Will another Gulf war bring repeat of '91 results?
David Perry, Executive editor -- Furniture Today, February 3, 2003
Here's the situation: The United States is poised to launch a land war in the Middle East. Mattress makers are hoping the fallout from war won't depress bedding sales, especially since the industry is coming off a rare year of unit declines.
That's what faces us today. Interestingly, the preceding paragraph also describes the situation that faced the bedding industry in February 1991. Could history be repeating itself?
As a student of history, we find the parallels here intriguing.
In early February 1991, allied forces were preparing for the ground war in Kuwait and Iraq. Air assaults had begun the month before. On the domestic bedding front, our industry was hoping to rebound from a two-year unit sales slump. Units were down 1.5% in 1989 and 1.3% in 1990. Iraq invaded Kuwait in August 1990, so the prospect of U.S. involvement in the Middle East loomed large in much of the last half of that year and into the first part of 1991.
The land fighting in the first Gulf War began on Feb. 24, 1991. It was all over by Feb. 28, with the Iraqis routed from Kuwait by coalition forces. Here in the United States, the bedding industry went on to a somewhat lackluster showing. The two-year slump in unit sales ended, barely. Units increased only 0.6% in 1991. Dollars were up 2.7% that year, a difficult year for the furniture industry.
As we move into 2003, the prospect of a second Gulf War appears great. The war drums have been beating for months. And bedding producers are talking openly about what war would do to our business. There's a feeling that bedding sales will suffer. And, like in 1991, we're coming off a second year of unit declines, based on our calculations.
Bedding executives generally believe a new Gulf War will be over quickly. And then they believe consumer confidence will rebound and consumers will feel good about spending again. Bedding will post substantial dollar gains this year, many executives predict.
Furniture/Today's Consensus Forecast, based on the projections of almost two dozen bedding producers, calls for a 3.8% jump in dollars this year.
Our forecast is more modest on the unit side. In fact, the 0.9% unit growth we are forecasting for 2003 is right in the ballpark with the meager unit growth we experienced in 1991.
The general feeling in the bedding industry nowadays is that we need to get a war with Iraq behind us, and then we can look for an improving business climate. But if history is a guide — and it's certainly worth considering, at the very least — we shouldn't expect unit volume to grow significantly this year.
If you're looking for better news from the history books, start planning for next year. In 1992, the year after the first Gulf War ended, unit sales jumped 5.1% and dollars were up a healthy 7.6%!
