Furniture, Household
SIC 2510
NAICS 3371
This industry's participants manufacture all types of furniture for household use. Their products range from all-wood furniture and cabinetry to upholstered pieces and mattresses. For coverage of office furniture, see Furniture, Office.
The production and sale of household furniture is a large, highly competitive business in which thousands of different companies worldwide participate. Once largely confined by national boundaries, household furniture has become a multibillion-dollar import and export business. Although dominated on all continents by a handful of growing corporations aiming at the mass market, the furniture market still has room for craftsmen and small companies. The majority of these small operations produce furniture within their native countries for two important reasons. First, they are unable to compete with the resources and distribution channels of larger companies. Second, they are better equipped to meet the needs of buyers looking for customized furniture and one-of-a-kind pieces, most of whom look to small, local operations to meet these needs. While industry dynamics make it unlikely that these small competitors will ever grow as large as the conglomerates, the furniture industry still invites growth for companies developing products that fill niche markets. The key is finding the correct blend of price, function, and appealing style, and supporting the product line with an efficient and extensive distribution system.
Household furniture, along with other home decor elements, is part of an industry that rises and falls with the state of the economy. As a general rule, manufacturers of household furnishings enjoy greater demand for their goods when employment and consumer confidence are high and interest rates are low. While there are exceptions (most notably retailers like Heilig-Meyers and Levitz Furniture, both of which filed for Chapter 11 bankruptcy restructuring during the economic boom of 2000), furniture manufacturers' success is closely related to the economy as a whole.
While many online retailers have made an impact on their industries, this is not the case with furniture. As of the mid-2000s, the presence of online retailers had had little effect on the industry, and consequently the failure of some high-profile online furniture retailers (such as living.com and furniture.com) did not weaken the industry. A new approach to selling furniture online was tested by both Ethan Allan and Pottery Barn. This approach, called "clicks and mortar," was proving to be a promising alternative to straight e-commerce. A clicks and mortar retailer is one that has both online ordering capabilities and traditional stores. More important than online retailers was the trend toward manufacturers entering the retail market directly. Rather than producing goods for wholesale to retailers, more manufacturers began introducing their products to consumers under new brand names.
Although all European countries host a domestic furniture industry, Germany, Italy, Belgium, Denmark, and Sweden possess the most competitive and the most highly developed industries. The vast majority of Europe's 65,000 furniture companies are small. Some countries such as Italy and Spain tend to specialize and customize their furniture, while others gravitate toward the mass market. This affects the number of companies operating in each country. For example, in the early 2000s, many of the 12,000 furniture makers in Spain tended to be artisans who made limited numbers of pieces to order for customers. Germany, in contrast, took a larger mass manufacturing approach, with fewer companies yet much higher production volumes.
Furniture manufacturing in the United States largely resembles the global industry in that it is made up of hundreds of small companies. As with most countries, furniture manufacturing is centered near the nation's wood supply—more than one-third of furniture manufacturers are located in North Carolina. While the industry in the 2000s supported hundreds of competitors, the top 25 U.S. manufacturers accounted for almost half of all furniture produced in the country. This was attributed to these manufacturers' domination of U.S. retail distribution channels.
Asia was a rapidly expanding manufacturing center, with dominant manufacturing countries such as China, Taiwan, Malaysia, and Indonesia, which led in worldwide furniture exports. Taiwan was one of the most successful producers both on the Asian continent and as an exporter to the West. By the early 2000s, China had become the largest furniture exporter in the world.
The home furniture industry is loosely structured. A company with a superior product can usually reach the market successfully, even if it has to bypass the traditional manufacturer-to-retail distribution chain dominated by the large conglomerates. Furniture companies in the United States can be part of conglomerates like Furniture Brands International, owner of Broyhill and Thomasville. They may also be large private companies like Klaussner or be one of the hundreds of smaller companies employing under 100 people.
European furniture manufacturers were usually much smaller with less sophisticated channels of distribution. Only a handful of European companies such as IKEA of Sweden and Natuzzi of Italy were considered international companies because of their success in exporting to the United States. As a consolidated European market emerged, the larger companies became more important because they were able to mass-produce popular pieces. At the outset of the twenty-first century, European customers enjoyed a wide variety of designs. Imports from the United States and Asia were relatively small, as European customers saw little need to buy foreign when the designs they liked were readily available to them from Continental manufacturers.
Most Asian manufacturers were even smaller than those found in Europe. For example, there were more than 12,000 manufacturers of wooden furniture in Japan. Almost 80 percent of these companies had fewer than 30 employees. Organized as handmade artisans, these companies were slow to produce pieces and were in danger of being replaced by imports from other Asian countries such as Taiwan. While individual Asian companies might be small, their collective economic power, when organized by their governments, was growing.
From about the mid-1990s, the liberalization of world trade, via such agreements as the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), contributed to rapid growth in the world furniture market. NAFTA phased out tariffs on most goods between Canada, Mexico, and the United States but established initial trade quotas to protect markets from price dumping while the agreement was being implemented. Most of the safeguard tariffs and quotas expired in 2004, with the remainder eliminated by 2005, creating virtually unrestricted trade between these countries. NAFTA appeared to have benefited Canada's furniture market; between 1992 and 2000, Canada's furniture exports increased by 405 percent. In 2003, Canada's total furniture exports, including residential, office, and institutional products, were worth US$6.9 billion. More than 90 percent of Canadian furniture exports went to the United States.
The 148-nation GATT, which reduces and eliminates tariffs that protect domestic industries, also affected the furniture trade. All participating countries, as members of the World Trade Organization, agreed to cut back tariffs by 33 percent, and the United States, the European Union, Canada, and Japan pledged to remove most of the tariffs inhibiting trade between them. China—already one of the top 10 furniture exporters in the mid-1990s— was able to greatly expand overseas furniture sales as it prepared for membership in the WTO, which it joined in 2001. In 2000, China's furniture exports exceeded US$3.5 billion, and the industry employed more than 3 million people.
The technology of making household furniture was simple for generations—wood and other natural materials were pegged or nailed together to make objects on which people could sit, sleep, or eat. In the sixteenth and seventeenth centuries, artisans realized that hard wooden seats would feel better if they were covered with upholstery stuffed with animal hair or wool. By the twentieth century people began to think that furniture could do double duty—a couch could turn into a bed, and a chair could recline.
Automation of manufacturing had not been a tremendous force in the furniture industry. Robot-controlled saws were able to turn out wooden chair arms consistently; however, there was no...
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