The Zacks Retail-Home Furnishings industry continues to face macroeconomic pressures. Elevated mortgage rates and subdued housing turnover remain key challenges, limiting demand for big-ticket home-related purchases. Cautious consumer spending, particularly among middle-income households, has weighed on overall sales volumes. Tariff concerns and broader economic uncertainty have also added to cost pressures and planning complexities for retailers. While premium categories supported by higher-income consumers have shown relative resilience, the broader environment remains uneven.
That said, the industry is showing gradual signs of stabilization, supported by ongoing digital transformation and strategic repositioning. Technology-driven initiatives such as augmented reality shopping tools, AI-powered personalization and mobile-first engagement strategies are enhancing customer experience and supporting sales. Companies like Williams-Sonoma, Inc. WSM and FGI Industries Ltd. FGI are leveraging product innovation, disciplined cost management and targeted marketing efforts to strengthen brand positioning and capture market share over the long term.
Industry Description
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.
3 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. Many homeowners remain reluctant to sell or move due to high mortgage rates, which suppresses housing turnover — traditionally a key driver of furniture and home furnishings demand. When fewer people move, the high-value furniture purchase cycle slows, and retailers often need to lean more on replacement demand or smaller ticket items.
Also, 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. Competition in the home furnishings space remains fierce. Retailers face mounting pressure from big-box chains, off-price operators emphasizing a value-driven, discovery-focused shopping experience, and digital-native players that continue to invest aggressively in expansion. In response, several companies are relying more heavily on discounting, extended financing options and sustained promotional campaigns to protect market share. While these strategies may help drive traffic and sales volumes, they also increase pricing pressure and can weigh on margins over time.
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 Bleak 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 #150, which places it in the bottom 38% 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 dull 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 January 2026, the industry’s earnings estimates for 2026 have decreased to $10.81 per share from $10.95.
Despite limited near-term visibility, we highlight a few stocks that investors may consider adding to their portfolios. First, we examine the industry’s shareholder returns and current valuation backdrop.
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 lost 7.3% against the broader sector’s 3.1% growth. The Zacks S&P 500 Composite has gained 20.4% in the same time frame.
One-Year Price Performance
Industry’s Current Valuation
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 23.05 compared with the S&P 500’s 22.58 and the sector’s 24.49.
Over the last five years, the industry has traded as high as 25.1X and as low as 14.19X, with the median being 20.17X, as the chart below shows.
Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500
2 Retail-Home Furnishings Stocks to Watch
We have highlighted two stocks from the industry that are capitalizing on fundamental strengths and have solid growth prospects.
Williams-Sonoma: This is a San Francisco, CA-based multi-channel specialty retailer. The company has been benefiting from strong multi-brand momentum, expanding retail productivity and ongoing strength in both furniture and non-furniture categories. The company is benefiting from improved inventory availability, enhanced in-store experiences, and double-digit gains in emerging brands like Rejuvenation and GreenRow. Strategic initiatives such as Dorm, West Elm Kids and B2B—up 9% in the fiscal third quarter—are widening its addressable market, while AI-driven customer service and supply-chain efficiencies are boosting conversion and profitability. With premium product innovation, reduced promotions, and successful collaborations, Williams-Sonoma continues to gain market share despite a weak housing backdrop.
The WSM stock — currently carrying a Zacks Rank #2 (Buy) — has gained 5.5% over the past year. Nonetheless, Williams-Sonoma has seen an upward estimate revision for fiscal 2026 earnings to $9.10 per share from $9.09 over the past 30 days. This company surpassed earnings estimates in all the trailing four quarters, the average being 8.6%. The estimated figure for fiscal 2026 indicates 4.6% year-over-year growth. It has an ROE of 53.1%.
Price and Consensus: WSM
FGI Industries: Based in East Hanover, NJ, FGI Industries provides bath and kitchen products to customers across North America, Europe and other international markets. The BPC strategy, which focuses on strengthening brands, expanding product innovation and deepening channel reach across regions, has been benefiting the company. Growth remains anchored in the resilient repair-and-remodel market, where sanitaryware demand rose 7% despite tariff pressures in the last reported quarter. The company is also scaling its presence in India and the UK, adding new dealers and winning programs, while digital ventures such as Isla Porter broaden its premium design reach. Margin improvement from a better mix and lower operating expenses further supports expansion. Strong customer relationships and diversified sourcing, including China+1 initiatives, also enhance long-term growth visibility.
The FGI Industries stock — currently carrying a Zacks Rank #3 (Hold) — has gained 41.2% over the past year. Meanwhile, this company surpassed earnings estimates in two of the trailing four quarters, the average being 80.1%. For 2026, the Zacks Consensus Estimate indicates a 56% improvement from a year ago.
Price and Consensus: FGI
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This article originally published on Zacks Investment Research (zacks.com).
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