The Zacks Retail-Home Furnishings industry comprises retailers offering home furnishing products under various categories. The merchandise assortment includes furniture, garden accessories, framed art, lighting, mirrors, candles, tableware, lamps, picture frames, bathware, accent rugs, artificial floral products, and child and teen furnishing. The industry players also develop, manufacture, market and distribute bedding products. The companies provide home and security products for residential home repair, remodeling, new construction and security applications. They are involved in manufacturing, assembling and selling faucets, accessories, kitchen sinks and waste disposal.
4 Trends Shaping the Future of the Retail-Home Furnishings Industry
Macroeconomic Challenges: The companies continue to face significant macroeconomic challenges, primarily stemming from a weak housing market and persistently high interest rates that weigh on consumer spending for big-ticket home furnishings. Inflationary pressures and tariff volatility further complicate the landscape, with the industry players noting that its incremental tariff rates have doubled since first-quarter 2025, creating cost headwinds and margin risks. While selective price increases and supply chain efficiencies have been helping, rising import duties and global trade uncertainties make long-term sourcing and pricing strategies difficult to plan. These challenges mirror broader pressures across the U.S. retail home furnishings industry.
Also, fierce competition in the home furnishings space is intensifying, with online giants like Amazon and Wayfair, specialty retailers, and direct-to-consumer brands pressuring traditional stores.
Slower Growth Expectation: The Federal Reserve (Fed) has lowered its U.S. economic growth forecast amid uncertainty while raising its inflation projection surrounding President Trump’s tariff policies in the latest meeting. The Fed now expects GDP growth of 1.4% for 2025, down from its previous estimate of 1.7%, and inflation to rise to 3%. Interest rates remain unchanged at 4.25%-4.5%. Fed also expects unemployment to rise to 4.5% by year-end.
The Federal Reserve warned that tariff-driven uncertainty could push U.S. inflation higher and slow economic growth.
Online Growth, Tech platforms, Digital Services & Personalization: Continuing acceleration in online furniture shopping, combined with cutting-edge solutions like room visualizers and AR, unlocks strong growth potential. Major platforms, like Wayfair, Amazon and Williams-Sonoma, are investing heavily in AI driven personalization and immersive user experiences. Features like augmented reality (AR) room visualizers, virtual reality showrooms, and mobile first shopping are reshaping the consumer journey. Companies leading innovation in these areas are well positioned to capture share as convenience and digital engagement become critical in buying decisions.
Gen Z and millennials value customization. Services such as AI-driven design apps, virtual interior consulting, and bundling (such as packaged room solutions) will help the companies boost margins. For example, Lowe’s acquisition of Artison Design (a home furnishing design/install company) signals that offering full-service packages is lucrative. Furniture retailers can similarly offer in-home assembly, design subscription services, or AR “try-before-you-buy” apps to increase attachment rates and customer loyalty.
Strong Product Reinvention & Marketing Moves: Product innovation plays a pivotal role in market share gain in this industry. Companies aim to come up with products and collaborate with celebrated brands and designers to maintain exclusivity. Also, customer experience is being enhanced by innovative marketing techniques, with an emphasis on digital marketing, better merchandising, store remodeling and loyalty programs. The companies are also going for strategic omnichannel expansion. Even digitally native retailers are exploring brick-and-mortar formats to enhance brand visibility and customer experience. Wayfair’s first large-format store in Illinois exemplifies this hybrid approach. Meanwhile, premium players like RH RH continue expanding showrooms that blend physical touchpoints with high-end brand storytelling.
Zacks Industry Rank Depicts Dull Prospects
The Zacks Retail-Home Furnishings industry is a 10-stock group within the broader Zacks Retail-Wholesale sector. The industry currently carries a Zacks Industry Rank #206, which places it in the bottom 16% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bearish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since April 2025, the industry’s earnings estimates for 2025 have decreased to $2.54 per share from $2.78.
Despite the industry’s blurred near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.
Industry Lags the Sector & S&P 500
The Zacks Retail-Home Furnishings industry has underperformed the broader Zacks Retail-Wholesale sector and the Zacks S&P 500 Composite over the past year.
Over the past year, the industry has gained 11.9% compared with the broader sector’s 25.4% growth. The Zacks S&P 500 Composite has gained 20.5% in the same time frame.
On the basis of the forward 12-month price-to-earnings ratio, which is commonly used for valuing retail home furnishing stocks, the industry is currently trading at 23.81 compared with the S&P 500’s 22.89 and the sector’s 25.51.
Over the last five years, the industry has traded as high as 24.95X and as low as 14.07X, with the median being 20.04X, as the chart below shows.
We have highlighted two stocks from the industry that are capitalizing on fundamental strengths and have solid growth prospects.
Somnigroup: Based in Lexington, KY, the company has been benefiting from several structural and strategic drivers that set it apart in a weak bedding industry backdrop. The successful integration of Mattress Firm has quickly generated both sales and cost synergies. The company has refined merchandising, shifted more share toward Tempur Sealy products and strengthened supplier partnerships, improving margins and positioning. Vertical integration across manufacturing, logistics and sourcing has enhanced efficiency, while leveraging Mattress Firm’s extensive delivery network has improved fulfillment speed and customer satisfaction. Importantly, Somnigroup now holds unmatched scale and advertising dominance, becoming the largest advertiser in the bedding industry, which boosts brand visibility and traffic. These initiatives, supported by disciplined execution, have allowed the company to consistently gain share in a declining bedding market, positioning it for significant EBITDA benefits even before broader industry recovery takes hold.
The Somnigroup stock — currently carrying a Zacks Rank #2 (Buy) — has gained 78.6% over the past year. Meanwhile, this company surpassed earnings estimates in all the trailing four quarters, the average being 3.7%. Somnigroup has seen an upward estimate revision for 2025 earnings to $2.54 per share from $2.49 over the past 30 days, depicting analysts’ optimism over the company’s prospects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Williams-Sonoma: This is a San Francisco, CA-based multi-channel specialty retailer. The company has been benefiting from its focus on digital initiatives, higher e-commerce penetration and product introductions. Williams-Sonoma is capitalizing on its strategic emphasis on broadening its product range and establishing a sustainable operational framework. By adopting a digital-first approach without exclusively relying on digital-only channels, the company has gained a competitive edge. Its strong e-commerce platform and successful Business-to-Business segment position it for substantial expansion, overcoming ongoing consumer spending challenges. The company’s portfolio of brands, serving a range of categories, aesthetics and life stages, is a tailwind.
The WSM stock — currently carrying a Zacks Rank #3 (Hold) — has gained 53% over the past year. This company surpassed earnings estimates in all the trailing four quarters, the average being 10.2%. The estimated figure for fiscal 2025 indicates a 3% year-over-year decline. Yet, it has a ROE of 54.5%.
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don’t build. It’s uniquely positioned to take advantage of the next growth stage of this market. And it’s just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it’s positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report
Somnigroup International Inc. (SGI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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