Go for the Cheese! Yes, the American Market is Sizable, Reachable, and Realizable

This article is focused on specialty brands that we define as producers of design-focused, high quality, manufactured gift and décor items that cater to consumers seeking premier or luxury products.

The U.S. consumer market, the largest in the world, is $3.9 trillion1; furniture, home wares, general gifts, toys and games, clothing and accessories, represent its large sectors.

For specialty brands that want to maximize sales and enhance brand value, a presence in the American market is imperative.

Home décor and general gifts are $128 billion to $233 billion2 of this market. Since the $233 billion size includes floor coverings and textiles, we estimate the consumer-oriented market size to be $128 billion.

Two-thirds of the $128 billion market is subsumed by mass-market, multi-door operators such as IKEA, Bed Bath & Beyond, and Ashley Furniture. The remaining one-third, or approximately $43 billion, is comprised of several well-known brands with no dominant players.  

At BrandMX, we believe that the largely fragmented $43 billion segment is the basis of the market size for premier and luxury products. This segment includes retailers such as Restoration Hardware, Williams-Sonoma, Wayfair/Perigold, Herman Miller/Design Within Reach, Ethan Allen, department stores such as Neiman Marcus, Saks, Nordstrom, and Bloomingdales, ultimate-luxury French and Italian home furnishings brands, a myriad of smaller home decor brands, and boutique resellers—life-style stores, gift shops, museum shops—located in affluent zip codes and tourist destinations.

The interior designer market alone is approximately $16 billion3. This market is likely encompassed by the $43 billion market size above, but it is an important distinction for brands focused on contract and premier home furnishings.

The definition of premier and luxury products in home décor varies by source, and products cross-pollinate across categories such as gift, furniture, furnishings, accessories, etc. To validate the reasonableness of the $43 billion figure, we have taken a second, top-down approach. With 5.7 million high-net-worth individuals4, the $43 billion market size represents an average per capita annual spending of $7,500. High net-worth individuals spend an annual average of $116,000 per household5, and $7,500 represents a justifiable 6-7% of total household spending on premier and luxury products.  

American consumers understand the premier and luxury market; they will pay higher prices for well-designed, high quality products, and are typically receptive to imported brands.

We have established that the market is sizeable! It is certainly reachable and realizable.  International brands have an array of options to enter the market from traditional distributor arrangements to establishing physical subsidiary presence. The right path to entry primarily depends on the type of product.

In order to increase exposure, realize sales, and enhance brand value, brands need to reach the upper echelon of end-consumers via premier retailer and trade channels. Brands need to be both “established and elevated” from day one, and have to unwaveringly pursue channels that have the appropriate reach for their products.  Such channels can further establish an “aura” for the brands and solidify their presence in the market.

There are fewer brands and relatively less competition in the premier and luxury market. Brands with differentiated products can command higher margins and can sustainably thrive.

Well, it is not easy to get to the cheese! Brands need to understand how to navigate the maze. They need to know ingress and egress points, connect to right channels, figure out optimal spend for expansion, all while avoiding missteps.

1 National Retail Federation 2019; excludes automobiles, gasoline and restaurants

2 Mordor Intelligence 2019, IBIS World 2019, GrandView Research 2019, Statista 2019

3 IBIS World 2020

4 Investible assets > $1 million, World Wealth Report 2019, HHI > $125,000, Ipsos 2019

5 Ipsos 2019

Published by Deepa Dadlani


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