1997 RETAIL SURVEY
By Joe Tatulli
During the past year the most asked question by newspaper and magazine reporters gathering facts for their stories on futon furniture has been, "What are the dollar and unit sales figures for this industry?" The information culled from this most recent national survey of retail outlets will help answer some of these questions and further define this changing market segment.
We asked our retail audience ten probing questions that define store type and size, overall retail sales figures, a profile of the consumer and his/her buying habits, the most popular price points, and product volume. It is our hope that a careful analysis of all these valuable statistics will help retailer and manufacturer alike better navigate the market and find a profitable route in our stable and still growing economy.
Let's take a look at the data. Of the one-hundred-and-fifty-four respondents, seventy-nine (51%) classified themselves as futon specialty stores. Of the other seventy-five respondents (49%), forty-seven (66%) classified themselves as bedding or bedroom specialty stores. That means that about eighty-two percent of all our respondents are operating as specialty stores. When you look at the results in the light of this fact, and compare our conclusions with that of the recent survey done by Furniture Today (February, 1998) you may be able to understand why the predominant presupposition about this category is that it is a low end cousin to the rest of the home furnishings industry. In reality, these specialty stores seem to have discovered a formula which is allowing them to reach a more affluent consumer with a better quality, higher profit margin (futon furniture) product. These products also have a lower propensity for problems after the consumer takes them home and puts them into daily use. Bottom line: the nature of our survey lends itself to some very interesting cross pollination of information between these two sample groups, and the comparisons and contrasts are the meat of my analysis.
Several statistics stand out as real eye openers. Over seventy three percent of the entire sample is selling innerspring futons, the second highest of the six sampled mattress products (See Figure 1). Top honors go to the cotton and foam futon at eighty-eight percent. The number three configuration is cotton and polyester at forty-seven percent, a full twenty-six points lower than the innerspring, and thirty-one lower than cotton and foam. Further analysis reveals that this high percentage follows the same path when you compare results from futon specialty (71%) and all non-futon specialty stores (75%). These stores are not selling high volumes of innerspring futon mattresses but they are carrying them as a higher end alternative.
Ninety-seven percent of futon specialty stores sell cotton and foam futons, while only seventy-nine percent of non-futon specialty stores doÐan eighteen point difference. An even wider gulf is apparent when you look at what percentage of each group sells the most cotton and foam product. The futon specialty group boasts forty-nine companies (64%) that told us they sell cotton and foam futon mattresses at the rate of seventy percent of their total futon mattress sales. The other group has only thirteen companies at that rate (22%), a full forty-two point difference. Thirty two percent of each group claims that ninety percent of their overall futon sales are cotton and foam. The sample also declared that they sell very few 100% cotton (24%), 100% foam (9%), and 100% polyester (14%) futon mattresses as a percentage of total futon sales by store.
The results present some interesting facts about the world of futon sofa-bed frames too. Over the entire sample there is a very balanced representation of all four categories (US hardwood, imported hardwood, pine and metal). In other words an average of seventy-six percent of all respondents carry frames of all four types. It is only when you compare results of our two groups, regarding how much they sell of each category that you see a trend developing (See Figure 2). The good news from my perspective, and I do have one, is that a very small number (20%) say that the lower end pine and metal frames represent more than fifty percent of their overall frame business. The futon specialty stores sell even less of these lower end products than do the non-futon specialty stores.
Let me make one thing clear: I have no problem with many of the pine and metal frames out there, some of my best friends make them. The problem I have is the perception our industry has in the home furnishings industry. The sample we gathered from the entire home furnishings industry is predominantly a specialty store sample. These retailers tend to be smaller, niche oriented dealers who are carving their market share slice from a smaller pie than the traditional furniture store or mass merchant. Our results prove they tend to carve their slice with a full range of products with the emphasis on quality and value, and with a focus on the higher end, higher margin frames.
Let me put it like this, by implication, our survey results tell us that the preponderance of throw away, junk frames are not being sold by the core of the futon furniture industry. I remain convinced that if traditional retailers take the approach the specialty stores have taken, they too will succeed selling fine futon furniture. That approach, confirmed again by these statistics, is to sell many different products with a broad range of price points, in a retail environment that focuses on stepping consumers up to higher priced, higher value furniture.
Only nineteen traditional furniture stores responded to the survey, but look at the consistency. Eighteen (95%) had less than $200K in total futon furniture sales, seventeen (89%) gave the category less than 1000 square feet, and thirteen (68%) said their best selling price point for a frame mattress and cover was less than $399 (See Figure 3). Futon specialty stores, on the other hand, sold fifty-eight percent of their goods in the $499 to $599 range, had seventy-six percent of their number using 1500 to over 2000 square feet of floor space, and had fifty-eight percent selling in the $500K to $1M sales category.
In other areas our results showed little statistical change from the past. Most consumers (99% for all respondents and 96% for futon specialty stores) are in the twenty-one to forty-five year old age bracket. I had been lead to expect a higher level of participation from the over forty-five crowd by several people I regularly talk to, but the numbers don't lie. Less than two percent (futon specialty at 1.3% , non-futon specialty at 1.27%) said their typical customer was over forty-five.
Where futon furniture ends up when it gets to the consumer's home must have been a confusing issue since many of our respondents checked off several rooms when we had asked for one. The guest room (39%) and the den/TV room (49%) were top choices.
In conclusion, I am going to take the liberty of extrapolating some other numbers just for the fun of it. We can determine an average dollar per square foot figure for the sample in two ways. One way is to calculate an average dollar per square foot for each different average size space a participant could choose. For example, you would take $350K, the mean average of the $200K to $500K category and divide that by 1750 sq. ft., the mean average of the 1500 sq.ft. to 2000 sq. ft. category. The result, $200.00 per sq. ft. is then multiplied by the number of respondents who gave those two answers. The sums of each multiplication are added together and then divided by the total number of respondents to each particular square foot category. This number is an average dollar per square foot for that category. Each category's average dollar per square foot is then added together and divided by the number of categories to arrive at an average dollar per square foot for the entire sample. That number is $254.77.
Another way is to run the same analysis for total futon furniture sales and total square feet devoted to futon furniture for the entire sample, find the averages for each and divide the average dollars by the average square feet. This analysis renders a $263.77 dollar per square foot average. The mean average of those numbers is $259.12 per square foot. All you need to do now is come up with a cumulative available square feet for the entire industry and you could multiply it by the average dollar per square foot and come up with a total retail dollar figure for the industry.
Lets take a wild guess and say there are two thousand futon and other specialty stores out there and they have an average square footage of 1320 sq. ft. (our actual average for the sample) devoted to futon furniture each. That would be 2.64 million square feet which would total $684,076,800.00 at retail. The numbers presented as results of the actual survey are accurate plus or minus five percent. The numbers calculated in this conclusion are based on an educated guess and should only be used for parlor games and other less serious activities.