest of the 10 distribution channels. But like the bedding stores and most other channels, its share shrank — by 0.8 percentage points to 22%.
The lifestyle furniture stores channel — consisting of No. 5 Ikea, No. 8 Williams-Sonoma and No. 12 RH, held on to the second largest share but dipped to 13.4% from 13.7% a year ago.
On the store front, the Top 25 had a combined store count of 21,473 units, down a net 362 stores from the year before. That compares to a 301-store decline for last year’s Top 25. The bulk of the decrease this time was due to consolidation at Mattress Firm (down 256 stores in the past fiscal year), but also consolidation by the rental stores channel. No. 22 Rent-A-Center dropped a net 223 stores, and No. 11 Aaron’s cut its store count by a net 37 units.
The greatest net growth in physical stores came from the Ashley HomeStore network, up a net 51 stores.
The cutoff for making the Top 25 declined slightly to $725.7 million for No. 25 Havertys from the previous $727.7 million (also for Havertys).