Over the last decade, eCommerce has become an increasingly popular method of selling furniture, with consumers opting to shop online rather than in-store.
American-based companies like LoveSac, though operating on a smaller scale than some of their competitors, have been able to use this to their advantage by developing a customer-first, family-oriented approach to business that offers both in-store and online purchasing options.
By taking advantage of new technologies – for example, by creating an app – and championing high-quality, lifetime-assured furniture, LoveSac has proven itself to be a popular, much-loved brand.
Lovesac: An Overview
Founded in 1995, LoveSac is an American furniture retailer headquartered in Stamford, Connecticut. The company has over 250 employees, and in 2020 it generated a revenue of $233 million.
LoveSac specializes in a patented modular furniture system called sactionals. This system is unique in that it can be adapted to suit a range of situations. As LoveSac’s website explains, you can have a couch that changes colors and always compliments your style.
Sactionals come with a range of benefits, including free shipping, a 60 day home trial, and a lifetime guarantee. In addition to this, the company has recently developed an app that allows customers to test out the perfect sactional configuration virtually.
Given its relatively small size (there are 116 LoveSac retail showrooms), the company has focused on understanding its customers and working hard to make them feel valued. It aims for a friendly, family-oriented atmosphere on its website, with a “designed for life” ethos.
In 2021, LoveSac announced a new collaboration with the fashion designer Jeremy Scott. Scott designed an exclusive Sac cover featuring a patchwork design inspired by his family tradition of exchanging handmade quilts.
Collaborations like this have become an extremely successful method for companies, particularly those in the eCommerce sector, to attract new customers.
LoveSac’s CEO, Shawn Nelson, says that the company’s mission is “to inspire mankind to buy less and buy better.” This message resonates with conscientious consumerism, which has become increasingly popular over the last decade.
If you want to find out about the values of other companies, we have created a list of the most powerful and enduring mission statements.
However, LoveSac’s vision has not always been so clear-cut.
In fact, the company’s journey began when Nelson was just eighteen after he decided he wanted to create the world’s largest bean bag. Although the bean bags were initially popular, the company struggled to make enough money. It has certainly taken a lot of perseverance to get to the position it is in today.
Lovesac Business Strategy
LoveSac operates a national business strategy with a production revenue model based on in-store and online sales. The company has an unstable financial background, having filed for Chapter 11 bankruptcy in 2006, but it is currently reforming its brand image to give a contemporary, chic feel.
Initially, LoveSac began by selling its bean bags to other companies like The Limited, which was a popular retailer at the time. However, this wasn’t very profitable, so instead, LoveSac adopted a direct-to-consumer strategy.
After acquiring several franchises, LoveSac found itself in serious debt and with a lot of excess inventory that simply wouldn’t sell. The company was in serious trouble until the CEO, Shawn Nelson, won 1 billion dollars on a TV show called “The Rebel Billionaire.”
Following this, a private equity firm saw promise in LoveSac, taking it on as an equity sponsor. The reform was highly successful, and from it came the rise of the sactional, which has come today to define the LoveSac brand.
Nelson has also declared that he wants LoveSac to be “the most loved furniture brand” by 2025, with no small mission.
To achieve this goal, marketing manager Mike Majlak has worked with AspireIQ to build LoveSac’s partnership and influencer program. Through this, the company has achieved over 577k clicks to its website and 18.5 million impressions.
Lovesac SWOT Analysis
A SWOT analysis assesses the strengths, weaknesses, opportunities, and threats to a business. It is cost-effective and extremely useful for generating business insights.
Strengths
- High production quality. Lovesac emphasizes that its products are built for life, giving them high value in the eyes of many consumers. This is likely to promote customer loyalty and approval, two of the most important factors in retail.
- Strong marketing strategy. Collaborating with micro-influencers, fashion designers, and other celebrities is a good way of promoting the company to the millennial market. Millennials are often hunting for trendy, quality products that are durable, so they are the perfect target market for sactionals.
- Financing options. The Lovesac credit card allows customers to access promotional financing. There is no annual fee, and cardholders receive offers throughout the year. This helps to improve customer loyalty.
Weaknesses
- Reputation. Having filed for bankruptcy in the past, Lovesac has to work hard to move away from its old reputation.
- Limited reach.LoveSac operates across several American states, but it has yet to go global. Doing so would allow it to branch out into new and emerging markets.
- Overseas production. Lovesac’s goal was to move 75% of production to China by 2020. Before this, its products were primarily made in Malaysia and Vietnam. However, this puts the company at risk of fluctuating markets and political uncertainties, which could cause supply chain issues.
Opportunities
- Going global. In the post-pandemic world, there is an increase in demand for furniture and home accessories as many people permanently adapt to working from home. This means that Lovesac has the opportunity to expand into new markets.
- Lack of employee satisfaction. Lovesack is not rated very highly by employees on websites like Glassdoor and Indeed, suggesting that, while it focuses on its brand identity in terms of customer satisfaction, this is not the case for employees.
- Product expansion. In recent years, Lovesac’s revenue has been growing consistently, allowing the company to invest in research and development (R&D) activities to expand its product portfolio.
Threats
- Economic uncertainty. In the post-covid world, many economies are rife with uncertainty as governments attempt to control expenses and reduce deficits. Individual consumers also face uncertainties about rising inflation; for this reason, they are likely to be cautious with their spending, and Lovesac’s products do not come cheap.
- Increasing competition. Lovesack is up against several large online furniture retailers such as Wayfair, which has a significantly bigger market share. Consequently, Lovesac must work harder when it comes to marketing to present its products as attractive alternatives despite their high costs.
Lovesac Competitor Analysis
While Lovesac’s modular furniture system is unique, it faces strong competition from other companies that focus on comfort, style, and longevity.
In fact, there are several similar businesses that have adopted a similar approach to Lovesac, reforming products that would once have been seen as childish or tacky, such as bean bag chairs, into desirable premium products. These similarities between Lovesac and its competitors make it even more difficult for one company to stand out amongst the rest.
Below, you can find an analysis of Lovesac’s key competitors.
1. Xorbee
Xorbee is one of the most similar companies to Lovesac. It is an American furniture company headquartered in Muskegon, Michigan, where its key manufacturing center is located.
Like Lovesac, Xorbee was founded over three decades ago when a college student, Jeremy Leffring, wanted to create better dorm room furniture. Since then, the company has grown, claiming to make the world’s most comfortable foam-filled furniture.
One of the company’s key strengths is its sustainable production method. Unlike Lovesac’s products, all furniture made by Xorbee is produced in the US and, even more importantly, it is made from 100% recycled foam.
Xorbee offers a lifetime guarantee on all its products. This makes it especially appealing to younger generations of consumers like millennials.
The cost of a 6-foot round chair from Xorbee is around $389, while a similar product from Lovesac costs around $950. However, the latter company is much bigger, operating with showrooms in many US states. Therefore its products reach more consumers.
Xorbee employs less than 25 people and generates less than $25 million per year in revenue. It is clearly in a very different position to Lovesac, but the company shows a lot of promise, and if it continues to grow, expanding throughout America, it could easily take a portion of Lovesac’s market share.
2. Wayfair
Wayfair is a global e-commerce company specializing in furniture and homewares. It is headquartered in Boston, Massachusetts, and Berlin, Germany. With more than 16,000 employees across North America and Europe and over 22 million products on its website, Wayfair is one of the largest competitors that Lovesac faces.
Like most companies in the e-commerce sector, Wayfair operates a global business strategy with a markup revenue model. As of June 2021, Wayfair’s net revenue for the previous 12 months was $14.8 billion.
Wayfair’s website claims “we are here to help everyone, anywhere create their feeling of home,” indicating a truly global vision. Here are some of the most powerful and enduring mission statements from companies around the world.
Wayfair has two income streams: direct retail, where revenue comes from sales, and advertising. This is one of the benefits of building a global brand; Wayfair’s reputation means that the space on its website is highly desirable to other companies for marketing purposes.
The company itself spends a large amount of money on marketing, however. For example, in 2019 it spent over $1 billion in advertising alone. While this figure seems large, it is necessary to ensure Wayfair’s website receives enough traffic since it is an e-commerce only business.
One of Wayfair’s key flaws is that while it is good at acquiring customers, it pays an extremely high amount to do so. In 2017, a study found that Wayfair paid around 69 dollars per customer but would lose $10 on that same customer over time.
3. Ikea
Ikea is another big player in the global furniture industry. It was founded in the town of Älmhult, Sweden, in 1953 and is now headquartered in Delft, Netherlands. While it began life as a mail-order catalog, it has grown to become one of the most iconic brands in the world by taking do-it-yourself flat pack furniture to a new level.
In 2020, Ikea achieved a gross profit of around 11.7 billion euros (13.74 billion dollars). The company operates both in-store and online across 445 different locations. While Lovesac has curated a small but dynamic product portfolio, Ikea stocks over 9,500 different products.
Furthermore, Ikea is on 7 Forbes lists, including best employers for women and best employers for diversity. So in this way, it should be as much of an inspiration to Lovesac as it is a competitor.
The low-cost model, which has brought so much success for Ikea, is also highly imitable, meaning that the company must constantly adapt and innovate to stay ahead of the game. This is one area where Lovesac is at an advantage, albeit a small one, because it already has unique products which allow it to stand out, even if it does not have the same financial scope as Ikea.
Ikea has tried to adapt by adapting its business model to be more environmentally friendly. This is one of the most prominent concerns for many contemporary consumers, so ethical practices within retail companies can go a long way towards driving business.
4. ComfySacks
ComfySacks was founded in 2004 by Tyler Shearburn. The company began life with the hope of providing a comfortable solution for home theatre seating, but today it markets Comfy Sack to a range of different audiences. It is an American company headquartered in Missouri.
According to ComfySacks’ website, the key difference between its product and the bean bag chair manufactured by Lovesac is that Comfy Sack chairs allow you to lay down.
They are also considerably cheaper, which is a key consideration for consumers during the economic uncertainty of the post-pandemic world. For example, a 6-foot Comfy Sack is less than half the price of a 6-foot Lovesac chair.
One of ComfySack’s biggest marketing points is that Apple Headquarters uses its chairs. It also counts Amazon, Uber, and Groupon among its customers. However, because ComfySack is relatively small, it has not been able to generate as much press from this as it potentially could have, given that, by comparison, Apple is one of the biggest companies in the world.
5. La-Z-Boy
La-Z-Boy Inc. was founded in 1927 and is headquartered in Monroe, Michigan. It is one of the world’s leading residential furniture producers, the products of which have become synonymous with luxurious comfort and relaxation.
In 2020, La-Z-Boy generated $1.7 billion in revenue, meaning it is no small player in the retail furniture industry. Its products are sold in thousands of retail outlets across the US and Canada, and they are manufactured and distributed under license in other countries, including Germany and Japan.
The company holds international patents on over 200 different styles and mechanisms, showing how diverse and innovative its product portfolio is. Several different La-Z-Boy brands, including Residential, Kids, Kincaid Furniture, Bauhaus USA Furniture, and more.
On its website, La-Z-Boy advertises free swatches and free design services, which are all part of its customer-first approach. They also offer the chance to work with a designer virtually, from the comfort of your own home. Moves like this that embrace the digital world’s growth often yield extremely positive results for retail companies.
In April 2021, La-Z-Boy signed a long-term renewable energy deal with AEP Energy Partners. This will take the form of a 10-year resource backed virtual power purchase agreement. Crucially, the company’s desire to go green will work in its favor over the coming years as environmental issues continue to be at the fore of our everyday lives.
How Lovesac Stands Out
Despite its past financial difficulties, Lovesac has managed to overcome all the obstacles in its way and has managed to reform its brand image to one that is both contemporary and desirable. Its family-first approach and “for life” ethos are appealing, generating trust between consumers and retailers.
Lovesac’s products might be more expensive than those of its competitors, but their durability and high quality make them a worthwhile investment.
Frequently Asked Questions
Question: Which is the largest furniture retailer in the world?
Answer: Ikea is the world’s largest furniture retailer, generating a revenue of 39.6 billion euros in 2020. It has achieved this by offering a wide range of quality products – over 9,000 – at affordable prices.
Question: What is Lovesac’s competitive advantage?
Answer: Lovesac’s competitive advantage is its “for life” company ethos which guarantees durable, high-quality products. This allows the company to sell its furniture at premium prices because customers believe it is highly valuable and will last a lifetime.
Question: Why choose Lovesac?
Answer: Lovesac values its customers, offering them a range of benefits in addition to products that will last a lifetime. People’s tastes change all the time, and by making sactionals, Lovesac has created a unique product that accommodates the ever-changing needs of individuals and families alike.
Question: Who is Lovesac’s biggest competitor?
Answer: Lovesac faces competition from all areas of the furniture retail industry, but its closest competitor, both in terms of size and product offering, is ComfySacks. To maintain a competitive edge, Lovesac may need to diversify its product portfolio and innovate to differentiate itself.
Conclusion
Today, consumers are bombarded with choices – whether to shop in-store or online, whether to purchase ethical or sustainable products, whether to favor quality or cost. The same is certainly true when it comes to purchasing furniture.
Competition in the retail sector will only get more fierce as the population grows, and with it, the demand for unique and high-quality – but affordable – products. Big brands like Ikea have dominated e-commerce for several years, but with economic uncertainties rife in the post-pandemic world, companies like Lovesac might see a surge in customers as more and more people choose to shop local.
Here are a few similar companies to read about:
- Home Depot 5 Biggest Competitors.
- All You Need to Know About Amazon.
- Wayfair Competitor Analysis.
- How Does Ikea Stand Out?
Research
https://www.fool.com/investing/2021/02/12/lovesac-what-investors-need-to-know/
https://www.macrotrends.net/stocks/charts/LOVE/lovesac/revenue
https://www.aspireiq.com/resources/lovesac/
https://investor.lovesac.com/company-information
https://en.wikipedia.org/wiki/La-Z-Boy
https://www.la-z-boy.com/content/design-services/free-virtual-design
https://www.indeed.com/cmp/Lovesac/reviews
https://xorbee.com/pages/xorbee-vs-lovesac
https://www.ikea.com/gb/en/this-is-ikea/about-us/reaching-more-of-the-many-people-pub3b03c401
https://www.la-z-boy.com/content/design-services/free-virtual-design
https://www.la-z-boy.com/News/2021-04-21.html
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