IADS Press Release: Home & decor market in department stores: Dynamic and influenced by fashion trends

Home & Decor: a stable business in department stores thanks to a few overperforming categories, with customers shifting focus to new products.

Still impacted by the consequences of the Covid-19 pandemic and related lockdowns in many ways, the global Home & Decor market in department stores remains dynamic and is now influenced by fashion trends.

Overall, the Home & Decor turnover share remained stable from 2019 to 2022 for IADS department store members, at 15%. However, research shows that companies actually found themselves in two different situations:

- A struggling business compared to previous record growth: after a Covid-related positive impact on sales, some department stores faced difficulties to achieve a similar level of sales in 2022 and to reach their margin targets.
- A stable or growing business in value: with inflation forcing retailers to increase their prices, other companies saw their turnover remaining stable even though they saw a decrease in volume. In addition, growth in a few categories supported their business and contributed to maintaining turnover.

In one way or another, the current Home & Decor trends reflect the post-Covid life: tableware and furniture are the most successful categories, with furniture being considered a strategic priority for the department stores’ buying teams. Consequently, given the average size of these products, the optimization of omnichannel operations is a must for any company willing to harness this category without dedicating too much space in its stores’ stockrooms, by relying on distant warehouses or marketplace agreements instead.

The Style Pulse, an IADS partner, described to department stores’ buying teams Covid’s long-lasting impact on stylistic trends and market tastes. The product offering now reflects consumers’ feelings and answers their aspirations as life returns back to normal: colourful and joyful aesthetics, inspiration from nature and travel, and objects enhancing comfort and at-home wellness.

The Home & Decor market increasingly follows the same logic as the fashion industry: according to Nelly Rodi, another IADS’ partner, consumers replace home products more often than before (every 5 years for a sofa instead of 15), in addition to increasingly asking for fashion codes in terms of branding, motifs or collection merchandising.

Also, this fragmented and highly competitive market is diversifying both downwards and upwards, as distributors (including mass-market) propose more interior design services, while fashion luxury brands put effort into their Home & Decor offerings. Louis Vuitton’s opening of a home goods store in Shanghai represents a significant example and shows that department stores are increasingly facing more intense competition not only on the product offer (whatever the positioning) but also on the range of services they recently developed to remain relevant.

Nelly Rodi presented its exclusive scouting of up-and-coming brands in tableware and furniture, but also in the decoration, electronics and household appliances categories:

• Tableware: La Double J, Studio Arhoj, Marie Daâge, Artesanias del Atlantico, Maison Fragile, Minval Living.
• Furniture: Red Edition, Houtique, Maison Dada, Popus, Noma.
• Decoration: Papermint, Tekla, Anna + Dina, Marmi, Petite Friture, Mattina Moderna, Areta, Datcha.
• Electronics: Transparent, La Boîte Concept, Roberts.
• Household appliances: Amibot Tech, Steamery.

IADS members also highlighted the brands that were already performing well in their assortments: Bolia, Red Edition, Flamant, Salt & Pepper and Pols Potten.

The product category dispatch shares remain relatively stable: Home Accessories are dominating the business with an average of 48% of the department store category business, Electronics represent 21%, Furniture 15% and Household Appliances 13%.

The tableware market is booming thanks to consumers looking for trendy products. Using fashion reasoning, shoppers are not shy about buying multiple sets of plates and consider these items as fashion products. In stores, creating multi-brand themes and stories that change on a regular basis is the path to success: products sell quickly after hitting the shop floor, thus enhancing margins. Candles (including regular candles, scented candles, and candle holders) are also a booming category: with good margins and little space needed, multi-brand areas successfully develop.

Even though the category is more difficult to handle (as it requires space and operations are inherently difficult), furniture is a strategic component and priority of Home & Decor’s growth. Post-Covid life also encourages its growth: convertible sofas are extremely successful at Galeries Lafayette and BHV, thanks to tourism resuming, fuelling Airbnb apartment renting. Craving for life in the open air, consumers continue investing in outdoor furniture at El Corte Inglés.

Finally, private labels are successfully positioned among the department stores’ best Home & Decor brands. This is why department stores keep developing new product categories and plan on expanding existing ones in the near future.

Even with the growth of their online business at an average of 33%, it remains difficult for department stores to compete with pure players offering extremely fast and free delivery services. With inflation, price competition is a reality in all markets, leading to aggressive promotions from competitors.

Overall, online commerce is seen as the main growth lever for the future and omnichannel services have been tremendously developing in all categories. When it comes to Home & Decor, in-store showrooming currently achieves good performance giving in-store consumers access to an extensive product offer. At the same time, department stores are increasingly curating their website to clear the product offer and to avoid online customers from feeling lost in an ‘infinite aisle’.

Despite relative stability in the Home & Decor sales value, many factors are affecting the category. Fewer quantities are sold at some department stores, showing the impact of inflation on customer spending. On the other hand, some product categories are booming and supporting the business: tableware, furniture and private labels are considered key to maintaining and growing sales. As for other product categories, the online business remains a priority for department stores that are improving operations.

Read the full press release below:

Read the full press release, in French, below: