Furniture retailers see decline in sales, layoffs since height of COVID boom

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What do you do when you’re forced to stay home for days, weeks, months at a time?

You make improvements to your home, of course.

With that, in the early days of COVID, furniture sales saw tremendous growth. 

In February of 2020, Americans spent $11.3 billion on furniture and home furnishings, and monthly sales grew by 181% over an 11-month period from April 2019 to March 2020, according to Commerce Department data.

However, a cushy new sofa or mattress isn’t always enough to pad the discomfort of inflation and a down economy, and furniture sales are now slowing. 

“We saw an acceleration in sales throughout the pandemic which began to taper late last year. Sales have seen a decline into the second quarter of 2022 and have stabilized over the third quarter,” says Jordan England, co-founder and CEO of eCommerce furniture company Industry West.

After initial optimism that pandemic shopping would continue to drive eCommerce purchases to new heights, popular online furniture retailer Wayfair has since reported missed sales goals. 

In a letter from co-founder and CEO Niraj Shah to Wayfair’s employees, Shah said, “We were seeing the tailwinds of the pandemic accelerate the adoption of ecommerce shopping, and I personally pushed hard to hire a strong team to support that growth.”

Shan continued, “This year, that growth has not materialized as we had anticipated. Our team is too large for the environment we are now in, and unfortunately we need to adjust.”

In the letter, Shah took personal responsibility for the shocking result of this sales decline, which was a workforce layoff of nearly 900 employees.

Meanwhile, in August, Vancouver-based Article, also a so-called DTC furniture retailer, laid off 17% of its employees. The company said 216 workers would be impacted by the staff reduction. 

"We anticipated the trend to online purchasing would be sustained," CEO and founder Aamir Baig said at the time. "That did not happen, and it has since returned to pre-COVID trends."

Other furniture retailers are experiencing similar declines and layoffs, even though their layoffs aren’t as prevalent in mainstream media.

“Many furniture brands have already followed suit (with layoffs), but it is not widely reported. There is a wide opinion in this industry that it is a time to get more lean and eliminate specialized roles that might be redundant or experimental. The huge run-up most consumer brands experienced was unsustainable,” says England.

One reason for the decline in sales may be that even as sales soared, furniture stores were largely unable to meet demand. The broken supply chain coupled with a lack of inventory and inflated container costs to bring goods to port led to many customers waiting months to receive their orders.

“We ordered furniture and appliances during the pandemic. Some of them got delayed to where it was a bit comical. We ordered a high end fridge and freezer in November of 2020, and they arrived in April of 2022,” said Trent Colarusso, general contractor at Colarusso Construction. “We are still dealing with another furniture delay that was ordered in May and is supposedly coming in February of 2023. Most of the delays have been on specific and high-end items. For other items that have been on backorder, we’ve usually been able to find substitutes.”

England explained why furniture brands experienced such tremendous delays, “Most furniture is manufactured abroad. Even domestic manufacturers rely on a complex supply chain to deliver product. The increase in ocean freight has led to price increases across the board for all products which is being felt acutely on larger items such as sofas and case goods.”

To combat this problem, “most brands, like Industry West, are working to increase container loadability and diversify their supply chain to mitigate the risks associated with erratic lead times and dynamic ocean freight costs,” said England.

Moving forward, England has two projections for what brands will survive the current economic downturn, and which will fizzle out.

“I think brands that focus on product innovation and a fantastic customer experience will always be able to grow and have momentum. In the near future in this erratic economy, brands like Industry West will be able to capitalize on our strengths such as our large B2B customer base,” says England.

England explained the brands that specialize in providing products for drop-shipping marketplaces saw some of the largest growth in the sector in past years, but may not see continued growth in the future. 

“There are a lot of well-intentioned marketing companies out there masked as furniture brands that don’t ever touch or develop a product. I think these companies will really struggle to maintain market share as privacy laws continue to eat away at their ability to track customers across their journey.”