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Hey FAM, it’s Ray Allegrezza.
This week, I’m talking about The Oracle of Omaha, Warren Buffet, and his advice on investing in yourself in light of inflation and its impending affect on consumers and the furniture industry.
Plus, don’t miss FAM stories about the home furnishings industry’s trillion-dollar diversity problem and how smaller retailers can compete with bigger stores.
#WIMTY — What It Means To You
In my first column for The FAM, I made you a simple promise. Simply put, I would never sugar-coat any of my columns.
And since none of us, not even the sage and venerable Oracle of Omaha, is omniscient, I want to underscore that I may not always be right, but I will always be honest and tell you the truth as I understand it.
So, without further ado, and with that caveat out of the way, here is my morsel of honesty for this week—some of us have our heads somewhere where the sun ain’t shining.
The pandemic convinced many of us that the sky literally was falling, and an extremely large lady was only moments away from grabbing the mic to sing her version of “Eve of Destruction.”
Suppliers only saw labor shortages, price hikes everywhere, missed shipping dates and angry retailers.
Retailers, meanwhile, paralyzed by frightening freight hikes, scarce product, and an uncertain future bought anything and everything that suppliers had on hand, or could get them soon.
Independent reps, meanwhile, told horror stories of getting beat up by both suppliers and their customers, and many opted to sit at home, rather than risk life on the road, where they belonged.
So, what’s my point? Simply that each group mentioned above got so caught up in their own misery and challenges that they often forget to see the world through the eyes of the ultimate end user….the consumer.
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And as a firm believer that there is no use crying over spilled milk, I invite you to step over that mess and take a look at some current statistics, all of which are bound to impact the consumer’s future spending habits.
Let’s start close to home. According to government figures, the cost of ongoing purchases for stables including gas and groceries has continued to rise for the past several months. Last month, the annual inflation rate spiked again to 8.5%, which has the dubious distinction of representing a four-year high.
Next, let’s take a peek at another ongoing bill consumers have to deal with—the cost of energy. No good news here, either. Recently the Fed warned consumers to get ready for massive price hikes if they plan on staying warm this winter.
Specifically, the U.S. Energy Administration predicted that our customers are likely to have to pay 54% more for heat this winter. I guess, however, Americans who heat their homes with natural gas, should feel lucky.
According to government predictions, those households (almost half of the country) can expect to pay an average of $746 for heating from Oct. 1 to March 31, still a whopping 30% more than last year, the government agency maintains.
But as they love to say on those home shopping channels: ’But wait, there’s more.’
While there is still no place like home, affording a home is going to be an uphill battle for lots of consumers. Lots of observers, including this one, thinks home buying this year, even with attractive mortgage rates, is going to be a grind. The great news for sellers and hell for buyers, is that home prices from coast to coast continue to rise up to three times faster than a year ago.
For many consumers, it may be time to say goodbye to that new-car smell. Anyone who has been shopping for a new ride can attest to the fact that new car prices are through the roof and so are used car prices. Here, the government tells us that new car prices are up almost 32% over last year thanks to inflation and ongoing supply chain issues. Talk about sticker shock!
It has also been tough for all the gamers who were hoping to ride out the pandemic by playing video games. In a sad new version of Goodbye, Mr. Chips, the severe shortage of the chips that allow computers, television, and video consoles to distract us has made it ‘game-over’ for gamers hoping to buy a new system.
Truly, this is enough to make one sick, and speaking of getting sick, plan on that costing you more, too. Even well before the pandemic, the rising cost of health care was making lots of Americans queasy.
Now, consulting firm Milliman says health care costs are up almost 9%.
Faced with ongoing and record-setting inflation, should we be surprised that consumers may have more pressing things on their minds other than your new sofa, credenza, new sleeping platform or outdoor assortment?
Now, more than ever, we all could benefit from some time with Pythia, better known as the Oracle at Delphi. But since that is not likely to happen, we have the other Oracle…the Oracle of Omaha, better known as Warren Buffet, to lean on.
Luckily for us, the Berkshire Hathaway CEO recently gave attendees at this year’s recent Berkshire Hathaway yearly shareholder meeting some advice.
Sticking to his guns, Buffett reaffirmed his longstanding advice that the best hedge against inflation is you, as in invest in yourself, be exceptionally good at something and if you are, people will “give you some of what they produce in exchange for what you deliver.”
Considering that the 91-year-old Oracle is worth $124.3 billion, I am inclined to take his advice to the bank.
So maybe, just maybe, if we stop looking at our own challenges and refocus on being the best we can be for our customers and our customer’s customer, we just may get out of this alive.
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FAM Furniture Stories
A quick look at the most current U.S. Census shows that 76% of Americans are White, 13% are Black, and 6% are Asian. That should come as no surprise. But when we think about the furniture industry—which is primarily made up of older White men—is there a disconnect between the people in the C suite and the people actually buying the product?
In the furniture world, it seems as if big retailers are getting bigger and more successful. If that’s the case, is the day looming where Goliath crushes David? Or do smaller retailers still have a shot on the playing field?
In Case You Missed It
Las Vegas Market’s proprietary FIRST LOOK forecast features three new trends – “Beach Bound,” “Overlay” and “Purple Prose” – inspired by destinations, moods and popular colors. These trends will be showcased through products available at the market via programming, vignettes, a guidebook and more during the July 24-28, 2022 market at World Market Center Las Vegas.
“The Summer 2022 FIRST LOOK trends consider how iconic locations, sentiments and color preferences can guide interior and product design,” says IMC’s Dorothy Belshaw. “The FIRST LOOK programming is an actionable style direction for buyers looking to have must-have product going into the 2022 holiday season.”
Hooker Furnishings has turned to a company veteran to help bring greater synergy and efficiency to its legacy and HMI brands with the promotion of Erin Stone to vice president of relationship management operations. In her new role, Stone will take the lead on integrating customer care and service, account, and order management, as well as contract and hospitality operations and project management functions between the two divisions. She will be creating new operational infrastructure around the interior design channel and reports to Anne Smith, chief administrative officer, and president of domestic upholstery.
Ethan Allen has debuted its newest Design Center in Walnut Creek, California. One of several openings, including a recent opening in Westport, Connecticut, that the company has slated for 2022, the new Design Center showcases the timeless aesthetic of Ethan Allen’s vast product portfolio while fostering collaboration between the company’s world-class interior designers and clients.
Grounded in a unique vision of American style, the center empowers clients to work with its professional interior designers at fully equipped workstations, viewing both before-and-after photos and 3D floor plans of single rooms or even entire homes. Large, high-resolution screens bring digital design plans to life, so clients can preview an incredibly realistic version of their designed space before placing an order.
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