There is a strange belief that when the calendar turns to a new year, all kinds of strange and wonderful changes will magically happen. Anyone who’s dived headfirst into ambitious New Year’s resolutions will know that’s not always the case.
But when it comes to home furnishing retail, it could happen this year. A lot will change in 2023 — enough that even if some aspects of the business remain the same, you’ll definitely notice a difference.
On the “wow, glad things have calmed down” front, we may see continued stabilization of supply chains, significant easing of price pressures, and a shift in buying patterns to pre-pandemic levels. The three-year flogging wave should be just a memory, although not necessarily a good one. As for the long-forecast recession, some are now saying it will be milder than expected; others are even predicting it will never come. Still, all the chatter could end up being a self-fulfilling prophecy.
As the new year approaches, here’s a breakdown of where the home furnishing industry can expect more and more (more or less) to arrive.
Perhaps the most exciting news for the retail landscape in 2023 are two highly anticipated new stores that could be game-changing in their markets. On the other side of the Atlantic, the first RH store in Europe is scheduled to open this spring or summer. RH UK (at least, that’s what I’m calling it) is housed in a historic building about an hour from London, and it has a retail section, a couple of restaurants, and enough classic British style to keep everyone entertained The fascination upstairs and downstairs. This is Europe’s first foray into a major push for RH, with more locations planned in Germany, France and elsewhere in the coming years. RH will once again be the most influential home furnishing retail business; by 2023, it will do so not only domestically but also internationally.
Another new store to watch in the new year is back this side of the Atlantic: The first-ever Wayfair store is expected to open this spring in the Chicago market. Spanning approximately 125,000 square feet, it will be the e-commerce giant’s first brick-and-mortar presence and will showcase the brand’s omnichannel push. In 2022, the company is opening several smaller outposts for sub-brands like AllModern and Joss & Main; the Wayfair store puts the company firmly on the path beyond the digital world — but it needs to be Wayfair to invest in The slam dunk proves to investors and clients that it can be successful in the real world.
Another piece of home furnishing industry expansion expected in 2023 involves market share gains for dollar stores, discounters, and deep discounters (think Ollie’s), all of which would benefit from a possible recession, or at least recession-fringing conditions. It’s not necessarily good news for those who give up market share – more on that below – but the impact will be spread out so the changes will be subtle.
Bed Bath & Beyond’s biggest home furnishing retail contraction in 2023 could involve — not that it will necessarily close or cease to exist, but it will likely be forced into bankruptcy sometime next year, and doing so will be part of the process. The other end of the scale appears smaller, with fewer shops. Making specific predictions about the fate of this retail collapse is a risky endeavor, as there’s a (slight) chance it might just muddle through and avoid the worst. But there’s a reaction to every move, and if Bed Bath & Beyond were to downsize, that would undoubtedly open up market share opportunities for competitors like At Home, HomeGoods and Wayfair. It’s not a zero-sum game — some sales will disappear — but some will show up in other retailers’ earnings.
Even a few months ago, people would have said you were crazy if you said 2023 was the year online sellers would be part of the downturn. (People may still say that about me, but that’s another story.) However, e-commerce, which all the so-called experts predicted would soar to unfathomable heights in the wake of the pandemic, has come down to reality (to say the least) , its future growth will be more measurable. Any retail business in the home space absolutely needs an online component, but it’s not going to be a major business anytime soon in our lifetimes.
Expect one more “less”? Sale to the new home market. While the U.S. desperately needs more housing, the Federal Reserve’s rate hikes have dealt a severe blow to homebuilding. Those whose income depends on new homes need to rethink their business models and look for new sources for at least the next year. That’s not to say the home remodeling industry will weaken — homeowners who have jobs and money but can’t afford to buy a new home will instead reinvest in their existing home. That is less becomes more.
more or less
Here’s the thing about 2023: We’re less likely to see wild changes in the business environment in the next 12 months than we have been in the past three years. Market changes will be more gradual and less noticeable. That’s how it was before the pandemic, and now (we hope) that pattern will resume.
Other shifts to watch: As Baby Boomers finally give up their insatiable spending habits and actually retire, expect Gen Z to become more important in purchasing home products. Factors such as technology, sustainability and social responsibility will have an increasing impact in various fields, including home furnishing retail.
That calendar flipping exercise is about to begin, and there are many variables that can keep us all guessing — more or less.
Homepage photo: ©Tovovan/Adobe Stock
Warren Schulberg Former editor-in-chief of several leading B2B publications.He has been a visiting lecturer at Columbia Business School; has been honored by the International Furniture and Design Association and the Fashion Institute of Technology; and has been cited Wall Street Journal, New York Times, Washington Post, CNN and other media as leading industry experts. His Retail Watch column provides in-depth industry insights on key markets and product categories.