Jan. 15, 2021

Blog: 2021 – change, scale & opportunity

Dollar Bill
Bo Stump
by
Bo Stump

Originally published in Furniture Today

Ashley’s recently announced $1 billion capital investment over 18 months is a blockbuster that all of us in the furniture industry should take notice of. It is clear evidence of the need to remain agile, constantly improve and anticipate the numerous seismic changes coming around the next corner.

$1 billion is larger than the market capitalization of all the public companies in the residential index, with La-Z-Boy being the notable exception (current market cap is $2 billion). Also, $1 billion in investment is larger than all five public furniture companies invested this past year, by a margin of $900 million. These are staggering numbers.

In a similarly shocking figure, Wayfair grew revenue by $5 billion between 2019 and 2020, most likely grabbing more home furnishings market share in one single year than any competitor ever before. $5 billion is almost the size of Ashley Furniture, so to grow in 12 months the size of your largest competitor is a remarkable feat.

With a Furniture Today estimate of the retail home furnishings industry at an annual rate of $115 billion and Wayfair at $14 billion, we now have a major player with more than 10% market share.

These huge numbers remind us that change is inevitable and that decision makers thinking big, smart and fast are making the most of it.

While the benefits of scale in the above examples are clear — greater volume purchasing power, more efficient and powerful systems, technology investments and maintenance, greater access to people/talent — there is plenty of room in the industry for smaller, more nimble players. We are constantly amazed at the new and emerging companies driving growth and profits within this complex and competitive landscape.

This remains a fragmented industry, and opportunity is ripe for smaller companies able to move more quickly than these behemoths. In many cases, these companies are better positioned to take advantage of rapidly shifting industry dynamics, with leaner organizational charts and shorter timelines from making decisions to realizing them.

In a sense, change is the one constant we have, whether in a year largely lost to a pandemic and shutdowns or in a, hopefully, resurgent economy and country in 2021. We look forward to following the shifting dynamics in the industry in 2021 and beyond.

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