There was widespread anxiety prior to the October 14-18 furniture show held in High Point, NC. Why?

• Retail sales of furniture and mattresses have been disturbingly weak this year, with many furniture stores reporting 14% to 20% sales declines on a year-to-year basis compared to 2022, which was not a strong year either.
• There were several external reasons for concern about this furniture market including severe declines in housing sales largely because of the highest mortgage rates in 23 years; a return of severe inflation in many consumer goods including fuel (gas is $7 a gallon in parts of California); and most recently, the war in Israel.
• We believed that many of the inventory excesses and imbalances that burdened the home furnishings sector in late 2021 and most of 2022 were almost resolved like we had hoped the logistical challenges were behind us. During much of 2022 imports, which make up approximately 90% of wood furniture sold at retail (48% of upholstered furniture is imported as well as 85% of metal furniture and 30% of mattresses) were especially hard hit by extremely large back-ups at our ports was doing better. Currently, however, we are being haunted by the events of last year.

Historically, the cost to ship a container from Asia to North America has been $5,000 or less—much less—but last year for complex reasons those costs rose to over $25,000 for some time. Adding to the confusion was a shortage of containers.

Currently, too many furniture stores are burdened with overpriced inventory bought when these shipping costs were so extreme. Today, with much more normal shipping costs, this inventory can be bought and delivered at much lower net prices often making furniture purchases last year difficult to sell without severe mark downs resulting in losses.

-In 2020 and 2021, our consumers received generous cash payments from our government. These not only made for the best years for furniture sales in anyone’s memory, they allowed many households to repay debts. Since then, however, consumers have again been aggressively using their borrowing power and credit card debt has returned to pre-COVID levels.

INDUSTRY SPECIFIC OBSERVATIONS

 -It was clear at this market that higher-priced furniture and mattresses were performing better than the larger promotional segment. Some vendors that manufacture or import higher priced/quality furnishings reported that this October market was their best in years.

This was especially evident among the designer trade who were at a good attendance levels.

-Thanks to more normal freight costs, some showrooms had price reductions (remember them?) but in some cases it is because the vendor has too much inventory. Either way, discounts are on some of the line, not the whole line.

-Rising interest rates are a bank’s nightmare. We understand that some of the consumer credit programs offered by banks and other financial firms have changed what they offer to our retailers to finance consumer purchases. Rates are not going down soon; thank the Federal Reserve.

-One of the most competitive product categories is power motion and it continues to grow and offer new features. The battery packs are available and are a perfect add-on sale.  Can these battery packs run our adjustable beds?

There were at least two NEW companies offering power motion in October.

-The loss of Klaussner, Lane/United, Mitchell Gold + Bob Williams and others was old news in High Point. Other vendors welcomed their demise and offered variations and replacements. The vendors were concerned about who the next retailer failure could be? We have lost about a dozen in 2023, not counting Mitchell Gold + Bob Williams‘ 18 small stores.

-While not as many as shown in Las Vegas, High Point offers an assortment of beds. Remember that Ashley has a full line (Klaussner and Lane/United both had full mattress offerings) as do others. Sometimes you need to offer different mattresses than the same brands offered everywhere else.

-Outdoor furniture has enjoyed a decade of growth and it is now found year-round in many furniture stores. It was strong for the last decade as the yard became known as the 4th room and needed decorating, and lots of new products, not just furniture, have helped it grow (outdoor TV’s, sound systems, grills, and other cooking related items).

-Outdoor or casual furniture, as some call it, had a good market even after a very good Atlanta show one month earlier. This category has lots of style and color from which to choose and it has the fastest replacement cycle in our industry.

-Upholstered furniture remains our industry’s largest category and most retailers told us it is probably the easiest to sell. Prices remain a great bargain, custom features are available, and our industry has improved the various types steadily over the decades. Today’s upholstered furniture is safer, more affordable, comfortable and durable with more functional features than ever before BUT do you learn more when you go to your sources’ showroom? Do you pass this along in communicating with your customers? Our sources said High Point has become THE upholstery market in the U. S. and we agree. It is stated most often as the retailers’ reason to travel to North Carolina.

SUMMARY

The response to any question about the recent High Point furniture show was most often “better than expected “. It benefited from many inputs:

-weak sales at retail;

-the Klaussner and Lane closings;

-dramatic changes in pricing;

-very uncertain economic outlook;

-consumer expects a recession; and

-consumers prefer services, entertainment, and consumables to durables these days.