HIGH POINT — Nearly one in five residents in the greater Denver metro wasn’t there a little more than a decade ago.
From 2010, population in the metro grew 18.57% to 3,015,776 in 2022, according to EASI Analytics. That presents plenty of opportunities for furniture and home furnishings retailers to pick up sales.
But unlike some exploding metros, Denver has a truly dominant player in town, as Top 100 retailer American Furniture Warehouse has firmly planted its flag here and picks up a lion’s share of sales.
“We don’t have a lot of competition. CBS 4 had a survey where people buy their furniture, and we had a 65% market share,” Jake Jabs, CEO of the Englewood, Colo.-based retailer, told Furniture Today. “So many stores have left here, Levitz, Heilig Meyers. None of them really came back. We dominate the market here. We are the player here and dominate the market.”
While AFW is king of the (Rocky) mountain, there are others who have found success here. Denver has a few national brands, such as La-Z-Boy, Crate & Barrel, West Elm and Room & Board, and the metro is the home of Furniture Row and Denver Mattress as well as HW Home, Home Collections Furniture, Lulu’s Furniture & Décor and others, who have carved out their own niche.
How’s business?
Jabs said in the past five years, American Furniture Warehouse’s sales (which include stores in Arizona and Texas) have grown from $700 million to more than $1 billion, and each of its stores have grown at a nice clip.
“We’ve had nice, steady growth. All of our stores are up over the past five years. Overall, our business has been up, around 10% a year,” he said.
And while business has slowed this year, Jabs said there are still opportunities because of the city’s growth trajectory.
“Denver’s growing. Business is soft, but I think it’s soft everywhere. Our business is down a little bit. I think all businesses are down,” he said. “When you drive around, they’re building warehouses and apartments and condos.
“Denver’s a hub of a huge area. Wyoming, a lot of Nebraska, Kansas, New Mexico. We send 15 trucks a week to Wyoming, for example. Denver is the hub of the Rocky Mountain area right now.”
Ron Werner, president of HW Home, said the growth is part of an overarching trend of people moving to what he called “minor-major” cities such as Denver, Charlotte, Indianapolis and Minneapolis, among others.
“People figured out there’s cities like Denver where there’s infrastructure. There are great restaurants. Denver has a world class opera; they only have three shows a year, but we have a beautiful opera house,” Werner said. “There’s culture; shopping, food, lifestyle, activity. It’s a lot easier to get around and a lot more affordable.”
That presents opportunities for HW Home, which operates on the higher end. “When we set up shop in Boulder shy of 25 years ago, Denver was your classic Cow Town,” Werner said. “Because of people like us and others who have come in and set up shop and planted a flag in the town, the coast, L.A. and New York do not have a monopoly in style, life or culture.”
The middle, however, is feeling a bit of a squeeze. Christy Brant and Caitlin Marsh, a mother-daughter team who own Lulu’s Furniture & Décor, said while there is some business to be had, it has its difficulties.
“The retail environment in Denver is a tough one and has a lot of choices at the low-end/discount pricing and a few at the super high end, but not a lot in the middle, which is where we fall,” they said. “Our store has experienced a pretty slow spring and summer as it seemed a lot of people were traveling and not home. We also think that Denver is a weird market in that a lot of Denverites would rather spend their money on new bikes or skis, than putting money into items for their homes.”
What’s ahead?
While the COVID boom generated accelerated sales, consumers are either pulling back on spending or paying for experiences. Brant and Marsh said that means the next five years could be critical in determining how many stores make it.
“We experienced a bit of the crazy times when everyone wanted everything for their homes, and we could not get it, and (we) are now experiencing the other end, where everyone wants to be out doing things and traveling,” the retailers said. “2023 has proven to be a challenge in many ways as customers seem to be trying to figure out where the economy is really going.
“The next five years could be a make it or break it time for more of us small stores. Will consumers realize that local stores are the lifeblood of their communities and how much we contribute to their cities, or will price and convenience of online shopping win out and every town will look the same as any other?”
Jabs thinks business feels rather recessionary, and there’s still a good bit of time to go before the economy rebounds.
“I’ve studied recessions, and most recessions last two years. I think this recession is going to last two years; I think we’re into this one about nine months,” he said. “Business has been down for the last nine months in the furniture business. I think we still have a year, year and a half, to go in this recession. Hopefully, we’ll be out of it by the election.”
Similarly, Werner said demand has definitely dipped and pricing has had a lot to do with that, but he expects a “rocky soft” landing.
“We basically went through a 10% supply shock price adjustment. That did not mean we were in the 1970s of stagflation. We’ve had 2% to 3% growth and about 10% inflation adjustment based on COVID and supply chain, and it’s starting to settle. People are still out there,” he said. “Is it true there are a lot of consumers who got their money from the government and got a cheap $999 sofa? Absolutely. We’re not in that business. Our customers are employed, they’re traveling, and they’re buying second homes.”
What’s selling?
Werner said when people shop HW Home, they’re looking for classics, and he’s happy to deliver.
“Our assortment is fresh and classic. We’re never super modern. Our store is not a sea of beige, which can happen in furniture stores,” he said. “It’s hard to put too much color on sofas, but we’ve brought in colors in leathers and fabrics. We provide pops of color through pillows and accessories and art. They’re timeless but very fresh. If you go to our website and look at our homepage to new arrivals, you see a lot of palette.”
He said selling value is always in fashion, regardless of what level of goods a retailer sells. “Our prices are higher today than they were five years ago, but we still work to deliver value,” Werner said. “We always have to be cognizant of value and deliver value. I don’t sell the most inexpensive things in town, but I deliver value. Prices can be higher, and if you deliver value, you can still succeed.
“I’m bullish on the future,” he added. “As a result of COVID, and even as people are traveling all over, the home is becoming important again. People understand the value of having a great dinner with friends over, and they want their homes to be nice.”
Lulu’s customers gravitate toward local. “We are continuously looking for locally made items, quality bang for your buck, and aesthetically pleasing products as that is what we prefer, and our customers do also,” Brant and Marsh said.
Jabs said American Furniture Warehouse’s customers like traditional looks, and there’s a place for transitional. He said natural materials are always a hit.
“We sell a lot of leather. I think maybe the reason is there are a lot of ranchers and farmers. We sell a lot of nice leather,” Jabs said. “In the mountains, we sell a lot of sleepers and bunk beds. If you own a condo in Aspen or Breckenridge, you have to have sleepers or bunk beds. We do a lot of that more than normal.”
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