Amazon, so what? As many retailers shrink, furniture stores expand

Ask furniture retailer Keith Koenig why he feels confident enough to open two 100,000-square-foot stores when many merchants are shrinking, and he points to an obvious reality: Rare is the consumer who buys a couch without sitting on it first.

“It’s such a personal item,” says Koenig, president of Tamarac-based City Furniture. “People want to see it touch it, feel it.”

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For most merchants, the post-Amazon era is a time of woe. Toys R Us and Sports Authority are gone. Book sellers, video stores and record shops are nearly extinct. Macy’s, Sears, JCPenney and Office Depot are shrinking.

Then there’s the furniture business, which faces comparatively flush times. Furniture retailers are expanding, as evidenced by the four-story Restoration Hardware that opened last fall in West Palm Beach.

The empty Sports Authority on Northlake Boulevard in Palm Beach Gardens was filled by a Rooms to Go outlet. The vacant Sports Authority at Palm Beach Outlets has been replaced by HomeGoods, the discounter that isn’t strictly a furniture retailer but sells plenty of bulky items.

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City Furniture, for its part, plans to open two stores of more than 100,000 square feet each in the Orlando area. That’s partly because consumers want to try furniture before they buy.

With unemployment low and millennials finally moving out of their parents’ houses, furniture retailers are seeing increased demand from consumers.

Furniture retailers’ growth also owes much to the sheer girth of their product. Amazon staples such as T-shirts, shoes and phone covers are easily delivered cross country, and easily returned. A couch or a dining room table poses a more complicated logistical challenge.

“Amazon is going to have no competitive advantage on us in our trading area,” Koenig says.

Koenig points to another edge held by City Furniture and other regional retailers: They employ crews that deliver and assemble bulky pieces, and workers take away the packaging and trash. Ordering furniture from Amazon means the shopper must shoulder some of the heavy lifting.

That’s why consumers who think nothing of buying a shirt on their phones are more cautious about ordering couches online, said commercial real estate broker Katy Welsh, a retail specialist at Colliers International in Boca Raton.

“Furniture is a harder thing to buy online,” she says.

Even so, a growing number of consumers are shopping for furniture online. Wayfair focuses on furniture, and the Boston-based ecommerce company has been growing fast while losing large amounts of money. Wayfair reported a $245 million loss on $4.7 billion in revenue in 2017.

Traditional retailers like Koenig are left scratching their heads about how Wayfair can sell a $300 sofa and throw in free shipping.

“I just don’t feel like they have a business model that makes sense,” he said. “The more they sell, the more they lose.”

Of course, skeptics for years made similar comments about Amazon. And Koenig said he has learned from Wayfair’s growth.

“It opened my eyes that there’s probably a bigger market for inexpensive furniture than we probably realized,” Koenig said. “They have taught us that there’s a lot of customers who need inexpensive furniture.”

As a result, City Furniture’s new stores are growing larger so that they can carry a stock of entry-level items, such as sofas priced at $300 to $400.

Despite his confidence, Koenig is careful not to gloat about the furniture industry’s ability to fight off Amazon.

“I don’t think any business is Amazon-proof. Amazon is a formidable competitor in every industry,” Koenig says. “Let’s be clear that furniture sales are growing online faster than in brick and mortar.”

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