Consumers are expected to be more cautious about their expenditures in 2024, especially if inflation continues on its current trajectory. This has put a damper on the furniture store sector, which is in stark contrast from the previous few years when home dwellers were obsessed with gussying up their interior spaces. However, the millennial audience has proven to be the exception, as many are purchasing their first homes and need furniture and appliances, albeit ideally at a cheaper price point. This makes the affordably priced furniture store a hot commodity in the real estate space. Family friendly neighborhood locations work well for these types of tenants, and their large space requirements are perfect for bigger warehouse-style buildings, or even former Bed, Bath & Beyond, Kmart or Sears units. The top players that are in expansion mode include Ashley, American Freight, Bob’s Discount Furniture and At Home.
Ashley, which rebranded their stores from Ashley HomeStore this summer, expects to open between 25 and 35 new stores per year, at least for the foreseeable future. Expect to see more Western/Southwestern markets that have experienced recent population growth to be targeted for expansion, especially after Ashley’s new one million-s.f. distribution and manufacturing facility in Avondale, Ariz., is completed by 2024. The Southeast will also see new units, specifically in Jacksonville, Fla., as well as growing communities in the southern portions of Mississippi and Alabama. Other Southern and Midwest markets, such as untapped regions in Tennessee, Kentucky, Texas, Ohio, Minnesota (specifically throughout St. Paul and Minneapolis), Michigan and West Virginia are also continually eyed for new stores, as well as Northeast states such as New York and New Jersey.
Size requirements for Ashley can run the gamut, with more rural market stores in the 14,000- to 30,000-s.f. range, and more populous metro units in the 40,000- to 65,000-s.f. range. Inline or end cap spaces in strip mall or neighborhood centers, as well as standalone buildings within a larger power center, or even retail street-front buildings, all work well for Ashley. Co-tenants should include daily errand brands such as Anytime Fitness or Walgreens. Ashley, which has a large number of licensees that own and operate their own storefronts, will be modernizing all of its stores with trendier furniture merchandise in a more open-format redesign by the end of 2024. This is in order to appeal to more of the younger, millennial-aged shoppers.
American Freight, which just began franchising its store concept in 2020 after being acquired by FRG Inc., anticipates opening between 20 and 30 new stores per year over the next two years. Upcoming growth will take place in all Southeastern markets, as well as in Missouri, Texas and Utah, the latter state which saw its first unit this month in Ogden. Continued growth will also occur in all markets within Colorado and Massachusetts.
Anticipate future growth to take place in smaller, untapped tertiary markets in the West, especially in California, Arizona and Nevada, where American Freight still does not have as large of a presence. In 2020, the brand boosted up its overall national presence by acquiring and rebranding 130 former Sears Outlet units and 30 former FFO Home units into its own namesake.
Ideal spaces for American Freight are between 17,500 and 30,000 s.f., either inline or end caps of a neighborhood center, a standalone building that is an outparcel of a retail center or even a refurbished warehouse near other home-themed stores such as Floor & Décor. Other co-tenants that work well include discount-oriented brands, such as Dollar Tree or Ross Dress For Less. Spaces in both urban metros and suburban/tertiary communities are sought after. American Freight, which is contemplating acquiring the Conn’s HomePlus fleet of stores, keeps its prices affordable with its low overhead warehouse style setup.
Bob’s Discount Furniture is on track to open between 15 and 20 new stores per year over the next two years. Continued growth will occur in markets where it already has a strong foothold, especially in the Northeast, namely throughout Virginia, Pennsylvania, New Jersey and New York’s Hudson Valley region. In addition, Wisconsin, Iowa, Indiana, Kansas, Kentucky and Missouri will be on the radar. Western markets will also be eyed for continued growth, especially Arizona and Northern California.
Bob’s unit sizes are generally between 25,000 and 45,000 s.f. Preferred sites should be inline or end caps in retail-heavy corridors, within power centers, grocery-anchored centers, open-air neighborhood centers or strip malls, as well as in standalone outparcel buildings. Heavily populated residential-oriented neighborhoods in both suburban communities and more urban metros are targeted. Preferred co-tenants include popular discount-oriented brands, such as Aldi, Five Below and T.J. Maxx, or other established daily errand brands, including Ulta and Target. Bob’s Discount Furniture is a value-priced furniture and mattress store that also provides complimentary treats for its customers, such as ice cream, cookies, candy and gourmet coffee.
At Home hopes to open between 10 and 20 new stores per year through the end of 2024, with that number potentially expanding to up to 25 new stores per year by 2025. Its expansion goals are anticipated to be aided by its acquisition in 2021 by Hellman & Friedman, a private equity firm focused on growing the brand’s store count. Areas targeted for growth include California, which is projected to receive up to 60 more units over the long term. Further growth will occur primarily in markets where At Home is still underpenetrated, including Florida, Colorado, Northern California, Idaho, Illinois and Connecticut.
New building construction is an option for At Home, as well as second-generation retail spaces, between 84,000 and 120,000 s.f., in high-density suburban shopping districts or areas near a college. Standalone retail buildings within regional power centers, especially a former JCPenney or Kmart, work well for At Home, and the potential site should be near other high-traffic big-box retailers such as Walmart or Costco. At Home is a no- frills warehouse-style store renowned for its huge assortment of home products, including furniture, décor and kitchen supplies at reasonable prices due to the majority of the items being its own private label.
