Why it matters:
- Lovesac, which began selling oversized bean bag chairs, or ‘sacs,’ 25 years ago, has grown its revenues sevenfold since 2018, to over $700 million.
- Furniture is a $263 billion market in the United States, with the largest segment, living room furniture, projected to be $73 billion this year.
- Lovesac’s “Sactionals” – its take on sectional couches – have disrupted couches and the company is poised to disrupt the larger furniture category.
Furniture brand Lovesac has an unusual plan for growth. It believes it can become a billion-dollar company by convincing consumers of the wisdom of buying less.
Lovesac was born 25 years ago when founder Shawn Nelson discovered there was demand for the oversized bean-bag chairs, or “sacs,” he made on a whim to use while hanging out with friends. He began selling them to friends and neighbors and on college campuses, then opened Lovesac stores in malls across the country. In 2018, due to the strength of a new product line — “Sactionals,” an innovative form of modular couches – he took the company public.
Lovesac saw tremendous growth during the pandemic, as Americans hunkered down at home. Now, as the furniture industry is struggling with a post-pandemic downturn aggravated by a slow housing market, Lovesac’s sales and profits have held up better than many of its competitors.
Nelson, Lovesac’s CEO, attributes the company’s success over the past nine years to two key decisions it made in 2015 and 2016. It decided to focus most of its attention, its store space, and its employees’ time, on its star product, the Sactional, and it adopted “Designed for Life” as the company’s guiding principle.
The goal is to build a brand that lasts
“Lovesac grew up the hard way,” Nelson told CO—. The company’s 25-year history of ups and downs “helped us grow strong bones and good business sense and is a major reason why I think we will be successful for the next 50 years,” he said. “That’s our outlook – to build a brand that’s here forever.”
Those ups and downs during the first 25 years of Lovesac included a successful exit from bankruptcy. Then came an accounting error related to freight cost calculations in 2023 that caused the company to have to restate some financial reports.
Currently, like most of the furniture industry, Lovesac has seen sales slow as consumers are delaying home purchases.
“We’re growing far slower than we used to, but we’re proud to still be growing when nobody else is, for the most part,” Nelson said. “We expect to achieve high growth again when the environment for home begins to do well again.”
That growth, he said, will be fueled by Lovesac’s “Designed for Life” philosophy of creating products that can last for decades.
Lovesac, Nelson said, wants to sell its customers “something you can have for the rest of your lives.”
“Our stated purpose…is to inspire humankind to buy better and to buy less.
“If we really achieve what we’re trying to achieve, there will be fewer couches sold on the planet because we messed with couches. And we will mess with other products too, in the same way,” he said.
[Read: How ‘Retail Concierges’ (Both Digital and Human) Are Poised to Disrupt the Shopping Experience]
Now, as the furniture industry is struggling with a post-pandemic downturn aggravated by a slow housing market, Lovesac’s sales and profits have held up better than many of its competitors.
Creating products that can evolve is essential
“Messing with couches” speaks to Lovesac’s differentiated merchandising strategy. In addition to building products that last, companies need to design furniture that can adapt to lifestyle changes or moves, he said.
“There are things that are well built, but unless they can evolve as your life changes – your family grows, you move to a different place, you move to a city, you need to fit it down a staircase or through a hallway, you’re downsizing – you’re going to ditch it,” Nelson said.
But if a product can evolve, Nelson said, “it becomes like an apex predator kind of product. We’re seeing that with Sactionals,” he said.
Lovesac’s Sactionals can be configured and expanded in many ways: The components can fit narrow staircases and tiny hallways, and they have replaceable slipcovers and can be purchased with embeddable surround-sound speakers and wireless charging tech.
The Sactionals have received rave reviews this year from publications as varied as Architectural Digest and Good Housekeeping to Family Handyman.
Lovesac, Nelson said, plans to introduce the “Designed for Life” philosophy to additional products beyond Sactionals, and he sees that as a growth opportunity for the company.
[Read: Future Shop: Retail Innovations That Will Change How Consumers Spend in 2024 and Beyond]
Furniture market indicates room for growth: ‘We sell two couches – somebody else sells 98. So there [are] more sales to take’
Furniture sales in the U.S. are expected to top $263 billion this year, according to research firm Statista. Living room furniture, Lovesac’s key niche, is the largest category, with expected sales of $73 billion, according to Statista.
Lovesac, with sales of $700 million last year, has only a small piece of that market, but Nelson sees that as more evidence of the potential for future growth.
In the couch category, he said, Lovesac has a 2% share of the market. “We sell two couches – somebody else sells 98. So there [are] more sales to take,” he said.
Nelson’s book about what he learned while building Lovesac, “Let Me Save You 25 Years: Mistakes, Miracles, and Lessons from the Lovesac Story,” was published this year and contains 25 key insights from his life as an entrepreneur.
Asked what the top advice he would give to an entrepreneur starting to build a business, Nelson said it would be the lesson he cites in the last chapter of the book: Maintain top ambition with infinite patience.
“Entrepreneurs are classically known to be impetuous and impatient and demanding,” he said. But it is important to “also be patient and let things grow.”
Lovesac, Nelson said, started to take off “when I finally learned to be patient, but never lose my top ambition.”
The top ambition for Nelson, and for Lovesac, he said, is that it will “be a big company and a big brand,” but more importantly, with its focus on building things that last, “it will be a brand that means something good.”
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