Remember to focus on things you can control
Jerry Epperson -- Furniture Today, October 13, 2008
This week I ran into the owner of my local gas station, my dry cleaner and my physician, all friends, and each stopped to ask about what is going on. Working in the investment community for decades should give me some insight, but not much.
Our economy has been getting progressively weaker for a year, the furniture industry has been in decline for the last 25 months, and the dollar has been declining for almost five years. Our economy has been supported by growing exports, government spending and modest consumer purchases.
Two weeks ago, our president, his advisors and our legislators announced that a growing problem had reached crisis level, and scared the trusting American consumers into their cold war bomb shelters. The stock market has been bouncing between euphoria and despair, reassuring American investors that no one has a clue. Meanwhile, the vultures with available capital are making the deals of the century.
Politicians are running out of fingers to point, and both candidates babble when asked what they will do to fix this mess. In a way, it is encouraging that the problem has been recognized and solutions are being sought. Unfortunately, the repair is being done by those who caused the problem in the first place. Worse yet, it relies on politicians.
Thank you for allowing me to vent.
Just how bad is it? Home furnishings numbers are challenging, but if you look at our most stable merchandise category, mattresses, we have some insight. Since 1973, mattress sales declined in only two years, and then only by 0.3% and 1.9%. In August, ISPA's sample reported a dollar decline of 16% — and this was the month before the really bad news hit.
What can we expect?
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Consumers will continue to spend on needs, not wants, and purchase what will do the job without frills. This is true in everything they are buying.
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Americans continue to marry, divorce, go to college, have children, move to get or keep jobs, and do other things that create furnishings needs.
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Flexibility may be a key. Expect to see surprising new alliances and combinations among the manufacturers, importers and retailers that define our industry.
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Minimizing inventories, optimizing selection, flowing cash and creating efficiencies are a must. Some exciting things are in the works.
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Expect calls from your creditors lowering credit lines, just as consumers will have credit card and equity lines reduced.
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Keep promoting. You must have a presence with those who are still buying — or die.
This is unexplored territory for us all. Remember to focus on those things you can control — and none of us can control Washington.
