Why pent-up demand is just about to kick in
By Jerry Epperson -- Furniture Today, February 3, 2002
Writing these columns is always risky. I have to be in a mood to write and do not respond well to deadlines, so I tend to write them weeks ahead of time. So who cares? I believe strongly that our industry is mending at a good pace as of the date I am writing this. I had a column saying the same thing after some encouraging numbers in August, but then the Sept. 11 tragedies occurred and that column was tossed.
We believe consumers are shopping our stores at a pace not seen for almost two years. And more are making purchases, but our close ratio is still well below 1997-1999 levels. We are improving, and consumer awareness of our product is encouraging.
After a lot of speculation, data is now proving that consumers are spending more time in the home. Internet shopping for all products was up 43% in recent months, for example. Fireplace log sales are up 23% versus last year, and snack food sales are up about 20%. Yes, we actually track this stuff.
Already we have a number of manufacturers running overtime, and some retailers complaining about delivery lead times. So far this is more common among upholstery companies than wood manufacturers.
Many of the initiatives taken to stimulate our economy take a year or more to register. Interest rates began to decline in the summer of 2000 and are beginning to yield positive results in many areas.
Furniture stocks and the stock market in general have been showing handsome gains. That tells us that Wall Street sees a recovery soon. Contrast that to the market a few months ago.
What should you not use as an indicator? More often than not, employment levels do not pick up until the economy is well into a recovery. That also is why consumer confidence usually lags a recovery.
Interest rates also can indicate the future, but they are, like the market, very complex. Short-term rates can fall while long-term rates are rising. That happened off and on throughout 2001. We expect rates to go up in the second half of 2002, perhaps sharply. Hopefully, that will be because the economy is recovering steadily.
Forgive us for being redundant, but the key to our industry's recovery will be the pent-up demand for home-related products. Unlike past cycles, housing turnover stayed at healthy levels throughout the recession, but furniture sales fell off sharply. Consumers were so eager to lock in the best mortgage rates since 1968 that they would buy the home immediately and will spend to decorate it later.
This is why we may have a better spring than usual, even if other industries may not see improvement. Wouldn't that be nice?
-
Pent-up demand offers opportunity
Dec 21, 2009 -
Volatility Riles Industry
Aug 24, 2011 -
Domestic upholstery producers optimistic
Apr 28, 2011 -
'10 view: Slow growth
Jan 11, 2010
Specialty retailer LoveSac introduces new store design
Kincaid Furniture honors Jimmy and Rosalynn Carter for Habitat work
Belfort Furniture, Lawrance Furniture are NHFA Retailers of Year
Omnia Furniture ends relationship with Kathy Ireland Worldwide
Singapore furniture show expecting increased turnout
VIEW ALL GALLERIES
