Hey FAM, it’s Ray Allegrezza.
This week, I examine how the combination of rising prices and a less positive outlook for income this year may affect furniture retail sales. I’ve talked to a bunch of retailers, suppliers and reps in the past few weeks and to be honest, nobody seems to be doing backflips over prospects for the remainder of the year.
I also look into a study by The University of Michigan called The Index of Consumer Sentiment that found that not only are consumers worried right now, they also expressed pessimism about 2023.
Plus, don’t miss FAM stories about the value and future of furniture markets, why it’s okay that not all ROI is measurable, and the importance of our reaction when life hits us hard.
#WIMTY — What It Means To You
We are literally just hours out from the High Point Market. Showrooms spic and span, market wardrobes back from the cleaners, shoes shined, hair just right, A-games out, game faces on.
The stage is set.
Word on the street is that buyer attendance will be good and enough new product made it here to warrant a look-see. On paper, we should be good to go.
On paper. In my head, or maybe in my head and my heart, I’m feeling more than a bit anxious and wondering why.
I’ve been keeping an eye on consumer spend at retail and based on everything I’ve read, it looks like shoppers are hitting the brakes and squeezing their wallets.
Recent statistics from the Department of Commerce indicated that retail sales rose an anemic 0.3 % in February compared to January, underscoring a slowdown in spending that I blame on the ongoing mess from inflation.
Most of my friends tell me that inflation has put them between the rock and the hard place and that they see no light whatsoever at the end of any tunnel.
The government’s most recent Consumer Price Index showed that inflation rose 7.95 % in the year through February, earning the dubious distinction of representing the fastest annual inflation in four decades.
And let’s not forget concern over Russia’s invasion of Ukraine, which many say triggered the ridiculous prices we are paying for gas.
If these issues are keeping me up at night, chances I am not the only soul staring out of my bedroom window when I ought to be sawing wood.
I just saw a recent study by The University of Michigan. It is called The Index of Consumer Sentiment and it found that not only are consumers worried right now, they also expressed pessimism about 2023 because of things like inflation and what might happen as a result of Russia’s invasion of the Ukraine.
Among the findings, the report found that spending for gasoline spiked more than 5% in February, when gas prices rose more than 10% for the month.
While sales at bars and restaurants were up just under 3%, spending at furniture, electronics and appliance stores was lower. E-commerce also took a hit and sales for this channel dipped almost 4% from January.
The survey results hit the wire the same day that the Fed raised interest rates, a move that some say could further impede spending by consumers and businesses alike.
The study also determined that personal finances were expected to deteriorate in the year ahead by the largest proportion since the surveys started in the mid-1940s, according to Richard Curtin, the university’s economist and director of surveys.Remember the phrase, It’s the economy stupid? That was a phrase coined by James Carville in 1992, when he was advising Bill Clinton in his run for the White House.Today, based on the University of Michigan survey, the phrase should be ‘It’s the inflation, stupid.”
According to Curtin, when polled, consumers consistently mentioned inflation throughout the survey, whether the questions focused on personal finances, prospects for the economy or assessments of buying conditions.
Further, when asked to explain changes in their finances, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past 50 years: from March 1979 to April 1981 and from May to October 2008.
The combination of rising prices and less positive outlooks for income revealed that half of all households polled anticipated declines in inflation-adjusted incomes in the year ahead, Curtin said.
Here at home, I’ve talked to a bunch of retailers, suppliers and reps in the past few weeks and to be honest, nobody seems to be doing backflips over prospects for the remainder of the year.
The icing on the cake came just a few days ago as just about every media outlet reported troubling new outbreaks of Covid throughout Asia and Europe.
Might we be next? Might consumers be thinking that, too? Might consumer spending, especially on deferrable, discretionary stuff like ours, suffer?
Time will tell. While my crystal ball is as foggy as a stormy night in London, there is one thing I know to be true: This industry is tough, resilient and determined.
I wish each of you a safe, productive and profitable market.
See you downtown!
FAM Furniture Stories
Is it Covid that has changed the way the industry looks at trade shows—or was that already happening before the pandemic hit? The FAM spoke to several industry insiders about the future and value of markets.
With the explosion of social media, influencer marketing, and other tech-based marketing, businesses are learning that some ROI is not measurable—and that’s okay.
There are a lot of things going wrong right now, and when life hits us hard our reaction to that is important.
In Case You Missed It
WithIt will hold its 25th Anniversary Event – “A Silver Soiree,” during High Point Market at its newly opened event space in Congdon Yards. Tickets for the event are on sale now for $40 for members and $50 for non-members. Production and the planning for this event, led by a committee of 25 WithIt members, worked to develop a celebration event filled with fun, dancing and delicious catering. The celebration will also include a silent auction filled with exciting products from leading home furnishings brands and local businesses.
Douglas Estremadoyro is Hooker Furniture’s new senior vice president of business transformation and strategic projects. In his new role, he will be responsible for corporate-wide strategic planning and work to synergize the company’s multiple divisions, as well as head key transformational projects, including shoring up the company’s digital roadmap and the tactical integration of Sunset West. Estremadoyro will also focus on the implementation and execution of Hooker’s enterprise resource planning system, in addition to several other key corporate growth initiatives.
The High Point Market Authority (HPMA), organizers of the biannual home furnishings trade show High Point Market, is this year’s recipient of a North Carolina Travel Award issued by Visit NC, the state’s tourism marketing office and a division of the Economic Development Partnership of North Carolina (EDPNC). The award recognizes leadership in the development or redevelopment of a transformational tourism asset in N.C., with particular emphasis on the redevelopment of an area that has fallen out of favor or struggled economically. Established in 2019, the Esse Quam Videri Award is inspired by the state motto for North Carolina, which translates “to be rather than to seem.”