MARKET PROFILE: HOME FURNISHINGS: Online furniture gold rush

Are catalogers failing to stake their claim?

Before Pottery Barn proved them wrong in the early ’90s, many catalogers believed that few customers would ever buy a sofa through the mail. Now consumers are snapping up sizable home hard goods such as sofas, sleigh beds, and armoires over the Internet.

Cambridge, MA-based Forrester Research has projected that online sales of home furnishings would hit $268 million in 1999 and grow to $595 million, in 2000. But rather than catalogers leading the parade of online furniture marketers, it’s the retailers and Web-only start-ups that are fast dominating the category.

Internet companies such as Furniture.com, Goodhome.com, and Living.com are setting their sights on becoming online superstores e la Amazon.com. Moreover, venture capitalists are pouring money into home furnishings e-tailers – about $250 million so far, according to San Francisco-based venture capital group Pricewaterhouse Coopers.

So where are the catalogers? Pottery Barn, the home decor arm of San Francisco-based cataloger/retailer Williams-Sonoma, is reportedly planning to go online sometime this year. And Northbrook, IL-based furniture and tabletop items cataloger/retailer Crate & Barrel is offering only a smattering of its furniture collection on its Website. Spokeswoman Bette Kahn says the company isn’t ready to offer its full furniture line on the Web, but claims the available selection is so popular that many items are backordered. Besides, for Crate& Barrel the Internet is less a sales medium than a marketing tool, Kahn says. “We’ve always felt the catalog and now the Internet offer our best marketing vehicles. They generate people’s interest and get them to come into the stores.”

Indeed, many cataloger/retailers still believe that when selling furniture, the Web works best in conjunction with other channels. At Fort Worth, TX-based furniture retailer/cataloger Bombay Co., online furniture sales growth has exceeded catalog and retail growth since the $305 million company launched its site in 1997. “But we find that many of our customers do their homework on our site, then come to our stores to sit on the furniture and touch the fabric,” says vice president of marketing Cathy Pringle. “The Internet isn’t just another sales channel; it’s also an informational channel. There are tremendous synergies between retail and the Web.”

The online-retail partnership is exactly what FurnitureFind.com president Steve Antisdel envisions as the future of his business. FurnitureFind began in 1952 as Bookout’s Furniture, a store in Buchanan, MI. When Antisdel launched a Website in 1996, “people came from all over, and we immediately saw that there was an unmet need in the marketplace.”

Since late 1996, FurnitureFind has grown an average of 94% each quarter, registering its first $1 million month in July. Antisdel expects online sales to reach $10 million this year. “Our customers are motivated by convenience; they don’t have time to shop. If they have a question about a sofa’s shade of blue, we send them a swatch,” Antisdel says. “They’re the same customers who shop by catalog.”

Small slice, huge pie

America’s Research Group estimates that of the roughly 20% of consumers who have made a purchase online, only 6% bought furniture. The relatively small number of online furniture buyers could be why furniture catalogers are sitting back and letting the dot-coms stake their claims.

Still, the potential for growth is impressive. The American Furniture Manufacturers Association puts 1999 furniture sales at $61 billion and estimates that 2000 sales will rise 5%, to $64 billion. And it’s the companies now up and running on the Web that stand to benefit most from this growth. Even small-scale cataloger/ retailers such as Madison, VA-based Plow and Hearth are enjoying the ride as early adapters.

Plow and Hearth has seen an influx of online-only customers in recent months, says founder Peter Rice. “Furniture has been selling well, and we found earlier this year that outdoor furniture does especially well on the ‘Net. This is our first real holiday season in which we’re promoting the site heavily, and we’re delighted with the volume of Web buyers.”

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