The 2023 Closets State of the Industry report analyzes the closets and organized storage industry, covering trends, challenges, and opportunities. 

The industry has undergone significant transformations driven by changing consumer preferences and societal impacts. Moving into 2024, this report explores how companies are adapting to meet the evolving needs of their diverse customer base.

2022 gross sales
Since the pandemic, closet and home organization companies have reported significant increases in gross sales. 29.6% of respondents reported 2022 sales between $1 million and $2.9 million, an increase compared to 24% in 2021. 30.4% of companies reported gross sales between $3 million and $4.9 million as compared to 14.9% in 2021. Additionally, the number of companies making more than $3 million grew from 27% in 2021 to 45.4% in 2022. Only 10% of companies reported sales of $499,000 or less compared to 26% in 2021.

2023 sales expectations
This year’s survey shows that most respondents expect sales to increase in 2023 compared to 2022. Specifically, 57.5% predicted better sales, 22.5% predicted sales to remain the same, 10% expected much better sales, 9.6% predicted worse sales, and only 0.4% expected much worse sales. Compared to last year’s survey, where 46% of the respondents expected better 2023 sales, 30% expected sales to remain the same, 12% expected much better sales, 11% expected worse sales, and 1% expected worse sales. When asked about 2024, 52.9% expect better sales.

Popular projects 
Home offices were the most popular project type sold in 2023, representing 50.4% of all sales. Specialty rooms were a close second at 49.6%, followed by closet systems at 43.8%, laundry rooms at 40.47%, and pantries at 37.5%. Even kitchens and bathrooms made the list at 23.8%, with outdoor spaces not far behind at 22.5%. This demonstrates the diverse range of products from closets and home organization companies.

When respondents were asked to name the top three project types that grew the most this year as compared to 2022, closet systems, garage organization, and home offices came in first, second, and third, respectively.

Closet systems exhibited the highest growth, with a 28.3% increase compared to the previous year. This surge in demand continues to reflect the importance of well-organized closets and storage options for homeowners.

Garage organization projects also saw remarkable growth, with a 25.8% increase. This indicates a rising trend in optimizing garage spaces for storage and functionality.

Home offices came in third with 18.8% growth. However, specialty rooms followed closely with 16.3% growth in 2023 as compared to 2022. This suggests an increasing desire among homeowners to create specialized areas tailored to their unique needs and interests.

Project upgrades
The top-ranked most popular closet upgrades in 2023, based on the survey, are as follows:
Accent lighting: This upgrade was the most popular, with 20.3% of respondents indicating their preference for accent lighting in storage solutions.

Chair/bench/seating: Approximately 14.7% of respondents opt for chair, bench, or seating options within their storage spaces.

Drawer dividers/inserts: This upgrade garnered the interest of 11.7% of respondents, highlighting the importance of organized drawers.

Glass or wood doors: Around 6.1% of participants prefer glass or wood doors for their storage solutions, adding a touch of elegance to their spaces.

Hampers/sliding baskets: 5.6% of respondents opt for hampers or sliding baskets to facilitate easy storage of laundry or other items.

Respondents reported the following as top upgrades for the garage:
Cabinets are the most popular garage upgrade, chosen by 25.0% of respondents. They offer ample storage for various items in the garage.

Appliances were preferred by 13.3% of respondents, adding functionality to the garage for different purposes.
Flooring upgrades were chosen by 13.3% of participants, enhancing the garage’s overall look and durability.

Countertops were selected by 8.3% of participants. They provide a convenient work surfaces for various tasks.

Hanging Racks were selected by 5% of respondents, providing additional storage solutions.

Material trends
Melamine/laminates and solid wood/veneer were the top materials for organized storage projects, with an average of 32% sold this year. Specialty materials, including mirrors, leather, glass, and metal, came in at an average of 20%, and wire projects were sold at an average of 19%.

Survey respondents ranked the following as the most popular component finishes: light woodgrain, white, textured or patterns, solid colors, dark woodgrain, and leather.

Pricing
According to the survey, when asked about the price changes between 2022 and 2023, the majority of the respondents (63.3%) reported an increase, followed by a minority (12.9%) who reported a decrease, while a considerable proportion (23.8%) stated that the prices remained the same.

The cost of closet systems ranges from $3,335 to $28,644, with an average cost of $7,633. Similarly, garage storage solutions costs range from $4,589 to $14,989, with an average cost of $8,424. 

The significant percentage of respondents reporting increased prices may be attributed to factors such as inflation, material costs, or an increase in demand for these services.

Challenges
The three greatest challenges faced by businesses in the survey this year are as follows:
Labor Shortages: Topping the list of challenges, 34.5% of respondents cited labor shortages as a significant challenge. 

Supply Chain Issues: Coming in a close second, 32.8% of respondents cited supply chain issues.

Inflation: Approximately 13.4% of respondents mentioned the impact of inflation as a concern. Regarding the impact of inflation on closing ratios and leads, a significant 92.1% of respondents acknowledged that it has affected their business.
In addition to these top-ranked challenges, staff turnover and training were also listed as challenges this year. These findings suggest that the industry has been grappling with a combination of internal and external challenges that have influenced their business operations and strategies.

For more information on closet trends and news, visit woodworkingnetwork.com/closets.