Rebound in retail may solve many problems
Jerry Epperson -- Furniture Today, November 18, 2001
Occasionally we are called upon to make predictions about our industry, and today we are going to be dumb enough to do it. Let's say some sooths.
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The sales declines of 2001 have created an opportunity for huge year-to-year comparisons next year. Since so much capacity has been removed at both the retail and manufacturing level, those who remain should experience strong volume gains. Plus, since companies have cut expenses to the bone, any volume increases should yield handsome bottom-line results.
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Past recessions have seen housing turnover weaken proportionally, but that has not been true this year. Since housing has remained healthy throughout this weak economy, we should have a greater deferred demand from our consumers than we have experienced since the end of World War II. Doubt it? Economic recoveries tend to mirror the declines. Severe declines are usually followed by brisk upswings.
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Investing has become a sport to most Americans. In the past, only a few large investors followed day-to-day fluctuations in the market. With today's participatory retirement plans, a market that encourages small investors, and more cable stations reporting on the stock market than on sports, even children watch the tape. To some it is a daily update on how soon they can retire or buy a new durable. Since we sell durables, we must hope for healthy stock markets to help our consumers. Let's face it, buying furniture is a long-term investment.
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Expect some experimentation in furniture retailing in the coming years as our industry seeks the vehicle that will attract the next big generation of furniture buyers — the kids of the baby boomers. Just as Levitz and its clones attracted we baby boomers with big selections and take-it-home-today instant gratification, the new generation likely will demand its own mix of Internet and bricks-and-mortar retailing. There's gold in those young people if you develop the right combination.
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The last 12 months have taught us just how inadequate our existing communications and technologies are as inventory imbalances and order problems hurt everyone. Thank heavens we have retailers and manufacturers working together to develop today's new technologies to keep these problems from slamming us in the future.
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The U.S. dollar has been weakening in a relative sense since mid-summer. That will begin to make merchandise from Canada and Europe more expensive here and make our merchandise cheaper in those markets. We do not expect it to have much of an impact relative to the merchandise coming from the Pacific Rim or from south of our border.
Even so, U.S. manufacturers are becoming more global in their thinking, are competing on their strengths, and may be surprised at how a rebound at retail can help resolve many problems. Remember, a pickup in consumer spending (a rising tide) helps all manufacturers (raises all boats).
Opinion columns are available online at www.furnituretoday.com.
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