The coming six months could be far better than the U.S. home furnishings industry has seen, according to a new, in-depth report published by the High Point Market Authority. The report incorporates economic data, consultations with leading U.S. retailers who are bucking the current trends, along with industry experts in a variety of fields to explore their strategies for success.
"While none of the leading retailers we interviewed sugar-coated their experiences over the past year by any means, we found their responses to be thoughtful and upbeat. For example, Neil Goldberg, chief executive of regional powerhouse Raymour & Flanigan, reported, 'We're confident that the economy is turning around and that the consumer is back. We've seen positive trends in all of our 90 stores over the last few months and store traffic is up,'" said Brian D. Casey, president and CEO of the High Point Market Authority.
"A year ago, consumers were experiencing a tremendous fear that they were going to lose everything," related Bernie Moray, chief executive officer at Detroit-based Gorman's Furniture in the report. "A year later, a lot of people are waking up and saying, 'Gosh, we survived it. We're going to be o.k. The pressure is off a bit.'"
"I think if anything, people want to be more comfortable in their homes now because they are spending more time there," noted Alan Kramer, vice president of merchandising at Houston-based Star Furniture. Raymour's Goldberg concurred: "We've noticed that a lot of customers are cocooning -- that is, rather than spending money on travel, eating out etc...they are staying in their homes and spending [disposable] income on improving the quality of their home life, including upgrading furniture and other home furnishings."
Highlights from the report include:
• In November, The National Association of Business Economists raised its growth outlook for 2010 to 2.9%, up from October's estimate of 2.6%.
• On December 22, the U.S. Commerce Department reported that the economy grew at its fastest pace in two years during the third quarter of 2009, with real gross domestic product (GDP) moving upward for the first time since the spring of 2008.
• This jump showed a faster rebound than was expected by The Financial Forecast Center, which was waiting until April for a return to growth.
• While unemployment is still a concern, like the GDP numbers, unemployment figures at the end of 2009 were better than expected. Forecasted to rise one-tenth of a point, from 10.2% to 10.3%, the jobless rate actually fell back to an even 10% in November and held steady at that level in December. If this trend continues, it could dip below 9.5% by May.
• Brighter employment prospects may be having a positive influence on the one indicator that matters most to retailers -- consumer confidence.
• Sales of existing homes leapt up a surprisingly strong 10% in October, with about 400,000 more units changing hands than the market had expected. Analysts expected strong sales to continue through November.
• The growth in home sales should contribute to a rise in home furnishings purchases, especially as changes to down payment requirements and mortgage terms give people more spendable income.
• The effect of tax-rate reductions designed to stimulate the economy by putting more money in people's pockets on a paycheck-by-paycheck basis has been slight so far, but should team with rising consumer confidence to boost retail sales over the first two quarters of 2010.
• According to Retail Forward's October 2009 ShopperScape(TM) report, 23% of consumers are "likely" to make a furniture purchase in the next six months and 7% "very likely." The numbers get a little better for a home furnishings/home decor purchase, with 30% "likely" and 8% "very likely."
"The most promising development, however, particularly for those in the home furnishings trade," Casey said, "occurred as sales of existing homes leapt up a surprisingly strong 10% in October, with about 400,000 more units changing hands. This healthy upsurge was fueled by U.S. consumers rushing to take advantage of an $8000 tax credit that was part of the Obama administration's economic stimulus efforts."
"With store floors everywhere starved for new merchandise, and consumers heading back into the marketplaces, retailers are on the hunt for fresh and exciting products," Casey said. "We expect that to translate into increased activity at the High Point Market this Spring, where retailers will find more new product introductions, in every category and style, at every price point, than at any other market on earth."
The full report is available for download via the following link: http://www.highpointmarket.org/pdf/Spring2010BusinessOutlook.pdf.