For a long while now, online furniture retail has merely occupied a lower middle ranking in German eCommerce. Even in 2015, only 6% of total sales in the furniture and furnishings market arose from online retail. We explain to you today why stationary furniture dealers should nevertheless reconsider their market positioning, and why online retailers and brand manufacturers should further expand their Internet presence.
The future lies in the linking of online and offline retail
Some 76% of all consumers, when buying furniture, still prefer traditional retail as opposed to online and mail order. The reason for is that for planning and advisory-intensive furniture such as kitchens, couches etc., stationary retail excels over online retail, which at least manages without an entirely local presence. Because of the mobilisation of the Internet and associated alterations to purchasing processes, sales in furniture and interior accessories over the Internet are also rising further in this sector.
It is thus in the hands of stationary furniture retailers and stores to overcome the challenges of online retail, by linking and expanding their core competencies – advice, individual planning and opportunity of tangible product testing – together with the potentials of online retail.
“The digital transformation is now also affecting furniture retail with full force. Only furniture retailers with a comprehensive digital strategy will survive, whose offering to the customer combines the best of stationary and digital retail together” – Achim Himmelreich, Partner at Mücke, Sturm & Company.
How these online and offline sales channels can be successfully combined is apparent from the example of Ikea, the market-leader in Germany. The Swedish furniture company has continuously developed its omnichannel strategy further: Besides the offerings in the classic Ikea catalogue and online shop, the company is working globally on establishing pick-up-points as well as ‘order-and-collect stations’ where customers can receive their products ordered over the Internet.
Trend: Augmented reality applications supporting the purchase process
In the purchase of furniture, haptics and product presentation play a special role – which is why visiting a furniture business remains virtually unrivalled. But with the integration of modern technologies, equally lifelike examples of home living can be made available to customers. With the use of augmented reality, new furniture units in different variants can be tested out on the PC, tablet or iPhone and even combined together with existing home furnishings. 3D room-planners can also support the purchase, where rooms can be planned, designed and viewed three-dimensionally. These applications are easily accessible and usable to customers as an app or a web service on the Internet.
Growth potential in the furniture sector is far from exhausted
The online share in the furniture sector is continually growing. This is reflected in, for example, the positive figures registered by online retailers such as Otto and Home24 over the last year. The latter was even able to increase turnover by 63% within the first three quarters of 2015. According to a prognosis by the ECC Trade Research Institute, Cologne, the year 2020 could threaten the end for one in three of the total 30,000 furniture businesses. Difficulties are faced particularly by smaller furniture businesses, who are now coming under pressure from market leaders in both local trade and in online markets.
“The online share will grow continually, but it remains an evolution, rather than a revolution” – Marco Atzberger, EHI Research Institute
Successful market positioning in the furniture sector using multi-channel concepts
Furniture retailers and brand manufacturers should reconsider their market positioning such that they accompany their target group over the entire customer journey and can offer added value at numerous junctures. These occur increasingly on the Internet, which is why the strategic development of an online shop will be inescapable in the future. Most customers, for example, inform themselves before purchase from a stationary furniture business in the online shop. It is important to advise and offer inspiration to customers also at the final point of use of the furniture and furnishings, namely within their own four walls.
Ever more ‘pure’ online players in furniture retail are thus expanding their offerings, besides VR applications and 3D room-planners, but also in content. This is a development that the “Schöner Wohnen” publisher Gruner + Jahr has recognised and therefore opened their own online shop in August. The publisher intends to accompany their target group from the information stage right through to purchase to further consolidate their leading market position.
In the future, it is the multi-channel retailers in particular who will be successful. Even tough online retail is far from maturity, furniture retailers should invest early in a hybrid concept of online and offline, since an enormous growth potential exists within the furniture sector. The sector generally is on a growth trajectory and exceeded the 19bn Euro mark in 2015. When we also consider developments in other sectors, the turnover in online fashion retail from 2008 to 2013 has about doubled in six years. Similar developments are also to be expected in online furniture retail.
“The online market for furniture has continuously grown since 2009.The as yet subpar online share in the sector indicates that the end of growth has been nowhere near arrived at. The online sale of furniture shows enormous potential“ – Hansjürgen Heinick, Senior Consultant at IFH, Cologne
Market positioning: Price observation in online furniture retail
Some day, the purchase of furniture on the Internet will be as commonplace as online shopping for shoes and clothes is today. Even now, customers enjoy a large selection from various providers and brands, and they research prices and product information on the Internet before purchasing. Besides a customer-friendly shop concept, which offers the best added value from both stationary and online retail, as well as supporting the customer journey at important touchpoints, furniture retailers should have an overview of important developments in the market. Among other things, price observation of competitors is also involved here. Because of the huge volumes of articles and competitors on the web, however, that information is difficult to compare. Software solutions to price management, such as the blackbee Retail Intelligence Suite, can help to obtain those essential insights.
Perfectly equipped for eCommerce – With blackbee for online retailers, multi-channel retailers and brand-name manufacturers in the fields of home and living. Using our intelligent software solution, you keep your competitors in sight and recognise where you can improve margins and increase turnover. Make contact with us, we look forward to meeting you!