Furniture Trader revenue rises 30% to more than AUD $30m

The Furniture Trader grew revenue 30% to more than $30 million in the last financial year, even as broader Australian retail faced a string of business failures.

The Melbourne family-owned retailer operates four large-format showrooms across the city and has taken a different approach from chain stores and online-only rivals. Its model focuses on non-branded furniture that customers typically want to see in person before buying. Despite attracting about 60,000 monthly website visitors, online sales account for only 5% of revenue.

That store-led approach has helped insulate the business from some of the pricing pressure in eCommerce, where retailers selling smaller branded items often face direct comparison and discounting. Bulky products, freight costs and the practical difficulty of moving fragile goods have also made furniture less suited to a pure online strategy.

"We've managed to protect our market position without having to compete in the 'race to the bottom' eCommerce sectors like so many other retail businesses, where small branded products became too competitive for independent family businesses to compete against the online retailers," said Sam Cain, Operations Manager at The Furniture Trader.

Cain said the showroom format has worked in the company's favour.

"Our style of furniture showrooms - large, bulkier goods and freight prices - has been somewhat shielded from stronger online retail competition due to non-branded, wide-ranging styles and the extra effort we go to in handling the fragile and difficult nature of furniture," he said.

Store-led model

Most customers still prefer to buy in person, particularly for larger household purchases where size, comfort and appearance are harder to judge on a screen. That preference has shaped how the retailer allocates investment between digital channels and physical stores.

"We feel this is because our furniture range is largely restricted by the high cost of transportation and the 'touch and feel' aspect of the product," Cain said. "Whilst we endeavour to improve our eCommerce presence, we know most of our customers prefer to purchase in-store, where they can get a better perspective on how something really looks, the comfort of the item and the size."

The growth comes during a difficult period for discretionary retail, with household budget pressure weighing on sales and several operators failing. Furniture has been especially exposed because purchases can often be delayed. One part of the customer base has remained active, however: buyers moving into new homes.

According to Cain, furnishing an empty property creates demand many households cannot postpone for long. That has helped support sales even as broader sentiment has weakened.

"Customers generally would put off buying new furniture; however, when you have an empty home, the need for new furniture becomes very important. Because of our price-competitive business model, on-trend buying and high quality of service, we were able to compete and grow our share of the market," he said.

Supply shift

Pandemic disruption also altered the company's supplier relationships. It faced warehouse pressure when containers of stock kept arriving while stores were unable to open, but Cain said the same period also changed access to manufacturers.

"The season of COVID brought about some incredible challenges to the business. We were unable to open, but had containers of furniture that had been ordered arriving, filling our warehouse capacity, forcing us to look for warehouse solutions in an environment where everyone was in the same boat, and a serious lack of warehousing was available," he said.

As larger retail customers reduced orders, some overseas factories began dealing with mid-sized retailers that had previously been outside exclusive supply arrangements. Cain said that gave The Furniture Trader access to a broader range of manufacturers and products.

"During this time, many of our overseas suppliers saw their exclusive customers cut off their orders, leaving them holding the stock, with no real remorse for the effects this had on their factory and capacity," he said. "This environment opened up these factories to start dealing with more mid-tier retailers like us, instead of keeping the exclusive supply deals with larger chain retailers. Our reputation and relationship in the industry also assisted in getting access to better manufacturers, enabling us to offer higher-end furniture at very competitive prices."

The retailer also said customer preferences were shifting. Rather than trading down to lower-priced items, it found more buyers willing to spend more on furniture they expected to keep longer, particularly in Melbourne's outer suburbs.

"We found our market responded very well to this, whilst at the same time our customers were becoming more interior design conscious of contemporary styles and colours, once again driven by online social media and eCommerce," he said.

Cain added: "In recent years, we found customers responded better to higher-quality, more expensive furniture. We feel this is largely due to Melbourne's outer suburbs becoming more established. People also started to see higher-quality furniture as a better investment in their new home, rather than simply finding a price-solution room package that would do the job until their situation changed."

Family strategy

The business has been run by the Cain family for three decades. Cain said the division of responsibilities between family members has helped the company grow without pushing too aggressively for scale.

"Eventually, my brother Daniel (Product Manager) stayed focused on product; I stayed focused on business processes and IT. Jim stayed present and made the big asset purchases and rental decisions as we grew, but as a team we formed a growth synergy," he said.

Family ownership has also shaped how the company approaches staff, customers and expansion decisions.

"We always bring our family values into any decision-making when it comes to staff and customers; it's not always about the bottom line, which we feel rings true in a family-owned business environment," he said.

In a weak retail market, that has meant caution rather than rapid expansion.

"Don't change what you are doing if you can see potential for growth. Stay in your lane by being good at what you do with your goods and services. Don't overextend your financial position in an opportunity to achieve growth, as the environment can change, and other opportunities to achieve growth will arise and seem obvious," he said.