Hey FAM, it’s Ray Allegrezza.
This week, I’m talking about how furniture sales are being affected by gas prices, inflation and how Americans feel about the economy (hint: it’s not good).
I dig into the numbers below.
Also, don’t miss FAM stories about endless aisles in online shopping, the second part of our Silver Tsunami series, and how websites will evolve over the next few years.
#WIMTY — What It Means To You
Here we are, only a few short weeks from the April furniture market and most of the buzz is still about ongoing supply chain issues, how well-trafficked the market might be, if the market will be ‘mask-on’ or ‘mask-off’, how clogged our ports still are, the ongoing high costs of transportation and the like.
Maybe I’m missing something, but for me, none of these challenges keep me up at night as much as the conundrum of trying to gauge consumer sentiment about today’s economy, how this is impacting the quality of their day-to-day lives, and most of all, how this is likely to impact their spending on an already highly-deferrable, discretionary purchase called furniture.
Not that long ago, and thankful to have not fallen prey to the virus or its variants, consumers were almost grateful to try and adapt to what some call the new normal, (something I prefer to describe as ‘new-next’).
Keep in mind, that meant putting the pieces of their Covid-rearranged lives together, trying to find a new rhythm, and battling inflation that is currently at its highest level in four decades.
And as the late-night infomercial host would say right about now….’But wait…there’s more!’
The latest assault on their wallets is waiting for them each day at the gas pumps.
While analysts may differ regarding the correlation between Russia’s invasion of Ukraine and the spike in gas pricing, consumers agree on one thing—with gas prices now at a minimum here in North Carolina of $4.19 a gallon and as high as $6.99 in Los Angeles—consumers are hurting financially and psychologically.
Desmond Lachman, an economics expert with the American Enterprise Institute reported, “Since the start of the year, international oil prices have increased some 60% to their present level of around $125 a barrel.”
He went on to project that, “If sustained, the increase in international oil price could add 1.5 percentage points to consumer price inflation, which is already uncomfortably high at 7.5%.”
Looked at another way, this is likely to cost the typical American household an extra $2,000 a year for gas, according to analyst firm Yardeni Research. Factor in that family is probably paying an additional $1,000 a month for food and another $700-$1,000 extra for utilities and even yours truly, who flunked algebra, knows that adds up to some $4,000 they may not throw our way.
Maybe my theory about pain at the pump and a slowdown in consumer spending is flawed, but polls conducted by minds far sharper than mine seem to support my theory that Americans are troubled.
And historically, when mildly hysterical, Americans keep the wallets and purses closed when it comes to non-essential purchases.
According to a recent Gallup poll, when thinking about the state of the nation, 78% of the respondents said they are dissatisfied.
The survey further reflected Americans’ recent concern about the economy when the percentage of respondents describing national economic conditions as “poor” increased five percentage points to 42% in February, and the percentage saying conditions are getting worse ticked up three points to 70%.
Both figures are tied for the highest they have been since the first months of the pandemic.
Recent data confirms that consumers are beginning to cut back on some of the items that have gone up the most in price.
On the bright side, statistics from the Bureau of Labor Statistics indicate that while furniture prices have gone up about 9% from a year ago, that increase was much less than for other categories including car and truck rentals (87.7%), used cars (45.2%) and, of course, gasoline (45.1%).
Even so, my call for furniture sales is like the road sign that warns us to slow down due to sharp curves ahead.
“Over the next 12 months people are expecting to spend more on groceries, utilities, and at-home basics while many signal they will spend less on discretionary items and out-of-home occasions,” observes Nicole Corbett, director, Global Thought Leadership, NielsenIQ.
Recently, The FAM ran a great think-piece about industry slogans and what ours should be. I wish I had the definitive answer, but I don’t.
However, I do have a suggestion. Knowing consumers are worried, frightened, and unsure about the future, our messaging should be about things like trust, security, comfort, warmth, and reliability.
As I said, this is only a suggestion. That and $5.00 will buy you a gallon of gas. Maybe.
FAM Furniture Stories
Industry newcomers who don’t have any bias or past information to go on—like Steve Baxter of tech company GTRsuite— sometimes realize extraordinary things.
Bad news for those tired of hearing about the need for up-to-date, user-friendly websites that tie the online experience to the store—they’re only becoming more important.
In the second part of our four-part Silver Tsunami series about aging in the furniture industry, we focus on how challenges to being a sales rep may impact the future of the role.
In Case You Missed It
The Sustainable Furnishings Council (SFC) is celebrating its 15th Anniversary with an industry-wide party on Friday, April 1, 2022 from 5-8 p.m at the CULP Innovation Center, the event’s Host Sponsor. The spirited and celebratory theme to welcome Scarlette Tapp, the organization’s new executive director. Tapp brings a tremendous capacity in nonprofit management, with expertise and experience in marketing and development as well as organizational leadership. SFC further shared that there will also be a congratulatory event theme as accomplishments of the organization’s first 15 years are acknowledged and a special keynote is made regarding the leadership provided by Susan Inglis in her tenure as executive director.
Infinity will spotlight three higher-end massage chairs at entry-level price points at the High Point Spring Market. The trio of chairs include Prelude, Aura and Smart X3, each with features that are, “often found in much more expensive massage chairs and offer home furnishings retailers and specialty bedding stores an opportunity to turn interested shoppers into motivated buyers,” according to the company.
Rifle Paper Co. is launching it’s first furniture collection in partnership with print-on-demand furniture company Cloth & Company. The new line has 15 different silhouettes including chairs, ottomans, benches, settees, room dividers, headboards, and beds. Twelve fabric options are also available to be paired with each silhouette and feature signature Rifle Paper Co. prints inspired by Bond’s hand-painted illustrations.