After a dramatic plunge in sales during the housing recession and a slow recovery since 2009, national furniture store chains are expanding aggressively in preparation for new household growth, and the Chicago area is a premier market for new stores.
“The Chicago market is exploding,” said Jerry Epperson, furniture analyst and managing director of Mann, Armistead and Epperson, in Richmond, Va.
Furniture sales follow home buying, and as mortgage financing picks up and employment improves, furniture companies want to fill in areas of the country that now are considered “understored,” Epperson noted. Chicago and many areas “lost a tremendous number of stores during the recession,” and furniture companies are expanding into those areas “at a rate not seen since the 1970s.”
The goal: “Inherit people orphaned when stores closed,” while also preparing for the formation of new households as millennials approach the peak spending years between age 35 and 54, he said.
Millennials, born between 1982 and 2004, are currently struggling through relatively low incomes and often extraordinary student debt, but they are perceived to eventually become a massive consumer force. Estimated at 83 million by the Census Bureau, which includes people born only to 2000, they outnumber 76 million baby boomers.
The baby boomers also will be prime customers, notes Anderson Bauman Tourtellot Vos in a report on the American furniture industry. As they retire, the boomers are discovering that their old furniture doesn’t look right or fit in retirement homes that are often smaller than homes where parents raised families, the Greensboro, N.C.-based consultants said.
“The American furniture industry is at a turning point,” after a recent spurt in sales following a 13 percent plunge in 2009, said the consultants. But they warned that the furniture business must change to appeal to a generation with different tastes and a tendency to shop online for price.
In the Chicago area, the furniture store expansion involves a wide range of companies — from the nation’s largest furniture retailer, Ashley, to discounter Bob’s Discount Furniture, middle-range company Art Van and classic American furniture store Ethan Allen.
During the summer, Ashley completed a 454,525-square-foot distribution center in Romeoville to serve the greater Chicago and Milwaukee markets.
There are currently 22 Ashley stores in Illinois. The company is looking for additional locations in the Chicago area, said Ashley spokesman Cole Bawek.
Analysts say that in an era of quick deliveries from online providers such as Amazon, having fast distribution has become essential. In a conference call with investors last month, Ethan Allen Chief Executive M. Farooq Kathwari emphasized company efforts to get furniture to homes quickly.
The company has been analyzing changing customer preferences driven by online competition and the rise of millennials. To appeal to them, Ethan Allen has been adding more casual furniture to the classic American furniture it’s sold for 83 years, said Kathwari in an interview.
Ethan Allen recently announced a plan to start selling Disney-inspired furniture this summer. The idea is to provide unique pieces that appeal to young adults and their children — furniture Ethan Allen describes as sophisticated, fun and durable.
The company currently is looking for a new location in Lincoln Park, which would put it near young adults and families — urban customers often living in condos, apartments or smaller places. It’s a different customer base than the mainstream handled by massive suburban showrooms in the past.
The store would be smaller than the typical suburban Ethan Allen location, Kathwari said. Ethan Allen previously had a store near Steppenwolf Theatre but gave it up when the theater desired the space, said spokeswoman November Rawlings.
Analysts note that many millennials are interested in living in cities rather than the suburbs. “They don’t want to go through the effort of driving to a store, parking and walking around to make purchases,” said Jason Dorsey, founder of Center for Generational Kinetics, a consulting firm focused on millennials.
Dorsey advises executives they can still appeal to millennials if they help customers see how a piece of furniture will fit with other items in a room. But rather than going to stores and sitting on sofas, millennials are just as likely to hunt for an item online at a good price. They also share photos of furniture on Instagram with friends and ask for approval of potential purchases, he said.
They want unique furniture, he said, so their social media pictures don’t show them with the same furniture everyone has seen. The challenge for furniture companies is that millennials want unique designs, available fast and at inexpensive prices. Millennials also may be concerned that they will pick furniture their friends recognize as familiar, Dorsey said.
Above all, he added, “millennials don’t want their parents’ furniture.” He thinks parents will adopt their children’s taste rather than the other way around, and he said furniture stores “will die when their customers die” if they don’t change.
“Consumer preferences are changing dramatically as the baby boomers exit, and a younger generation enters the market,” noted Anderson Bauman Tourtellot Vos. “In order to groom new customers, retailers will need to find a way to meet the younger generation where they are — on the Internet and in social media.”
Yet, a challenge for the industry, notes the report, is while the “industry is changing, it’s image isn’t.”
Aware that social media and comparison shopping via mobile devices are critical to the younger generation, Art Van, which is expanding in Chicago, is putting iPads on the showroom floor. And it’s been adding mixed metals and “a rustic loft look” to appeal to urban customers, said Diane Charles, spokeswoman for Art Van.
After a push into the Chicago suburbs with 12 stores in the last two years, Detroit-based Art Van’s goal is to have up to 20 stores in the Chicago area, Charles said.
Bob’s Discount Furniture, an East Coast retailer owned by private equity firm Bain Capital, is opening stores this month in Skokie, Burbank, Orland Park, Villa Park and Aurora and working on the destination concept by including cafes with complimentary coffee, ice cream, cookies and candy. In the spring, the company will be opening stores in Schaumburg and Calumet City.
Preparations were laid with a 752,000-square-foot warehouse in Shorewood. Besides stores in the Chicago area, the company plans to open stores this spring in Merrillville, Ind., and Latham, N.Y.
Becky Yerak contributed.
Twitter @gailmarksjarvis
