Store of the Future   //   February 7, 2024

Discount furniture retailer American Freight is trying to revamp its in-store experience

Four years after merging with Sears Outlet, discounted home goods retailer American Freight is getting a fresh look.

The company, which sells furniture, mattresses and open-box appliances, is testing out a store redesign and streamlining its branding to try and bring in more customers. It hopes to make the shopping environment more pleasant by changing how it organizes products in its warehouses and by introducing brighter colors like green, yellow and orange to its displays and signs.

In the past, items in American Freight’s stores were more closely-packed together, but items are now more spread out and grouped via theme like “dining” and “bedroom.” Open-box appliances, meanwhile, are now color-coded depending on the amount of wear. American Freight has also folded a roof image into its logo and collapsed it down to “AF,” using it as an acronym for “appliances” and “furniture.”

American Freight, which was founded in 1994, operates 370 locations across 40 U.S. states, as well as an e-commerce site. It sells both new and used items such as couches, refrigerators and dining sets and has amassed more than 5 million customers to date, according to the company.

American Freight is piloting its new layout in four stores in Denver and Tampa and plans to expand later this year, depending on the in-store conversion rate. To advertise the refresh, American Freight is running a series of national commercials through digital, programmatic and social channels. It is also advertising via billboards, cable and radio in 27 select markets around the U.S.

American Freight’s brand refresh comes not long after its restructuring, which occurred right before the pandemic. In 2020, Franchise Group acquired American Freight for $450 million, then combined it with Sears Outlet Group. Executives spent the next few years deciding the best way to position American Freight as a brand, especially one that caters to people undergoing a major life transition, like buying a new house. The goal, said Lauri Joffe Turjeman, American Freight’s chief marketing officer, was to make shopping simpler, quicker and more to-the-point — as opposed to cramming in products and cluttering the store with signs that screamed information.

“The traditional model in furniture, there’s a lot of yelling,” she said. “You walk in and everything is said all at once, with product tags calling out financing and warranties.” With the new store look and layout, “we’re shifting the curve to how we’re solving the customer’s problem, versus what we’re offering,” she explained. Items, for example, are now classified according to use case and condition, and shoppers can find more products on their own without assistance from a store associate.

There were other kinks to work out with the refresh. Namely, the name wasn’t intuitive, as the company does not sell freight. The new “AF” logo — which looks like a little house — is meant to help with this problem. The messaging is now “hyper-relevant,” David Sonderman, chief creative officer at The Shipyard, an advertising agency that oversaw the refresh, told Modern Retail. “We did talk about the merits of changing [the name],” he said. “But we also realized that we could make moves that were less.”

American Freight typically caters to shoppers looking for discounts on big-ticket items. To that end, it is timing its brand refresh to the beginning of the tax refund season, when it typically sees a 30% lift in sales, Turjeman said. “The campaign is during our very important and coveted peak season,” she explained. “It’s a big season for our business, and customers are saving to make this very big needed purchase.”

The furniture and appliance businesses have been in a period of flux since the pandemic. Many people bought such items in 2020 and 2021 when they were spending more time at home and had extra money in the form of stimulus checks. Ikea’s sales surged 45% from August 2019 to August 2020 as people turned their homes into offices and classrooms. Overstock (now Bed Bath & Beyond) and Wayfair also saw demand skyrocket for items like desks and chairs.

But, since then, demand has slowed as interest rates and inflation picked up and the housing market dropped off. According to Insider Intelligence data, furniture retail sales in the U.S. rose 4.2% in 2022, down from 21% in 2021 and 11.4% in 2020. At the end of 2023, contemporary furniture retailer Z Gallerie and furniture maker Noble House Home Furnishings both filed for bankruptcy.

While the price of home furnishings has since come down — it dropped 0.4% from November to December, according to the U.S. Bureau of Labor Statistics — costs remain high. The average price of household furnishings and operations has gone up some 20% since 2018, via St. Louis Fed data. Sales of large appliances in the U.S. are projected to rise only 2% in 2024, according to Insider Intelligence.

Right now, shoppers are likely to postpone major purchases for their home, Sky Canaves, senior analyst at Insider Intelligence, told Modern Retail. But, for those who are able to spend the money, many are trading down across categories and may be more willing to consider discount, open-box, refurbished or secondhand goods from places like American Freight, Canaves said.

American Freight’s refresh “makes sense” in this context, she said, especially because “retailers are starting to pay more attention to the importance of brand building across channels.”

“Relatively smaller specialty players… need to differentiate themselves from competitors that have much greater market share,” she said.

American Freight is banking on its refresh to communicate this message. For instance, the new commercials emphasize value, not just in terms of a dollar amount, but in terms of convenience, time and energy, Sonderman said.