This article discusses the "HGTV Effect" that has lead to the growth of the home furnishings retail sector. A companion article updates the discussion following the housing crash.
1. Making the Connection Between HGTV and Downtown Revitalization
By Michael Stumpf, November 2006
G
ive HGTV some credit. They did not invent had the fifth-highest change in store counts from
the home improvement show, but they 1997 to 2002, adding about 300 new stores per
have built it into an enormously popular year.
entertainment venue, reaching 89 million house-
So what does all of this have to do with downtown
holds and capturing more than 800,000 nightly
revitalization? Downtowns have certainly reaped
prime time viewers. It has been called one of the
some of the benefits of these trends. In places as
most widely copied formats on the television
diverse as Appleton, Wisconsin and Idaho
landscape, giving rise to such shows as Trading
Springs, Colorado, home furnishings and related
Spaces and Extreme Makeover on other channels.
businesses line the downtown main street, where
HGTV’s goal is “to provide ideas, information, and shoppers may find home décor, tableware, ornate
inspiration” for decorating and home improve- staircases, art, custom kitchens, interior design
ment. And its viewers have been inspired. Be- services, and more.
tween 1995 and 2005, sales of furniture have
In the retail industry, new shopping centers adopt-
grown by 75%, outstripping the 67% rate of over-
ing this leasing strategy – placing shops with a
all retail sales. Sales of home furnishings – items
specific targeted customer next to each other – are
from carpets and linens to lamps and kitchenware
known as lifestyle centers. By understanding the
– have grown by 97%. People are spending more
strengths of these centers and the motivations of
time at home and spending more to decorate their
lifestyle shoppers, cities may help to create a
homes.
competitive advantage for their business districts.
Home furnishings is one of only a few retail cate-
The typical HGTV viewer is between 35 and 64
gories not dominated by a relatively small number
years old. Seventy percent of them are women.
of firms, and also exhibiting growth in overall
These demographics parallel those of the typical
store counts. The fifty largest home furnishings
lifestyle consumer. On average, these consumers
retailers capture 29.3% of all sales in the category.
shop more often, visit more stores than average
While this may seem like a lot, in 14 of 24 catego-
during their shopping trips, and spend more than
ries, just eight retail firms capture more than 30%
the typical shopper. Best of all for downtowns, a
of sales. At the same time, home furnishings stores
significant number of these consumers do not like
Place Dynamics
Michael Stumpf is a consultant in community planning, economic development, and
1 market analysis, based in New Berlin, Wisconsin.
3. The HGTV Effect Revisited
By Michael Stumpf, November 2008
Two years ago when I wrote this article, the first concept. From a peak of 61,086 furniture and
signs of a slowing housing market were beginning home furnishings stores in the first quarter of
to show. Since then conditions have worsened 2007, we have seen a precipitous drop-off to
more than anyone could have foreseen. The con- 59,192 establishments at the end of the second
cerns I raised at the end of the article have proven quarter of 2008. This does not include stores that
to be true – for some businesses. that are part of recently announced closings.
Times have been hard on the chain retailers. Unfortunately, data do not break out the number
Overall sales in 2007 were less than in 2006. In of chain stores closing versus independent retail-
2006 most of the 25 largest home furnishing ers such as those that would be found on Main
chains saw solid growth. In 2007 nearly 40 per- Street. Anecdotal evidence suggests that the
cent of these companies experienced declining greater number of closed stores are chain stores.
sales, and only Bed, Bath & Beyond, Williams- So far, perhaps, the independents have proven to
Sonoma, and Crate & Barrel posted the double- be more adept at weathering the storm. If this is
digit gains that were so common in preceding true, it may be due to their unique merchandise,
years. Data for 2008 won’t be available for some associated service offerings, characteristics of the
time, but monthly reports indi-
cate a continued slump, with
sales falling to about the same Number of Furniture & Home Furnishings Retailers
levels we saw in 2004.
61500
Slowing sales have taken their 61000
toll. Companies like The Bom- 60500
bay Company and Wickes Fur- 60000
niture have closed their doors 59500
for good. The segment’s number 59000
two retailer, Linens ‘N Things, 58500
has filed for bankruptcy, an- 58000
nounced store closings, and 57500
may yet throw in the towel. 57000
2001 2002 2003 2004 2005 2006 2007 2008
Other major chains like Pier 1
may follow suit, as well as 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
stores like Home Depot’s Expo
Monthly Sales: Furniture & Home Furnishings Stores
12000
10000
8000
Millions
6000
4000
2000
0
Place Dynamics
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