Interior of Guest House setup with staged furniture.
Guest House's business is twofold: the company stages homes for sale and also sells the furniture it uses to stage. — Guest House

Why it matters:

  • The home furnishings industry is poised generate a compound annual growth rate of 6% over the next 10 years.
  • As the pandemic has kept many folks both close to home and working remotely, home merchants have benefited from consumers sprucing up their abodes.
  • Leaning into post-COVID living trends, home disruptors Fernish, AptDeco and Guest House tapped their rental, resale and home-staging business models to drive newfound growth.

The pandemic should have dealt a blow to home furnishings companies, an industry largely in the discretionary spending category. Yet this pandemic – which preserved many professional jobs and moved them to workers’ bedrooms, living rooms and home offices – ended up being a boon for three home startups that were quick to recognize new consumer behaviors and lean into them.

Fernish, AptDeco and Guest House seized on stay-at-home orders in 2020 by helping consumers make the spaces where they were spending so much of their time more inviting. These startups were also quick to notice migration patterns out of cities and expanded their businesses into new markets to help consumers decorate their new homes.

“Consumers became more frugal during COVID,” Shambhu Jha, research consultant with Fact.MR, a publisher of market research. “They weren’t spending on parties or travel, but they were spending a lot of time at home and they wanted things to be nice.”

Fact.MR projects a compound annual growth rate of 6% in the home furniture category over the next 10 years.

Consumers are still staying close to home

Nearly a year and a half after COVID first hit the U.S., consumers are still staying close to home. Deloitte recently found that a majority of employers are flexible on the timing of a return to the office. And recent spikes in COVID cases are pushing more workers to continue their work-from-home habits.

The pandemic also changed the way people bought furniture by pushing them to do it online.

“Before COVID, only three in 10 consumers bought furniture online and seven went to a brick-and-mortar store,” says Jha. “It’s exactly the opposite now.”

 Woman decorating bedroom with furniture rentals from Fernish.
Furniture rental company Fernish has noticed a surge in demand for furniture in the home office, dining and decor categories as a result of the pandemic. — Fernish

Fernish: A nation of renters warms up to furniture rentals too

With home prices surging, more of the population is renting than in the past. Fernish, the Los Angeles-based home company that rents furniture from some of the most well-known brands, realized that renting poses challenges where furniture is concerned. Will that California king bed fit into the bedroom of my compact new apartment? Is the burden and expense of moving all that furniture across the country worth it?

“There's nothing easy about furnishing an apartment,” Michael Barlow, co-founder and CEO of the Los Angeles-based company, told CO—. “We marry the subscription economy to the furniture market, making home furnishing effortless.”

Customers can rent from Fernish for as little as two months, though most contracts are for 12 months. At the end of the term, customers can continue renting, purchase the piece (minus what they’ve already paid into it) or swap out the pieces for something else. Because Fernish keeps an inventory of items, its turnaround from order to delivery is just one week.

For example, Fernish rents the Petrie Midcentury Apartment Sofa for $80 a month, or customers can buy it for $1,900. According to Barlow, the average customer rents seven to eight items. At the end of their contracts, 80% of customers stay with Fernish, Barlow said.

In spring 2020, orders for home office furniture surged. Though higher than before the pandemic, dining room furniture has since moved into the top category, followed by decor items like throw pillows and art.

That propelled Fernish to triple-digit revenue growth in 2020 and expand into Seattle and Dallas-Fort Worth.

“Two years ago, I would never have thought that we’d be in Texas,” said Barlow. “But we looked at the data and that’s where the population growth has been and that will continue to grow.”

[Read here on 10 successful companies that reinvented their business.]

Before COVID, only three in 10 consumers bought furniture online and seven went to a brick-and-mortar store. It’s exactly the opposite now.

Shambhu Jha, research consultant with Fact.MR

Guest House: Helping home buyers shop the staged furniture they see at virtual open houses

When Alex Ryden was making and selling luggage, he was frustrated that his bags weren’t getting more traction at a handful of retailers. He decided to try a different tactic: selling them out of the Denver home he had recently bought.

But when customers showed up, they were more interested in Ryden’s espresso maker and lounge chairs. “People would say, ‘The bags are good, but I really like the furnishings,’” he said.

Friends who worked in real estate then asked Ryden to help them outfit the homes they were selling. Ryden realized that people like buying home furnishings when they can see them in a home, not a showroom.

With the help of an interior designer, Guest House will stage a home with items from brands such as Joybird, Crate & Barrel and Burrow, as well as items from local Colorado makers. The company then photographs the spaces as part of its fee. According to Guest House, staged homes sell 40% faster and command a 5% higher price.

The other side of the Guest House’s business is selling furniture. Using the home as a showroom, the company allows potential buyers to purchase items they like with a QR code. “Every home we stage, we see as a store we open,” said Ryden.

Homebuyers can even buy a whole house’s worth of furniture, just a room or perhaps a few pieces. Those items will remain in place on moving day. Furniture for an average room costs $3,000.

“As a homeowner, you get handed the keys to your new house and it’s empty,” said Ryden. “Buyers want to have a beautiful space they can live in on day one.”

When open houses came to a halt during the depths of the COVID pandemic, Guest House switched to virtual open houses.

“You could no longer put out an open house sign on the corner and expect to sell. You had to do it online,” Ryden said. “We had a huge increase in demand for staging and photography. That really helps homeowners stand out on Zillow.”

Customers can also buy furniture from the Guest House site.

In 2020, Guest House grew 200%, Ryden reports. Sales are up 260% in 2021 from a year prior. Now in Denver, Boulder and Colorado Springs, in June Guest House expanded into San Diego.

[Read here on office furniture inventions inspired by the pandemic.]

 Furniture and rug setup from AptDeco.
AptDeco brings together buyers and sellers of secondhand furniture, from checking seller listings for accuracy to delivering the items straight to the buyers' homes. — AptDeco

AptDeco: A marketplace for buying and selling secondhand furniture

Trawling sites like Craigslist and Facebook for furniture is a tried-and-true way to decorate on the cheap. But it’s not without its hassles: You might not see the small rip in the corner of the sofa online, and you’ll have to arrange a pickup truck to get the pieces.

AptDeco takes much of the pain out of the equation by bringing together buyers and sellers of secondhand furniture. Sellers list their items on the site, AptDeco makes sure those listings are accurate, handles online sales, picks up items and delivers them inside the buyers’ homes in the same day. For this service, AptDeco charges sellers a fee between 25% and 38% of the sale price, depending on the category, brand and price.

“We manage the experience end-to-end,” said Reham Fagiri, co-founder and CEO of AptDeco.

Initially, when COVID hit, listings dropped dramatically as consumers tried to figure out how the pandemic would affect them. But that soon changed as people realized they were going to be at home much longer than they first thought. “People wanted to redecorate their homes to be more comfortable,” he said.

Demand spiked for home office furniture and organizational items like bookcases. Sellers, meanwhile, were clearing out areas of their homes to make room for work-from-home and home gyms.

But the biggest trend Fagiri saw was interest from suburban consumers who began visiting the AptDeco site. According to Brookings, which analyzed U.S. Census data, the nation’s largest cities saw the biggest population losses and most cities had slower population growth since COVID.

In the New York metro area, AptDeco’s drivers were already going out to New Jersey and Connecticut. Suddenly, more customers wanted them to come to areas further afield like the Hudson Valley, about 100 miles outside the city. “We’ve seen a 400% increase in sales in suburban areas over the last year,” she reports.

This past year, AptDeco expanded into Philadelphia as well as the San Francisco Bay Area. Since the start of COVID, AptDeco sales have increased 300%.

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