As we enter the October market, there is a lot of noise around the economy and government policies that affect consumer psyche. Does that impact their desire to upgrade their home furnishings in the near future? That is the question. And what will be the mindset retailers and factories have towards new product introduced at market? I am cautiously optimistic.
There are some very real challenges that will be facing some people that may have impact on their ability to purchase home furnishings. After three years of deferral due to pandemic policy, the roughly $1.75 trillion of outstanding student loans in the U.S. started accruing interest again this month. For the 44 million Americans with student debt, payments resumed in October. Now the borrowers will face loans with the highest interest rates in 15 years.
It is likely that spending habits will change for some recently graduated buyers as they rearrange their household budgets. Roughly 70% of the U.S. economy is tied in one way or another to consumer spending; the inflation in food, gas and housing is also taking money out of the household budgets.
Since furniture is a highly deferrable purchase, it is likely that when consumers change their spending behavior, segments of the furniture industry will feel a pinch. We are already starting to see it in our industry from publicly traded companies reporting slumping sales. In a recent survey, 70% of respondents said they plan to shop more often at discount retailers. Pressure on individual’s budgets will send them into value purchases.
On the other hand, there are plenty of people who are not worried about the price of gas, food or student debt. In many places, I see new home construction selling out quickly. In my town due to high demand, there are houses selling for many times what they would have sold for before the pandemic. Those who are not encumbered by debt and have money to spend on cruises and travel, will also find their way to spending on home furnishings given the right offer. There is always money moving around in the marketplace if the offering is right.
So what do I expect for market? A mixed bag. Promotional vendors should do well gaining floor placements at the expense of higher-priced, slower-moving products. Consumers will downgrade their wants and needs to fit their pocketbook, and retailers will change their offerings accordingly. Retailers also will be looking for items they can show at great prices in their advertisements. Value will be the key.
It also could be a surprisingly good market for new introductions. On many retailers’ floors the offering is the same thing from the same vendors. Thus, they compete to see who can be the lowest price. Some retail floors get stale, and a customer that comes in time after time looking for something new will eventually find it elsewhere or on the Internet.
This market is an opportunity to freshen up the floors with value products and new looks that will not be on every other floor. New product that excites the customers to update their home furnishings should also do very well.
Have a great market.