Furniture retailers like Wayfair suffer as fewer people buy homes
Furniture retailers like Wayfair suffer as fewer people buy homes
It’s not a great time to be in the furniture business. This week, Wayfair reported a $42 million loss in the last quarter. The company’s CEO compared the current drop in demand for home goods to the 2008 financial crisis.
Turns out, after a furniture buying boom in the early days of the pandemic, consumers are tightening up their spending in the home.
Besides Wayfair, furniture retailers RH, Ethan Allen and Williams-Sonoma have all seen revenue declines in recent months. Turns out, the furniture industry is feeling some collateral damage from a stuck housing market.
With mortgage rates still elevated, people aren’t buying many new houses. That means they also aren’t buying many new beds, dressers or nightstands to fill those houses, per Neil Saunders, a retail analyst at GlobalData.
“The home furnishing industry is really in the doldrums at the moment. We’ve had a couple of years of very, very sluggish performance,” he said.
Even setting aside the slow housing market, big-ticket furniture items “are expensive,” Saunders said. “And a lot of people either don’t have the confidence to buy those things, or they don’t have the finances to buy those things.”
Some furniture items are selling better than others, according to Mintel analyst Rebecca Watters.
“We saw more investment and purchases happening in these high traffic, high visibility areas,” she said.
Think: living room couches and dining room tables. That’s in part thanks to inflation elsewhere in the economy, Watters said, which has people telling their friends, “‘I want you in my home because it’s a little bit more cost-effective than going out to dinner now.'”
A possible rate cut by the Federal Reserve in September could help unstick the markets for homes, Watters added — and boost sales of stuff to fill them with.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
