CIT expects post-recession growth for furniture sector
July 9, 2013,
NEW YORK — CIT Trade Finance Group's Michael Hudgens says in a new video that certain sectors of the furniture industry benefited during the recession, and the industry should see post-recession growth.
Hudgens is the Southeast Regional Manager of CIT Trade Finance. The video, "Furniture Moves Forward: Sector Sees Post-Recession Growth," is available online.
Pent-up demand driving sales
As markets improve and many Americans regain confidence in the economy, furniture sales will see a lift. "In 2012 the furniture industry grew almost double the rate of the overall economy," said Hudgens. "We think that was due to pent-up demand. Also, as the housing market improves, the furniture business will continue to see increased sales."
Opportunities and challenges
The challenges facing the industry now include determining where sales will come from and how to sustain it, such as adopting e-commerce strategies. Another problem is how to serve the 25-35 year-old demographic. "People in that age category really don't want their parents' furniture and see these products more as disposable versus durable," said Hudgens. "This is what many furniture companies are trying to solve right now, and this is both a challenge and an opportunity."
Issues facing the industry
The top three issues facing the furniture industry right now are rising costs, the consolidation of the customer base and securing financing. "Whether you are a domestic manufacturer or an importer, labor is scarce and expensive," said Hudgens. "Secondly, retailers have consolidated from independent retailers to chain stores and then big box retailers. Lastly, when the housing market collapsed, furniture sales did as well. As a result, several banks and lenders pulled away from the furniture market, making financing difficult for businesses to secure."
"The outlook for the sector is very positive. It's a great business to be in and one that's very important to CIT," said Hudgens. "We believe the companies that work with us have a huge advantage over their competitors because of our knowledge base and our deep experience in the sector."