The aftermath of the collapse of the renowned furniture brand Habitat has sent ripples through the home decor industry. Furniture and home decor companies are grappling with challenges that are reshaping the market landscape. The most recent blow came with the judicial liquidation of Habitat. The strains on household purchasing power, inflation in raw material costs, the real estate crisis and the intensifying competition from discount and bargain brands are compelling these companies to innovate and evolve, lest they face a similar fate, mentions Capital.
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The challenges confronting the home decor and furniture sector are multifaceted, ranging from economic downturns to amplified competition. While some companies like Habitat and Made.com have succumbed to the pressure, others, including Maisons du Monde, are striving to weather the storm. Maisons du Monde, with a sales dip of 9.8% in the first nine months of 2023, has pledged a comprehensive transformation plan set to roll out in the initial quarter of 2024. Additionally, Alinéa and Zodio consolidated their efforts last August, aiming to achieve critical mass and restore profitability.
In France, the home decor market, which reached a staggering turnover of 13 billion euros in 2023, is now witnessing a downturn. Sales have plummeted by 6.5% in volume and 1.5% in value over the course of 2023.
It’s not just the economic scenario but also the mounting competition from hypermarkets, supermarkets, and stores specialising in discounts. Platforms like TEDi, Stockomani, Action, and second-hand marketplaces such as Leboncoin are vying for a slice of the home decor market. Over twenty brands hold sway over 70% of decoration article sales, with Ikea at the forefront, commanding a 10% market share. Leclerc, Maisons du Monde, Action, GiFI, and Leroy Merlin closely follow suit.
Given this challenging landscape, what strategies are brands adopting to stand out? With the declining number of physical stores due to soaring rents, brands are exploring new distribution channels. Options include venturing into e-commerce, potentially joining a marketplace, or forming partnerships with other retailers. An example of the latter approach is the move made by Geneviève Lethu in early 2023. The tableware brand, absent from the scene for nearly a decade, rekindled its presence by launching a collection of 300 products via dedicated corners in Casino, Carrefour, and Leclerc stores.
Concurrently, entering the second-hand and used goods markets has become crucial. Consumers are increasingly drawn to this approach for purchasing items at reduced prices. Many brands, including La Reboucle (La Redoute), Maisons du Monde, Leroy Merlin with Selency, Ikea, and Gautier, are recognising this trend and tapping into this market.
Yet, despite brands' concerted efforts to revitalize their appeal, a market turnaround isn't imminent. Data suggests that the sector might not regain momentum until 2025. Factors contributing to this projected timeline include improved purchasing power, a rebound in real estate transactions, and consequentially, a resurgence of consumers visiting stores to furnish their homes.
Source: www.capital.fr
