Home, Garden and Furniture Retail Poised for Transformation
BigCommerce's Meghan Stabler explores the challenges and emerging trends in the sector.
Similar to other retail segments, home, garden and furniture was changed by the pandemic as consumers shifted to online channels. Today, while the pace of online growth has slowed, consumer preferences call for a true omnichannel experience, which is challenging for retailers and brands to deliver.
But new technologies are making it easier. Moreover, technologies such as augmented reality (AR) and virtual reality (VR), as well as AI-powered solutions, are transforming the shopping experience. Here, Meghan Stabler, senior vice president of marketing at BigCommerce, discusses these trends as well as the key findings of a recent BigCommerce report on the home, garden and furniture sector.
WWD: What are the challenges facing retailers and brands in the home and garden sector? Meghan Stabler:
The home, garden and furniture sector is not immune to challenges facing the retail industry as a whole. This growing sector is at a critical juncture, trying to balance the postpandemic return of customers to physical stores with the fast-paced changes in online and mobile commerce.
The act of shopping has entirely changed in recent years. In the past, the product was the central element of the shopping experience, with consumers on a quest to find it. Today, however, the consumer is at the heart of the process, with retailers striving to present the perfect product in a way that best resonates with the shopper.
What does this mean for the home, garden and furniture industry? Retailers are being forced to completely rethink their commerce strategy. From the proliferation of third-party marketplaces to the rapid adoption of buy online, pick up in store and curbside pickup, they're being asked to create a frictionless omnichannel shopping experience that bridges the gap between online, mobile and in-person shopping in record speed.
This challenge, coupled with the need to adopt and integrate the rapidly evolving technology that consumers have come to expect, demands a degree of flexibility and agility that many traditional brickand-mortar retailers in this sector are not accustomed to.
At BigCommerce, we witness this daily. Retailers are demanding a platform that is both flexible and adaptable, allowing them to engage with shoppers wherever they are. Our open, composable platform stands out in the competitive retail landscape by providing the flexibility, customization and openness needed to drive innovation and boost sales at every growth stage.
WWD: What are some of the key takeaways of the report? M.S.:
As a leading e-commerce platform, BigCommerce has been working with major names in the home, garden and furniture sectors like Chair King Backyard Store and Burrow for years.
The 2024 Global Ecommerce Report: Home, Garden and Furniture dives into BigCommerce's global data, comparing it year-over-year to glean insights on the industry as a whole.
Two dominant themes are interwoven throughout this report: the resilience of the home, garden and furniture sector despite a turbulent year and the sector's ability to quickly understand and adapt to the evolving behaviors of its customers.
It's widely recognized that the home, garden and furniture sector grew significantly due to the surge in home renovation projects during the pandemic. A study by Harvard University revealed that while the U.S. economy contracted by 3.5 percent in 2020, spending on home improvements and repairs rose by more than 3 percent, reaching nearly $420 billion. Despite slowing a bit after the pandemic, growth in this sector continues to be on the rise. BigCommerce's home, garden and furniture brands and retailers globally saw a 3.25 percent increase in 2023 gross merchandise value (GMV) compared to 2022.
Interestingly, these businesses saw a 7.9 percent increase in global average order value (AOV), despite experiencing a 4.3 percent decline in total number of orders placed. That means people were making fewer purchases but still spending more per order.
Consumers' reluctance to “buy now” is not entirely surprising considering the backdrop of 2023's high inflation and home interest rates, which led consumers to reduce their discretionary spending. However, the rise in AOV is not solely due to price adjustments for rising costs. The real story is the lengths retailers went to increase AOV by understanding and adapting to shifting consumer behavior.
Take the surge of flexible payment options as an example. With a growth of $23.22 billion in 2022 to $30.38 billion in 2023, the rapid adoption of flexible payment options by e-commerce retailers suggests that buy now, pay later (BNPL) options are not only popular, but a prerequisite for many customers. As shoppers navigate through financial uncertainties, offering them the opportunity to spread payments over time eases their minds when making purchases, often leading to bigger ticket purchases.
While not touched on in the report, another tactic retailers are employing to boost conversions among budget-conscious consumers is the widespread adoption of loyalty programs. By offering customers immediate discounts in return for valuable data, retailers can drive sales by tailoring outbound promotions through retargeting ads, SMS texting and email campaigns.
WWD: What trends do you see emerging this year and what opportunities do they present for the second half? M.S.:
From generative AI to augmented reality (AR) and virtual reality (VR), it's clear that the trends shaping the home, garden and furniture industry are largely driven by rapidly advancing technology. The opportunity for retailers in this sector hinges on their ability to harness this technology to drive conversions through more precise targeting and immersive, personalized experiences for consumers.
The first opportunity for retailers to consider is to leverage AI to drive a more effective omnichannel data strategy.
Over the last year, the omnichannel data approach made its debut, turbocharging existing omnichannel strategies that brands and retailers rely on to connect with savvy online shoppers and to stay competitive.
This year, new technologies such as AI will bolster the omnichannel model into a data feed management powerhouse giving retailers a new way to drive better ad performance and sell more products. This is especially critical in a sector like home, garden and furniture, where product catalogs are syndicated to dozens of thirdparty marketplaces and social channels.
Houzer, one of the largest suppliers of luxury kitchen sinks and faucets in the
U.S., turbocharged its omnichannel growth with AI-powered technology from data feed optimization company Feedonomics, a BigCommerce subsidiary. Houzer was able to improve the accuracy of its syndicated product catalogs, resulting in a 47 percent increase in conversion rate, 150 percent increase in transactions and a 118 percent increase in revenue.
Another opportunity is leaning into AR and VR to elevate customer engagement. These technological advancements are revolutionizing the online shopping journey by providing an immersive experience for customers, while allowing retailers to seamlessly connect the physical and digital retail environments.
The home and garden sector is no stranger to this technology, with a Statista study revealing that 35 percent of shoppers aged 18 to 34 utilize AR/VR features to purchase furniture. By incorporating virtual showrooms that allow shoppers to envision products in their own homes, they move one step closer to making a purchase — as well as decreasing the risk the shopper will return the item later.
Lastly, when assessing emerging technology, don't overlook the impact of generative AI on enhancing personalization. Companies like Klevu use AI to strategically merchandise items, generate personalized product recommendations and enhance search capabilities based on a shopper's site interaction.
Overall, it can be challenging to determine which of the rapidly emerging technologies to invest valuable time and resources in. Home, garden and furniture retailers need to ask themselves — does this technology put the customer at the center of the shopping experience, and then prioritize their investments accordingly.