When will furniture retailers finally see the light?
Digitization has not yet arrived
"The online market for furniture is not yet so big" - this is how many furniture dealers justify the low level of digital ambition. Many of them remain in the dark when it comes to digitalization, that's why they don't see a great need to answer the "why".
PwC is forecasting annual sales growth of 1.5 percent for the furniture trade until 2020. For the online segment, on the other hand, double-digit sales growth of 14 percent is expected. That sounds strong first - but compared to other industries, such as the fashion industry, this growth is very weak.
Production winner, online loser?
According to the PwC study, Germany is the European leader in furniture production, its turnover in 2015 was 22 billion euros. However, the online share of turnover is very low: in 2016 with only 13 percent it was significantly lower than in many other retail segments. So Germans like to buy furniture - but not online. Or what else is there in this balance sheet?
What is disregarded in this balance: in Germany, 25 percent more furniture is imported than exported. The fact that the German online market is comparatively weak in the furniture segment cannot therefore be explained by the lack of interest of end consumers, but by the fact that they tend to order furniture from abroad. But what is the reason for this?
Clearly: the price. Furniture from the low-price segment often comes from abroad, whereas high-quality furniture from manufactories and furniture systems with a high proportion of automated production is predominantly manufactured in Germany and sold at a comparably high price.
It is slowly dawning
Good news for furniture retailers who are not resisting the digital transformation: the reasons for the expected 14 percent increase in online sales are on the one hand technical innovations in the industry, such as 3D printers, which can, for example, produce decorative items more efficiently. On the other hand, changes in social awareness are also reflected in the furniture industry: not least, consumers' increasing environmental awareness calls for sustainable and fair production, design furniture from re- or upcycling processes without long delivery routes.
„New providers are characterised above all by the fact that they can react flexibly to new requirements of the sales channels, as they play on all channels themselves. Suppliers who do not provide this flexibility have strong competitive disadvantages in the Home & Living segment.”
- Pierre Haarfeld, eTribes consultant, founder and CEO digitalapartment.de
Platforms as a solution approach
A platform does not primarily sell products, it sells access to the articles. This access is opened for companies as well as for customers. Today, absolute price transparency and the need for unlimited availability also prevail in the furniture segment. This makes it very difficult for companies and dealers to establish robust customer relationships. Logistics and storage space also play an important role, especially for goods of comparable size such as furniture. You don't have to be the retailer who wonders whether investing in a huge warehouse for constant availability is more worthwhile than production on request and the associated long delivery times. You can be the one who opens your platform to others.
Individual customer journey as trigger
Barriers have shrunk as the willingness to buy furniture online increases. In order to increase this new willingness, the customer journey must be optimally exploited in the online shop - through adequate online services such as product descriptions, zoomable product images, free fabric samples, customer reviews, convenient payment and delivery and individual advice, or even augmented reality and virtual reality retail software to virtually examine the impression of a piece of furniture in your own living room.
An important aspect is touchpoint integration, so that the customer can be reached via all devices - from desktop to mobile to headless devices such as the Amazon Echo.
The willingness of consumers to buy fairly produced furniture at a higher price is therefore increasing - the best prerequisite for creating the right platform for them. With the Spryker Commerce OS, you can optimally design the customer journey and help you to become a pioneer for an entire segment with your online shop.
Would you like to learn more about how to overcome these challenges?
We will be happy to help you with some free advice.