Suit Up for Battle
Furniture Retailers Looking to Survive, Much Less Prosper, in 2009 Had Best Be Prepared for Battle
December 2008 By Powell Slaughter
There’s no sugarcoating it. For a lot of furniture retailers, 2009 shapes up as a war for survival. While many look to 2010 as
the year the U.S. economy slogs back from its worst economic crisis in 80 years, it might n0ot come soon enough for some.
The indicators available in early November are bleak. In October, the Conference Board Consumer Confidence Index—in recent years the major bellwether for the furniture industry—hit an all-time low, and 36.6 percent believe conditions will get worse in the next six months, up from 21 percent in September.
The Conference Board’s index of leading economic indicators has been falling since July 2007, while Gross Domestic Product in 2008’s first half slowed to an 1.8 percent annual rate from 2.3 percent in the first six months of last year.
September non-farm employment lost 159,000 jobs through September, and long-term unemployment rose to 2 million people.
Combine skittish consumers, slumping sales and an economy in turmoil with a credit crunch that’s putting the squeeze on even strong retailers’ ability to access the cash they need to run their business, and you get a grim picture for next year that’s no real surprise to anyone in the furniture sector.
“Some will fail for lack of $200,000 or $1 million that’s just not there,” said Jerry Epperson, managing director of Mann, Armistead & Epperson, Richmond, Va., at an American Home Furnishings Alliance finance meeting last month. “Bankers don’t want exposure in the furniture industry specifically.”
Speaking earlier at High Point Market, Epperson pointed to the bedding industry as an indication of just how tough things are.
“Since 1973 ... the bedding industry has only had two off years,” he said. “One was off 0.3 percent and another time it was 1.9 percent. So far, through August of this year, the mattress industry is off 8.3 percent and August sales were down 16.1 percent. So, that gives you some idea of the magnitude of what we’re going through.”
A PERFECT STORM It hasn’t helped that the overall economy tanked as the furniture industry was coming off a couple of already slow years.
“The biggest hurdle is the general economic environment,” said Doug Kays, president of the National Home Furnishings Association (NHFA). “Furniture, as a category, took its hit and made some adjustments in ‘06 and ‘07. ‘08 and ‘09 are about the general economy. If the economy had stayed where it was, the furniture industry would have gone back up this year. We’re now, for the first time, really, at the mercy of the general economy. ... We’ll be on the wave when it comes back.”
the year the U.S. economy slogs back from its worst economic crisis in 80 years, it might n0ot come soon enough for some.
The indicators available in early November are bleak. In October, the Conference Board Consumer Confidence Index—in recent years the major bellwether for the furniture industry—hit an all-time low, and 36.6 percent believe conditions will get worse in the next six months, up from 21 percent in September.
The Conference Board’s index of leading economic indicators has been falling since July 2007, while Gross Domestic Product in 2008’s first half slowed to an 1.8 percent annual rate from 2.3 percent in the first six months of last year.
September non-farm employment lost 159,000 jobs through September, and long-term unemployment rose to 2 million people.
Combine skittish consumers, slumping sales and an economy in turmoil with a credit crunch that’s putting the squeeze on even strong retailers’ ability to access the cash they need to run their business, and you get a grim picture for next year that’s no real surprise to anyone in the furniture sector.
“Some will fail for lack of $200,000 or $1 million that’s just not there,” said Jerry Epperson, managing director of Mann, Armistead & Epperson, Richmond, Va., at an American Home Furnishings Alliance finance meeting last month. “Bankers don’t want exposure in the furniture industry specifically.”
Speaking earlier at High Point Market, Epperson pointed to the bedding industry as an indication of just how tough things are.
“Since 1973 ... the bedding industry has only had two off years,” he said. “One was off 0.3 percent and another time it was 1.9 percent. So far, through August of this year, the mattress industry is off 8.3 percent and August sales were down 16.1 percent. So, that gives you some idea of the magnitude of what we’re going through.”
A PERFECT STORM It hasn’t helped that the overall economy tanked as the furniture industry was coming off a couple of already slow years.
“The biggest hurdle is the general economic environment,” said Doug Kays, president of the National Home Furnishings Association (NHFA). “Furniture, as a category, took its hit and made some adjustments in ‘06 and ‘07. ‘08 and ‘09 are about the general economy. If the economy had stayed where it was, the furniture industry would have gone back up this year. We’re now, for the first time, really, at the mercy of the general economy. ... We’ll be on the wave when it comes back.”
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