Furniture retailers are facing the difficult reality that even products consumers still prefer to buy in person are no longer immune to shifting consumer habits, rising operating costs, and broader economic uncertainty.
As inflation pressures household spending and e-commerce continues reshaping retail, companies across the furniture and homewares industry are reassessing where they can sustainably operate.
Now, a long-established retail chain is preparing to exit a market it once viewed as a major growth opportunity, highlighting the difficult decision many brands are making to protect long-term profitability.
Adairs to close all operations in New Zealand
Adairs will officially end operations in New Zealand, closing all seven of its physical stores after recently shutting down its online business in the country.
The company informed New Zealand customers via email that retail operations will cease by June 2026, with individual closure dates varying by location. The retailer also confirmed that online orders placed before May 6 will still be fulfilled as scheduled.
Founded in 1918 in Australia, Adairs specializes in homewares, home furnishings, and furniture. The company entered the New Zealand market in 2016 with the opening of its first store and has since expanded to approximately 170 locations across both countries.
The closure marks a significant retreat for the retailer, which had previously expanded its physical footprint across the region as part of its long-term growth strategy.
Adairs’ earnings reveal mounting profitability pressure
The closure announcement follows Adairs’ first-half fiscal 2026 earnings report, which highlighted growing financial pressure despite continued sales growth.
Group sales increased by 5.9% during the period, while Adairs-specific sales rose 4%. However, profitability weakened considerably as higher operating costs and heavy promotional activity weighed on margins.
Group net profit declined by more than 33%, with Adairs reporting a one-third drop in earnings during the first half.
The company’s exit from New Zealand aligns with a broader restructuring effort focused on improving operational efficiency and optimizing store performance.
Adairs has continued investing heavily in its retail footprint and digital operations. During the reported half, group capital expenditure totaled $6.4 million, supporting store upgrades, technology improvements, and broader digital initiatives.
The retailer also plans to open up to four new Adairs stores, close as many as seven existing locations, and upsize one to two units during the second half of fiscal 2026.
“Whilst the results across the brands were mixed, I’m pleased with the material progress we have made and the significant decisions we have actioned to reposition and reset our businesses,” said Adairs Group MD and CEO Elle Roseby in the company’s latest earnings call.
David Paul Morris/Bloomberg via Getty Images
Retailers continue adapting to industry-wide disruption
Adairs’ withdrawal from New Zealand comes as retailers across multiple sectors continue reassessing store footprints, international expansion strategies, and long-term profitability goals.
According to CoreSight Research, store closures increased by 67% in 2025 compared to the previous year, reflecting ongoing pressure across brick-and-mortar retail as companies navigate inflation and changing consumer habits.
More coverage by Fernanda Tronco on retailers exiting entire markets:
- 115-year-old fashion brand exits entire market in 2026
- Dunkin’ could exit an entire market in 2026 after 14 years
- Nordstrom brings back fashion brand after 25-year U.S. shutdown
At the same time, e-commerce continues gaining market share. U.S. online retail spending reached $1.34 trillion in 2024 and is projected to surpass $2.5 trillion by 2030, according to Capital One Shopping.
Still, physical stores remain dominant across the broader retail industry. Worldwide retail sales reached approximately $18.9 trillion in 2025, with around $14.4 trillion still generated through brick-and-mortar locations, according to Euromonitor research compiled by EY.
“It’s clear that the physical store still plays an important role,” said EY Retail Analysts Malin Andrée and Jon Copestake.
“Not only do stores have plenty of runway left in delivering revenue, but they also have opportunities to drive new growth and alternative revenue streams and, by working in tandem with digital channels, they can maximize returns on investment.”
Why furniture and homewares retailers face unique challenges
Furniture and homewares retailers continue facing unique industry pressures, particularly as consumers become more price-conscious and online competition intensifies.
Global brands such as Ikea have significantly reshaped pricing expectations and consumer purchasing behavior, forcing smaller and mid-sized retailers to compete more aggressively on both convenience and affordability.
At the same time, furniture shopping remains heavily dependent on the in-person experience. Many consumers still prefer to physically evaluate comfort, quality, materials, and size before making a purchase.
Approximately 76% of shoppers prefer buying furniture in-store rather than online, according to a Consumer Insights Now study reported by Nationwide Group.
However, digital convenience continues driving online sales growth across the category. For consumers purchasing furniture online, home delivery, broader product selection, and easier price comparisons remain major advantages.
“You’ve got e-comm growing, you’ve got a tough business economy, you’ve got younger consumers that do not want heirloom furniture,” International Home Furnishings Representative Association Executive Director Ray Allegrezza told Business of Home.
Despite current challenges, the industry’s long-term outlook remains strong. The global furniture market was valued at $786.13 billion in 2025 and is expected to surpass $1.33 trillion by 2033, expanding at a compound annual growth rate (CAGR) of 7%, according to Grand View Research.
Even so, profit margins across the sector remain relatively thin. Retail furniture stores typically generate gross margins of 35% to 45%, while net margins often range from 3% to 6% after accounting for expenses such as rent, shipping, and labor, according to Wexford.
As retailers continue balancing physical storefront investments with rising digital demand, companies like Adairs are increasingly reevaluating which markets and store networks remain sustainable for long-term growth.
Related: 169-year-old bank to close 26 branches in major shift
