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IKEA, Wayfair, and their impact on the home decor market

Ikea versus Wayfair - Home Decor Market Share

By Stacie Hughes

Do you know what I love about shopping today versus just 5 years ago (besides avoiding crowds via the web)? Visualizing my potential purchases in home! I still remember using Wayfair’s augmented reality (AR) app for the first time—allowing me to see that wingback in charcoal gray sitting comfortably next to the fireplace. Thanks to the AR in the app and Wayfair’s speedy delivery, my home now has a new kitchen table, chairs, two headboards, new lighting, and more! After such a positive experience, the researcher in me wanted to take a deeper look into the furniture and home décor market category, as well as key retailers like IKEA and Wayfair, and the progress they have made to grow and capture share.

While I expected my purchases alone to account for a point or two of share, I was surprised to learn that Wayfair’s 4.4 percent share of the furniture and home décor market was lagging behind some of the heavy hitters (e.g. Walmart, Amazon, Target, etc.). This is due to the inclusion of various categories we track such as medicine cabinets, storage, lighting, furniture and more. Consumers still visit their local stores to buy these categories, but the difference in Wayfair’s unit share and dollar share (2.6 vs. 4.4) shows that consumers tend to shop there for more expensive items. Despite being lower than I expected, Wayfair has shown consistent year-over-year growth in the last eight quarters. IKEA’s market share is also smaller than the other major players in the Home Décor category. That said, they certainly compete (and not just in meatballs and free in-store children’s play area); they hold steady with just over 4 percent of the furniture and home décor market share over the last three years.

Both outlets have their perks—whether it’s IKEA’s Småland supervised play area or Wayfair’s endless aisles and fast shipping (allowing me to order and receive my products before anyone in the house finds out I’ve been shopping). Despite this, perhaps due to the tactile nature of Home Décor products, neither IKEA nor Wayfair are usually the first store shopped for Home Décor- consumers usually check Home Depot or Lowe’s first.

TraQline covers a wide array of furniture and home décor products, and our analysis included  everything from storage and shelving to area rugs and living room furniture. Below, we’ll look at which products seem to draw shoppers to IKEA and Wayfair.

At IKEA, consumers gravitate most often to shelving, which wins 22 percent of the product mix. In a tie for second place are Bedroom Furniture and Storage, both winning 17 percent. Wayfair’s customers are much more focused than IKEA customers. Wayfair’s top products are Family/Living Room Furniture (23 percent), Bedroom Furniture (17 percent), and Kitchen Furniture (7 percent).

A Changing Trend: How Online Sales are Influencing Home Décor Market Share

Furniture and home décor shoppers still tend to make their purchases in-store. However, in the past three years, we’ve seen a statistically significant decline in the share of customers who make their purchases in a brick-and-mortar store. In-store purchases have dropped from 76 to 72 percent in that time period, making way for a 4 percent increase in online purchases.

As an almost entirely online retailer, Wayfair has clearly benefited from this shift in shopping habits. IKEA, on the other hand, is a multi-channel retailer. It still wins the majority of its market share from in-store purchases, but their mobile app and website have helped push online sales to increase significantly in the last two years, driving online sales to 12 percent of its total mix (Source TraQline unit/dollar 4Q ending Q3 2019). Interestingly, when we look at dollar share for online buyers only, Wayfair rises towards the top, with 17 percent of share for the last year. It is quickly closing the gap between itself and its #1 competition, Amazon. Dollar share increases are likely a result of the higher ticket furniture purchases being made as consumer become more comfortable with platforms like Wayfair’s, as well as making large purchases online in general. Despite Ikea’s recent growth in online sales, when looking only at online share, the retailer captures 3% of consumers’ dollars.

While the retail space continues to evolve and change at a rapid pace, watching how each retailer innovates to meet the needs of their customers. They’ve already introduced things like AR apps, in-store kitchens, and childcare (how’s that for innovation!?), so what will come next? If you had asked me three years ago whether or not I would purchase furniture online without having seen it in person first, I would have said you were crazy. However, more consumers are embracing online furniture and home décor sales, and retailers are right there to meet us where we are.  Plus I value my fellow consumers’ opinions and those online reviews are the game-changer leading me to click ‘complete purchase’. While Wayfair and Ikea are not the first stores shopped for furniture and home décor, they are rapidly evolving to capture share of the category, and will be two retailers to keep an eye on.

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TraQline's Dave Stevenson, PH.D President & CEO
Dave Stevenson, PH.D
President & CEO

Before launching The Stevenson Company in 1995, President and CEO Dave Stevenson managed worldwide research for product development, distribution, advertising, and customer satisfaction. His roles, first as head of the marketing section of General Motors’ worldwide product planning group, and later as director of GE Appliances’ global economics and market research team, give him extensive experience in consumer as well as business to business marketing solutions. Mr. Stevenson holds a Ph.D. in statistics from Southern Methodist University.