Trend in furniture trade moving towards connected store

Dominik Endress

Cross-Channel Specialist - Senior Project Manager

Now in the furniture business too! We in the mobile communications market have already recognized that the market is changing and have long since started to adjust accordingly. Now the furniture sector is also beginning to realize that they have to equip themselves to compete with the ever stronger online business.

According to a recent study from the Cologne Trade Institute ECC, the furniture giants in Germany such as Ikea, Höffner, Roller etc. are set to face turbulent times in the next few years. In the worst case, one in three of the approximately 30,000 German furniture and home furnishing stores are threatened with closure by 2020.

Boosting turnover of furniture stores online

The furniture retailer Home24, for example, which belongs to the Rocket Internet start-up studio, increased its turnover in the first nine months of 2015 by over 63 percent to more than 171 million euros. The mail-order company Otto – which claims to be number one in the online home furnishings sector – already generated approximately 700 million euros turnover in 2015 and expects a further plus this year of more than one hundred million euros.

According to the ECC industry expert Jens Rothenstein, many retailers have not yet recognized the imminent threat. “At the moment it is predominantly small pieces of furniture or furnishings which are ordered online, but in future consumers will risk ordering larger pieces such as couches or even entire kitchens online.” According to the study, if the worst comes to the worst, one third of the furniture and furnishings businesses are under threat.

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Furniture stores could soon be a thing of the past. Source: Roller GmbH & Co. KG, headquarters.

“All large furniture retailers have recognized that it is important to be involved in online business. They just do not agree how” says Sebastian Deppe from the consulting company BBE. The market leader in the German furniture business Ikea, for example, has been working at strengthening their internet business for some time now. As well as the traditional furniture stores, Ikea has been setting up additional pick-up points where items which have been ordered online can be collected.

According to Marco Atzberger from EHI, owner-managed smaller businesses are likely to be faced with the most difficulties, as they are now going to be facing pressure from both the large-scale retail outlets and online businesses simultaneously. This could lead to the market shake-out accelerating (source: ECC).

We will just need to wait and see how the furniture business will develop at the end of the day. It will almost certainly, however, move towards cross channel. With this being the case, the connected store will certainly also be an option to help retailers hold their own against the online business. More information can be found on our homepage www.the-connected-store.com