{"id":14944,"date":"2025-03-18T04:19:37","date_gmt":"2025-03-18T04:19:37","guid":{"rendered":"https:\/\/dmsretail.com\/RetailNews\/retails-home-sector-has-yet-to-find-steady-ground\/"},"modified":"2025-03-18T04:19:37","modified_gmt":"2025-03-18T04:19:37","slug":"retails-home-sector-has-yet-to-find-steady-ground","status":"publish","type":"post","link":"https:\/\/dmsretail.com\/RetailNews\/retails-home-sector-has-yet-to-find-steady-ground\/","title":{"rendered":"Retail\u2019s home sector has yet to find steady ground"},"content":{"rendered":"<p> <p><a href=\"https:\/\/dmsretail.com\/online-workshops-list\/\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-496\" src=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\" alt=\"Retail Online Training\" width=\"729\" height=\"91\" srcset=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png 729w, https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90-300x37.png 300w\" sizes=\"auto, (max-width: 729px) 100vw, 729px\" \/><\/a><\/p><br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><\/p>\n<p>            <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.retaildive.com\/static\/images\/audio_icon.svg?482016190122\" alt=\"\"\/><\/p>\n<p>        Listen to the article<br \/>\n        <span class=\"text-to-speech__button__audio-length\">10 min<\/span><br \/>\n    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/res.cloudinary.com\/dmgi9movl\/video\/upload\/q_1\/v1742220664\/news\/text_to_speech\/retail-home-sector-pandemic-impact-five-years-later_sbokvt.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have feedback.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<p>Few sectors of retail showed the life-altering impact of the pandemic more than the home category.<\/p>\n<p>The sector saw both highs and lows over the past five years. And while signs of normalization are emerging, home goods retailers \u2014 and the industry more broadly \u2014 are bracing for new challenges ahead.<\/p>\n<p>At the onset of the pandemic, sales at home goods retailers skyrocketed. Life largely shifted to revolve around the home: For many individuals, homes very quickly became remote offices and classrooms in an attempt to slow the spread of the virus. Recreational activities also moved to the home, with consumers testing the latest viral trend in the kitchen or binging the newest TV series from their couches.<\/p>\n<p>That, in turn, meant demand for home items increased as consumers sought products to make their new normals a bit more comfortable.<\/p>\n<p>\u201cWhat happened during the pandemic was a very disjointed reality for consumers because we shifted from using our home and using our dollars that we spent on our home in a very social, engaging way to one that was much more utilitarian,\u201d Greg Portell, a senior partner and global markets lead at Kearney, said. \u201cCompanies that provided office space, utility types of purchases \u2014 because we were stuck at home \u2014 did very, very well. But the entertaining type of categories suffered because we weren&#8217;t entertaining during that time period.\u201d<\/p>\n<p>Wayfair \u2014 which sells a variety of home goods from office desks and chairs to couches to kitchen products \u2014 experienced a boost in sales early in the pandemic. The company recorded an annual net profit for the first time in 2020 after making its public market debut in 2014.<\/p>\n<p>The pandemic created a unique scenario that fueled demand in the sector and pulled forward many purchases, according to Joe Derochowski, Circana\u2019s home industry adviser.<\/p>\n<p>\u201cWe basically sold four to five years worth of stuff in one year. So an industry that was already hot went really, really hot,\u201d Derochowski said.\u00a0<\/p>\n<p>However, as restrictions eased and vaccines allowed consumers to return to many aspects of their pre-pandemic lives, home retailers took a hit.<\/p>\n<div class=\"ed-chart ed-chart__datawrapper\" data-source=\"snorkel-form\">\n<h4 class=\"ed-chart__title\">Home furnishing sales grew early in the pandemic before demand quickly declined<\/h4>\n<p>Monthly retail sales, in billions of dollars, released by the U.S. Department of Commerce between 2019 and 2024.<\/p>\n<p><iframe aria-label=\"Interactive line chart\" data-external=\"1\" frameborder=\"0\" height=\"359\" id=\"datawrapper-chart-al1j7\" scrolling=\"no\" src=\"https:\/\/datawrapper.dwcdn.net\/al1j7\/3\/\" style=\"width: 0; min-width: 100% !important; border: none;\" title=\"\"><\/iframe><\/div>\n<p>Up until recently, sales from furniture and home furnishing stores steadily declined on a year-over-year basis, according to monthly numbers from the U.S. Department of Commerce\u2019s Census Bureau.<\/p>\n<p>A declining housing market coupled with increasing inflation also caused demand in the home goods category to decline, according to Darpan Seth, CEO of Nextuple, an omnichannel order management advisory and software firm.<\/p>\n<p>The macroeconomic factors only accelerated the decline of retailers that were already facing challenges, leading to several bankruptcies in the space including from Bed Bath &amp; Beyond, Z Gallerie and Mitchell Gold and Bob Williams in 2023 and The Container Store and Tupperware last year.<\/p>\n<p>\u201cIt all swung back to the other side \u2014 big decline,\u201d Seth said. \u201cThere was 10% growth during the pandemic. There was another 7% decline thereafter.\u201d<\/p>\n<h3>Where we are now<\/h3>\n<p>While home retailers have experienced both highs and lows over the past several years as demand shifted, there are signs the space is normalizing.<\/p>\n<p>Home goods sales were up year over year in the last three months of 2024, and that growth continued into the new year with the sector experiencing a 5.2% increase in January, according to the Commerce Department.<\/p>\n<p>Growth has extended beyond home furnishings. Within home improvement, The Home Depot last month reported its first quarterly comparable sales gain in two years.<\/p>\n<p>Kitchen appliance sales hit $10 billion in 2024, according to Circana data. While that\u2019s below the early pandemic levels of 2021 and 2022, it marked an increase from the prior year. Other categories across the sector experienced gains as well: home environment appliances grew nearly 3% year over year, housewares were up 0.6%\u00a0and home textiles expanded 8.2%.<\/p>\n<div class=\"ed-chart ed-chart__datawrapper\" data-source=\"snorkel-form\">\n<h4 class=\"ed-chart__title\">Home categories are on the rise again&#8221;<\/h4>\n<p>Dollar sales, in billions, of home categories between 2021 and 2024.<\/p>\n<p><iframe aria-label=\"Interactive line chart\" data-external=\"1\" frameborder=\"0\" height=\"360\" id=\"datawrapper-chart-m83ZF\" scrolling=\"no\" src=\"https:\/\/datawrapper.dwcdn.net\/m83ZF\/7\/\" style=\"width: 0; min-width: 100% !important; border: none;\" title=\"\"><\/iframe><\/div>\n<p>While sales in the sector broadly are increasing, several retailers have yet to recover. RapidRatings tracks both long- and short-term indicators into how individual companies are performing through its Financial Health Rating, which measures the likelihood of default over the next 12 months, and its Core Health Score, a financial health measurement that looks at the long-term sustainability and operational efficiency of a company. Both measurements are on a 100-point scale, with 100 being the best score and 0 being the worst.<\/p>\n<section class=\"storylines-carousel-wrapper hide-small show-large\" id=\"desktop-carousel\"\/>\n<p>As of late February, Beyond Inc. \u2014 which formed following Overstock\u2019s acquisition of Bed Bath &amp; Beyond out of bankruptcy and now also includes Zulily \u2014 had an FHR of 34 and a CHS of 27, both representing high risk of default. The company last month reported fourth-quarter net revenue fell over 20% to $303 million, while full-year revenue fell 10.6% to $1.4 billion. And just last week, amid a flurry of C-suite changes, the company announced Executive Chairman Marcus Lemonis became its principal executive officer after 16-year company veteran Dave Nielsen was terminated.\u00a0<\/p>\n<p>Wayfair\u2019s current FHR is 23 and its CHS is 30, also making the online home goods retailer a high risk of default. In its most recent quarter, Wayfair reported revenue inched up just 0.2%; for the year, revenue fell 1.3%. The retailer has also initiated several rounds of layoffs in recent years, with the latest announced earlier this month.<\/p>\n<p>And Kirkland\u2019s, which announced last month plans to update or close 6% of its store footprint as part of a turnaround effort, has an FHR of 24 and a CHS of 29. Kirkland\u2019s in June announced it hired a financial adviser to review strategic alternatives for the company. The home goods retailer in the fall inked a deal with Beyond, which involves the return of Bed Bath &amp; Beyond stores in a smaller format, while Kirkland\u2019s received $17 million in debt financing from Beyond.<\/p>\n<p>While Kirkland\u2019s Financial Health Rating and Core Health Score put it at high risk of default, it\u2019s not necessarily a death sentence. But it\u2019s not an encouraging sign either, according to RapidRatings Executive Chairman James Gellert.<\/p>\n<p>\u201cThat doesn\u2019t mean that a 24 is going to file for bankruptcy, but it means it certainly is susceptible to all of the things that could make that happen,\u201d\u00a0Gellert said.<\/p>\n<p>But to put it into perspective, when The Container Store filed for Chapter 11, it had an FHR of 33, LL Flooring had a score of 30 and Big Lots had a score of 27, according to RapidRatings.<\/p>\n<section class=\"storylines-carousel-wrapper show-small hide-large\" id=\"mobile-carousel\"\/>\n<p>The risk for companies that file for bankruptcy \u2014 even if they\u2019re able to exit largely unscathed \u2014 is a loss of customers, especially within the home sector where consumers are less loyal to particular brands and retailers.<\/p>\n<p>\u201cOnce consumers have gone away from buying from you to other places, they usually don&#8217;t come back,\u201d Nextuple\u2019s Seth said. \u201cYou can secure financing and you can try to prop it up, [but] it\u2019s very difficult to climb out of a bankruptcy for companies in this space in particular.\u201d<\/p>\n<h3>What\u2019s ahead<\/h3>\n<p>On top of fluctuating demand over the past several years, home retailers are facing a number of macroeconomic factors, including inflation and uncertainty around key political issues.<\/p>\n<p>As President Trump took office at the top of the year, concerns over tariffs \u2014 and their potential impacts to both retailers and consumers \u2014 intensified.\u00a0<\/p>\n<p>While tariffs on goods from Mexico and Canada are less likely to deal a significant blow to the home goods sector, the 10% tariff hike on imports from China may force more pressure onto retailers, according to Cristina Fern\u00e1ndez, Telsey Advisory Group managing director and senior research analyst.<\/p>\n<p>The 10% increase, which would up the ordered rate to 20%, would likely \u201ctranslate into a low-single-digit price increase for those goods,\u201d based on what happened after previous tariffs went into effect during Trump&#8217;s last term, Fern\u00e1ndez said. However, she noted those cost increases will likely be \u201cmanageable\u201d for retailers.<\/p>\n<p>But as consumers grapple with price increases across all sectors of retail, the home category could still stand to reap some benefits. Circana\u2019s Derochowski points to trends coming out of the Great Recession as something the industry could expect to see in the months ahead.<\/p>\n<p>\u201cWhen the recession hit, the consumer who used to eat at restaurants a lot, that younger consumer, started to eat more at home because it was cheaper and they started to entertain more at home,\u201d Derochowski said.\u00a0<\/p>\n<p>On top of that, he added, consumers are starting to hit the replacement phase for high-frequency use items that were bought early in the pandemic.<\/p>\n<p>\u201cBottom line is: We have been in a growth phase the back part of the year, and I suspect that that should continue going forward,\u201d Derochowski said.<\/p>\n<\/p><\/div>\n<p><p><a href=\"https:\/\/dmsretail.com\/online-workshops-list\/\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-496\" src=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\" alt=\"Retail Online Training\" width=\"729\" height=\"91\" srcset=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png 729w, https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90-300x37.png 300w\" sizes=\"auto, (max-width: 729px) 100vw, 729px\" \/><\/a><\/p><br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Listen to the article 10 min This audio is auto-generated. 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Few sectors of retail showed the life-altering [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14945,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-14944","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/14944","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/comments?post=14944"}],"version-history":[{"count":0,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/14944\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media\/14945"}],"wp:attachment":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media?parent=14944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/categories?post=14944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/tags?post=14944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}