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Furniture/Furnishings Weekly

The Fall Furniture Market in High Point, N.C. brought the industry together last week to do business, celebrate successes, and commiserate. We spent the day Saturday, the official opening day, while buyers and vendors had been there since the prior Tuesday. The sky over High Point was gray and wet. So was the mood. We heard apprehension. A residential furniture manufacturing executive we spoke to said he is preparing for a protracted slump of at least nine more months. Our conversations confirmed that customer traffic at retail has been painfully slow. On a positive note, the customers who show up are ready to buy. Conversion rates are double the norm, more or less, and consumers are thinking big. The average ticket is higher. Premium customers are more active than the mass market. Positive conversion and ticket have not been enough to offset weak traffic. Buyer and designer activity in the showrooms was moderately strong. One vendor reported activity was up 50% versus October 2022, but not as busy as April, when this vendor opened a new display space. Unofficially, buyer registrations for the market are down about 5% versus the fall of 2022. Registrations may not directly reflect activity. More registrations last year does not mean they all showed up. The question that hangs over the industry is how long retailers can survive the current sales pace. We heard speculation that 8,000-9,000 retail locations could be gone in two years if the current sales pace persists. That represents about 25-30% of the US furniture store base. We think that’s too dire. But residential furniture has been plagued by overcapacity in both retail and manufacturing. Another positive note: pricing and margins have held up well at the manufacturing level. That has been true at the retail level, as well. But good margins on low volume is not a formula that holds up long. Retailers need volume to leverage occupancy and fixed costs.