October 1, 2008, 12:00 AM

Housewares and home furnishings retailers weathered ‘07 economic storm

Even in the face of a slowing economy and the housing crisis, online housewares and home furnishings retailers ranked in Internet Retailer’s Top 500 Guide still managed to grow by 20% in 2007.

Even in the face of a slowing economy and the housing crisis in 2007, online housewares and home furnishings retailers ranked in Internet Retailer’s Top 500 still managed to grow their combined sales by 20%.

For the year, the cumulative web sales of the 58 housewares and home furnishings merchants ranked in the 2008 edition of The Top 500 Guide rose by 20% to $3.9 billion from $3.24 billion in 2006. In comparison, all retailers ranked in the Top 500 Guide grew their combined sales year-over-year by 21.6% to $101.7 billion while total online retail sales rose by 21.8% to $165.9 million.

In 2007, segment leader Williams-Sonoma Inc., No. 21 in the Internet Retailer Top 500 Guide, generated e-commerce revenue of $1.1 billion, up 19% from Internet revenue of $927 million in 2006. Following Williams-Sonoma in the Top 500 housewares and home furnishings category are Crate and Barrel (No. 52) at $286 million; CSN Stores Inc. (No. 69) at $202 million; Hanover Direct Inc. (No. 81) at $176 million; Restoration Hardware Inc. (No. 83) at $166.4 million; Art.com Inc. (No. 93) at $145.1 million; Lillian Vernon (No. 105) at $131 million; AJ Madison Inc. (No. 124) at $96.1 million; Brookstone Inc. (No. 131) at $89 million and Bed, Bath & Beyond Inc. (No. 134) at $86.4 million.

Williams-Sonoma now controls 28% of the online housewares and home furnishings market as measured by the Top 500 Guide, compared with 7% for Crate and Barrel, 5.1% for CSN Stores and 4.5% for Hanover Direct.

In 2007 the combined performance of all Top 500 housewares and home furnishings merchants easily outpaced the growth of store-based sales for the segment, which grew by only 1% to $118.6 billion from $117.7 billion in 2006, according to the U.S. Department of Commerce. In the case of Williams-Sonoma it also was the web that accounted for nearly all of the retailer’s sales growth. In comparison to e-commerce, overall sales grew by just 5.9% in 2007 to $3.94 billion from $3.72 billion in 2006. Comparable store sales increased year-over-year by just 0.3%. In 2007, the Internet made up 28% of total sales, but represented 81% of revenue growth across stores, the web and catalog.

The web was also the biggest generator of sales growth at Brookstone, which prior to the holiday season last year enhanced Brookstone.com with a three-dimensional store that brings shoppers into an actual Brookstone store, enabling them to browse the aisles, view housewares and home furnishings and – ideally – purchase products. Brookstone, a multi-channel retailer of specialty lifestyle merchandise, reported $89 million in web sales for 2007 a 31% increase compared with $68 million in online sales in fiscal 2006. Overall full-year sales were $562.8 million, a 9.9% increase from fiscal 2006. But more important the web, which accounted for 16% of all sales, drove 38% of the revenue increase across all channels. In comparison same-store sales rose year-over-year by just 5.2%.

Top 500 housewares and home furnishings retailers grew year-over-year for a simple reason: they’ve made it easier for consumers to shop the web for the niche items they seek. While chain retailers such as Linens `n Things (No. 154) in May filed for Chapter 11 bankruptcy protection and announced plans to close 120 underperforming stores, niche web merchants continue to do well online. With more than 200 niche web sites selling home furnishings ranging from wall art and woks to waterbeds, CSN Stores grew sales by 84% last year to $202 million, up from $110 million in 2006. CSN Stores also is continuing to explore new merchandise categories to present on individual web sites, says Eric Klose, vice president of marketing. “We continue to identify categories we feel are underserved on the Internet,” he says.

Other niche retailers ranked in the Top 500 home furnishings and housewares sector also performed well last year. The sub-prime mortgage meltdown and slowing general housing marketing certainly aren’t taking a toll on niche retailer Cymax Stores Inc.

In fact, while store-based merchants in the home furnishings and housewares space are seeing less foot traffic and slower sales because of a weaker economy, Cymax (No. 247) is expanding. A year ago Cymax had 30 or so niche sites, a number that has since grown to about 112.

By December, Cymax could be operating as many as 200 stores. Sales in 2008 also are forecast to rise by about 38% to $45 million from $32.5 million. In the last month, Cymax has launched seven niche sites aimed at buyers of patio furniture and plans to launch 15 more stores targeting consumer electronics and appliance shoppers. “Whether it’s one web site or 112, customers expect to find plenty of product information, crisp images and to locate merchandise quickly,” says Cymax CEO Arash Fasihi.

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