Rising consumer confidence and disposable personal income are driving a release of pent-up demand in the home furnishings and décor sectors, according to the Consumer & Retail Insider, an industry report released by Brown Gibbons Lang & Company. Investor appetite has increased in line with favorable demand trends which is spurring investment activity.
The BGL report, now available online, examines developing trends in the Home Environment industry.
- Positive trends in the housing market coupled with changing demographics, notably the growing number of millennial first-time home buyers and downsizing empty nesters, establish the foundation for a thriving market in home fashion.
- Retailers of home furnishings and décor are reporting strong growth and investing in brick-and-mortar and digital assets in anticipation of growing demand. eCommerce is seeing double-digit growth as technology, convenience, and product assortment drive more online purchases in the category.
The fragmented home décor market has seen robust M&A activity as market participants pursue product line and channel expansion to tap new shoppers and grow online sales. The Home Depot (The Company Store), Masco Corporation (Kichler Lighting), and Newell Brands (Chesapeake Bay Candle) are among the large home goods companies shopping for acquisitions, each announcing deals during the last six months. Private equity funds are investing in this growing niche, illustrated by recent platform buys in home décor (Sycamore Partners/NBG Home), lighting (CID Capital/Grandview Gallery and AEA Investors/Visual Comfort), and home fragrance (NEST Fragrances/Eurazeo).
We expect the M&A market in home furnishings and décor will continue to be active as companies seek access to innovative products, new markets, and eCommerce-driven business models to accelerate growth.