New York - Furniture stores in Canada continue to move out of the recession, following in the footsteps of a struggling housing market. Total furniture sales in Canada were down during most of the period largely due to the erratic performance of new residential construction. Most furniture purchases are made when consumers move homes; however, Canadians have found purchasing homes increasingly difficult over the past five years. “Affordability constraints tempered new home sales during the period and the looming threat of a real estate bubble scared off many investors in 2013,” according to IBISWorld Industry Analyst Will McKitterick. Nevertheless, rising consumer confidence and higher disposable income levels have helped furniture sales pick up during the past year. As fears of the housing bubble dissipate, industry revenue is anticipated to rise 2.3% in 2014. However, this boost will be insufficient to temper losses incurred over the past five years; consequently, revenue is expected to fall at an average annual rate of 1.0% to $10.1 billion during the five years to 2014.

Rising prices are expected to help furniture store retailers achieve sales growth in 2014; however, industry operators are unlikely to reap the benefits of higher sales. Competition in the Furniture Stores industry is at an all-time high, with a crowded field of competitors fighting over lower-than-average demand. “Per capita disposable income levels and consumer confidence remain relatively low, forcing operators to price gouge to lure frugal consumers,” says McKitterick. As competition heats up within the industry, furniture retailers have felt added pressure from discount stores and warehouse outlets. Markdowns and discounts will likely squeeze operators' profit margins, forcing some small retailers to exit the industry.

Consolidation is not forecast to continue over the next five years; nevertheless, operators will continue to find it difficult to compete. External competition from big-box and e-commerce retailers will continue to steal away customers and revenue from industry operators. Nevertheless, the industry is expected to begin expanding during the next five years. As the real estate bubble dissipates, the housing market is expected to normalize. Rising household incomes will fuel demand for new homes as consumers shift from purchasing cheaper rental homes in multi-unit apartments to single-family units.

For more information, visit IBISWorld’s Furniture Stores in Canada industry report page.

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IBISWorld Industry Report Key Topics

This industry sells household, outdoor and office furniture (except those sold in combination with office supplies and equipment), including living room, dining room and bedroom furniture, upholstered furniture, desks and home office goods, lamps, recliners, rugs and outdoor pieces.

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About IBISWorld Inc.

Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service, and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-37721-800-330-3772 .

Source: IBISWorld Inc.

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