1996 Futon - Retail Survey

Introduction

The furniture industry like much of the economy did not rebound from its prolonged slump during 1991. Consumers still hesitated to finance on credit the more costly purchases such as furniture in the face of continued job insecurity and weak personal income growth.

Standard and Poor's Industry Surveys (1991) report analysts are in general agreement that unit shipments were about fifteen percent below the record high of four years earlier. Shipments of bedding, including mattresses and boxed springs, were flat. A consolidation in furniture manufacturing that began in the 1980's has cut the number of companies in half to approximately 2,500 today. At the same time, the number of furniture retailers also fell. During this period the amount of disposable income spent on furniture has declined from 1.2 to 1.0 percent.

In spite of the gloom, the housing market, as a leading indicator for furniture sales, began to show some slight signs of a turnaround in 1992. Further-more a trend of staying in a home and remodeling also bodes well for a future pick-up in demand for furniture.

The 1992 Futon Life Retail Survey was undertaken to get a second look at the retailing end of the futon industry. It is substantially the same survey that was taken in 1991 except for the addition of new questions about construction types and materials.

Method

A 29-question survey was sent to Futon Life subscribers with the summer 1992 issue. A total of 229 valid responses were analyzed to give a statistical accuracy of plus or minus 6.8 percent.

Forty-six states were represented in the sample. When grouped by section of the country (Northeast, South, Midwest, West, and West Coast), the distribution is closely proportioned to the latest demographic and business data available .

Respondent Demographics

The respondent's gender is determined by the first name of the person who filled out the survey form. From the responses where gender could be determined, the ratio of males to females is 4 to 1.

The most common classification of respondent is retail outlet owner with about two-thirds in this group. All other categories (managers, sales staff, buyers, advertising/marketing personnel, and others) comprise the rest with no group taking more than 15 percent.

Business Demographics

The type of retail establishment is more balanced. Futon Specialty is most common at almost 30 percent. Contemporary/Lifestyle, Bedding, and Waterbed Specialty follow in a second tier with about 15 percent each. Traditional, "Other" and Warehouse/Discount (least represented) make up the remainder. These results are statistically identical to last year's survey.

Customers

The typical futon purchaser is a person in the 21 to 35 years age group for the majority of establishments. Almost 95 percent of the customers know something about futons, but for half of them the level of knowledge about the product is low.

Product

A futon is at least twice as likely to be placed in a guest room than in any other room. Primary bedrooms and especially children's bedrooms are the least likely destinations, strongly suggesting that futons are considered auxiliary furniture chosen for its utilitarian value and price. About 40 percent of respondents indicate the most popular price for a full/double size ensemble is in the $300 to $399 range. The median point is calculated to be $360. High and low end pricing together account for less than ten percent.

A majority of outlets sell only one or two of the several construction types available. The most favored types are "all-cotton," which is sold by 74 percent of retailers, and "cotton with foam panels," which is sold by 66 percent. Each of these construction types represents, on average, about one-third of all futon sales; other types trail far behind. Most retailers do not sell the "cotton and egg-crate foam," "cotton-poly blend," "all-poly," or other types.

Only one-third of the retailers sold more than 500 units in 1991. This is a significant decline from 1990 when about half reported selling at least 500. The number selling over 2000 units remained the same at about five percent. When asked about the number of "roomful" units sold (for example, two frames, two futons and covers, three pillows, and one occasional table), the overwhelming majority answered fewer than 200.

Sales

Twenty-five percent of respondents report 1991 sales of more than one-million dollars. This is down from 30 percent reported in the previous year. Average annual total sales reported by all respondents who sell futons are estimated conservatively at $813,500 per business. Com-pared to a 1990 estimate, this is an eight percent decrease in total sales.

Sales of futons alone are estimated to average about $220,000, or 27 percent of total sales. They account for as much as two-thirds of the total sales in futon specialty stores and as little as one-tenth in the waterbed specialty stores.

Regional Comparisons

Responses to this survey come from all parts of the country and are well-distributed with respect to population and the number and sales volume of furniture retailers. This makes it possible to compare results from the Northeast, South, Mid-west, and West regions with reasonable assurance of statistical reliability. Results have been tabulated only from responses indicating that the business sells futons.

The largest proportion of responses come from futon specialty stores, with all sections of the country represented nearly equally at 31 - 40 percent. Contemporary/ Lifestyle furniture stores also are uniform at 15 - 20 percent. Other outlet types, however, show greater variability between regions, although some of this may be an artifact of fewer stores in these categories.

Method used to estimate sales: The number of responses to each category is multiplied by the middle value of the dollar range (eg, $350,000 is taken as the middle value of the $200,000 to $500,000 range) giving the total dollars for the category. Results then are summed for all categories and divided by the total number of responses to give the average sales per business. This number is an estimate because exact sales volumes were not supplied by survey respondents.

The number of units sold in 1991 most frequently is fewer than 500 in all four regions which is a reflection of the predominant retail outlet type &emdash; the smaller futon specialty store. However, two additional observations stand out:

1. All regions have stores with higher sales volumes.

2. The West and Midwest are the most likely locations of such outlets.

When total retail sales are compared region by region, there are some clear differences. The highest proportion of Northeast retailers are in the $500,000 to $1,000,000 bracket, whereas the West peaks in the $200,000 to $500,000 range. South and Midwest areas follow at under $200,000. These results generally match the differences in cost of living across the nation and should not be surprising. As noted before, all regions possess a few high-volume outlets as indicated by the two to eight percent of respondents citing annual sales of more than two million dollars.

Sales of futons alone are not as variable as total sales, with all regions strongly showing up in the under $200,000 category and none reporting more than two million dollars in 1991.

Throughout the country there is little difference in the distribution of responses to the question on the most popular price point of a full size ensemble in contrast to last year's survey which found wider variation.

This year no one reported a price point greater than $600 in the Northeast and South. The under-$300 categories also were least frequently marked in the Northeast. These results suggest that the recession has had across-the-board effect on futon pricing structures, although it has not pushed them below last year's level.

Publication

Futon Life has an average readership of 3.0 persons per copy, up one tenth from the year before. Seventy percent of recipients pass on their copies to colleagues and even more make sure that it is saved for future reference.

There is nearly unanimous agreement that Futon Life educates its readers about futons and frames as well as about manufacturers and distributors.

As a resource for contacting suppliers and making purchasing decisions, it is doing even better than the high marks it received last year.

Readers are very pleased with the publication. Nearly half rate the value of articles and advertising in the top category. Addition of color and enhancement of the visual impact of Futon Life may have contributed to the slightly more positive responses this year, but there is no doubt that the publication is exceptionally well-received because it meets the needs of its audience with a substantial level of quality.

Major Conclusions

1. Futons are sold mostly in lower volume specialty outlets.

2. Total sales volume in 1991 appears to have declined from the previous year, from two to eight percent, in all likelihood due to the continuing recession.

3. The typical price point for a full-size futon and frame ensemble is between $300 and $399. This "average" price has not been influenced by the economic climate.

4. Most futons are placed in a guest room and are purchased for their utility and price.

5. Retailers who have never sold futons are favorable toward them and are satisfied with their quality and availability. They want to know more about them, however, before committing to the product.

6. The dominant types of futon construction are the "all-cotton" and "cotton with foam panels." Most retailers are likely to sell only these two types.

7. Futons account for about one quarter of the total store sales among the retailers surveyed and two-thirds in the futon specialty shops.

8. Futon sales, prices, and retail outlet type are similar in four regions of the country. The higher cost-of-living in the Northeast is evident in the results.

9. Futon Life has increased its popularity with its readers by improving quality and usefulness.

References

Census of Retail Trade. 1987. U. S. Bureau of the Census, Dept. of Commerce.

County Business Patterns. 1988. U. S. Bureau of the Census, Dept. of Commerce.

Industrial Surveys: Textiles, Apparel, and Home Furnishings/Basic Analysis. November 1991. Standard and Poor.

All information contained herein is the property of FUTON LIFE and Futon Life © 1993 FUTON LIFE. All rights reserved. This survey may not be reprinted or copied without the express written consent of the publisher. Raw counts and percents plus or minus the 95 % confidence interval for each response to a question. Calculations are shown both with and without the missing values (ie, no answer given) included.

Sex of respondent

1. Category best describing respondent's position

2. Category best describing respondent's outlet

3. Total retail sales in 1991

4. Have sold futons and frames at some time

14. Number of additional people who read respondent's copy of FUTON LIFE

15a. FUTON LIFE used to learn about futons and frames

15b. FUTON LIFE used to learn about manufacturers/distributors

15c. FUTON LIFE used to contact manufacturers/reps/distributors

15d. FUTON LIFE used to purchase products

15e. FUTON LIFE information passed along to colleagues

15f. FUTON LIFE issues saved for future reference

16. Value of FUTON LIFE articles and advertising

II. RESULT ONLY FROM RETAILERS WHO DO NOT SELL FUTONS

Sex of respondent

1. Category best describing respondent's position

2. Category best describing respondent's outlet

3. Total retail sales in 1991

13a. Can find a supplier for futons and frames

13b. Can find products that meet respondent's quality standards

13c. Have enough information about futons

13d. Have decided to stay out of the futon market

III. RESULTS ONLY FROM RETAILERS WHO SELL FUTONS

Sex of respondent

1. Category best describing the respondent's position

2. Category best describing the respondent's outlet

3. Total retail sales in 1991

5. Retail sales for futons in 1991

6. Average age of repondent's customers who buy futons

7. Knowledge about futons of a typical customer

8. Most common end use of a futon purchased from respondent's store

9. Most popular price point for a full/double size ensamble

11. Units (futon/frame/cover) sold in 1991

12. Roomful units sold in 1991