2008: Almost certainly a better year than 2007
Jerry Epperson -- Furniture Today, November 11, 2007
It's the time of year when we start looking ahead to next year. Perhaps the best thing about 2008 is that it might help us forget 2007.
A quick review of 2007 shows that it was a decent growth year for bedding; a very weak year for bedroom and dining room; a soft year for home office; a modestly better year for home entertainment, youth and stationary upholstery; and a flat year for recliners and major motion.
Except for bedding specialty shops and some catalog and Internet outlets, it's been a tough year for furniture retailers, especially the department stores and full-line furniture stores nationwide. The Northwest, however, did modestly better than other regions. Furniture stores that still carry their own receivables and sell electronics did better than most.
October continued the weakness seen earlier in the year, and hopes for any turnaround in the remaining two months of 2007 are slim.
It now appears 2007 will be remembered as the worst year for furniture retailing since 1982, when the prime rate exceeded 20% for part of the year. Since the usury rate was 18% in most states, it was nearly impossible to finance furniture purchases that year.
We expect total retail sales of furniture to decline 7% to 9% in 2007 vs. 2006, and bedding sales to grow about 5%.
What about 2008? We expect a decent January, which has become our fourth-best month of the year, then the usual winter weakness, except for some that benefit from the tax rebate season in March and April.
If the usual pattern holds true, business will remain lackluster until mid-August, when we should begin to receive some benefit from home sales in the summer.
We expect some good news in early 2008 from housing sales, partly because they will be compared to weak 2007 numbers, and partly due to the lower interest rates and other incentives being initiated to help the housing sector. Our industry won't get the full benefit of any 2008 housing recovery until 2009, but we should get a slight boost, especially when compared to the dismal 2007 fall selling season.
Mattress sales in 2008 should continue to show 5% to 7% gains, benefiting from the ongoing movement to more luxurious pieces being sold in larger sizes.
In 2008, we will be seeing higher prices in wood and leather furniture.
All this does not factor in a recession. Some economists say there's a 20% chance of a recession in 2008. The furniture industry had its own recession in 2007.
Once again, we're ahead of the pack!
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