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IKEA, Wayfair, and their impact on the home décor market

September 21, 2021
ericv Author 5 mins read
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By Stacie Hughes

Do you know what I love about shopping today versus just 5 years ago (besides avoiding crowds via the web)? Visualizing my potential purchases in home! I still remember using Wayfair’s augmented reality (AR) app for the first time—allowing me to see that wingback in charcoal gray sitting comfortably next to the fireplace. Thanks to the AR in the app and Wayfair’s speedy delivery, my home now has a new kitchen table, chairs, two headboards, new lighting, and more! After such a positive experience, the researcher in me wanted to take a deeper look into the furniture and home décor market category, as well as key retailers like IKEA and Wayfair, and the progress they have made to grow and capture share.

Where do IKEA and Wayfair rank in the market?

While I expected my purchases alone to account for a point or two of share, I was surprised to learn that Wayfair’s 3.1 percent share of the furniture and home décor market was lagging behind some of the heavy hitters (e.g. Walmart, Amazon, Target, etc.). This is due to the inclusion of various categories we track such as medicine cabinets, storage, lighting, furniture and more. Consumers still visit their local stores to buy these categories, but the difference in Wayfair’s unit share and dollar share (3.1 vs. 4.4) shows that consumers tend to shop there for more expensive items. Despite being lower than I expected, Wayfair showed consistent growth from year to year, though its share is flat over last year’s. IKEA’s market share is also smaller than the other major players in the Home Décor category. Their share has declined year over year for the last 3 years and is currently at 3.5 percent for the 4Q ending June 2021.

What do home décor shoppers buy at Ikea and Wayfair?

TraQline covers a wide array of furniture and home décor products, and our analysis included everything from storage and shelving to area rugs and living room furniture. Below, we’ll look at which products seem to draw shoppers to IKEA and Wayfair.

At IKEA, consumers gravitate most often to shelving, which wins 23 percent of the product mix. Storage comes in second place at 17 percent, and Bedroom Furniture takes third with 16 percent. Wayfair’s customers are much more focused than IKEA customers. Wayfair’s top products are Family/Living Room Furniture (21 percent), Bedroom Furniture (17 percent), and Office/Computer room Furniture (12 percent). Office furniture in particular has seen a lift over the past two years, likely due to the increased number of people working and studying from home.

Do shoppers visit IKEA and Wayfair before other Home Décor retailers?

Both outlets have their perks: IKEA encourages shoppers to make a day of shopping with Småland supervised play area for children and their in-store food court. Wayfair offers endless aisles and fast shipping (allowing me to order and receive my products before anyone in the house finds out I’ve been shopping). Despite this, neither IKEA nor Wayfair are usually the first store shopped for Home Décor- consumers usually check Home Depot or Lowe’s first.

A Changing Trend: How Online Sales are Influencing Home Décor Market Share

Furniture and home décor shoppers still tend to make their purchases in-store. However, in the past three years, we’ve seen a statistically significant decline in the share of customers who make their purchases in a brick-and-mortar store. In-store purchases have dropped from 73 to 61 percent in that time period, making way for a 14 percent increase in online purchases.

As an almost entirely online retailer, Wayfair has clearly benefited from this shift in shopping habits. IKEA, on the other hand, is a multi-channel retailer. It still wins the majority of its market share from in-store purchases, but their mobile app and website, alongside the global pandemic shifting consumer habits, have helped push online sales to increase significantly in the last two years, driving online sales to 22 percent of its total mix (Source TraQline unit/dollar 4Q ending Q2 2021). Interestingly, when we look at dollar share for online buyers only, Wayfair rises towards the top, with 16 percent of share for the last year. It is quickly closing the gap between itself and its #1 competition, Amazon. Dollar share increases are likely a result of the higher ticket furniture purchases being made as consumer become more comfortable with platforms like Wayfair’s, as well as making large purchases online in general. Despite Ikea’s recent growth in online sales, when looking only at online share, the retailer captures 3% of consumers’ dollars.

Retail spaces continues to evolve and change at a rapid pace. Each retailer is innovating to meet the needs of their customers. They’ve already introduced things like AR apps, in-store kitchens, and childcare (how’s that for innovation!?), so what will come next? If you had asked me three years ago if I would purchase furniture online, I would have said you were crazy. However, more consumers are embracing online furniture and home décor sales, and retailers are right there to meet us where we are.  Plus I value my fellow consumers’ opinions and those online reviews are the game-changer leading me to click ‘complete purchase’. While Wayfair and Ikea are not the first stores shopped for furniture and home décor, they are rapidly evolving to capture share of the category. They are definitely two retailers to keep an eye on.