Products & Trends

Analysts Expect 2017 To Finish Big

Favorable economic and demographic trends point to strong second half sales

In his State of the Industry presentation at High Point Market, industry analyst Jerry Epperson pointed to growing home sales, good economic news, and an oncoming wave of millennial furniture buyers as signals of rising sales in the second half of 2017. “The first quarter of this year was stronger than the first quarter of 2016, thanks partly to the weather, no presidential election, and good news on employment, housing and inflation,” said Epperson, Partner with Mann, Armistead, & Epperson, Ltd. Investment Bankers and Advisors, and publisher of the monthly Furnishings Digest newsletter.

On the housing front, sales are up significantly over 2016. “Existing-home sales took off in March to their highest pace in over 10 years,” says Ken Smith, Audit Partner with Smith Leonard Accountants and Consultants and publisher of Furniture Insights. New-home sales are also up. According to Epperson, this growth results from Americans forming new households and changing residences at a rate not seen since 2004.

Consumers’ desire to furnish and decorate these homes is translating into traffic – and dollars – for designers and retailers. Home-related purchases are outpacing other credit-reliant spending, such as travel, jewelry, electronics, and vehicles.

Retailers reach Millennials to drive sales

In addition to good economic conditions, demographic trends are also favorable. “Home furnishings spending peaks at 35-54 years old, although it differs by category,” says Epperson.

“This year, as the oldest Millennials turn thirty-eight, eighty-three million new consumers are moving into their prime buying years.”

These children of Baby Boomers arrive with significant furniture needs. “Many millennials are coming from the rental market, and want and need more and nicer furniture for their new homes,” says Smith.

Savvy retailers are finding success by thinking like their young customers. “With millennials, we’re competing for our share of their spendable income,” says George Perry, president of Sherwood House Furniture, in Danville, VA. “It often comes down to what’s more important, getting a new mattress or upgrading their phone. Accents and accessories are popular with this consumer, as is the reclaimed look. They don’t want what their parents had. I think that’s why we’ve seen repurposed styles become so popular.”

“We get a high market share of younger customers,” says Dave Cavitt, president of the seven-store Furniture Enterprises of Alaska. “We appeal to them by using younger on-air talent in our TV and radio spots, and showing entry-level price points.” Cavitt’s marketing plan also includes online advertising such as Google AdWords.

High Point Market Keynote seminar shows how to coax online shoppers into your store

Stacy Furniture & Design uses digital media to reach younger shoppers, says president Dorian Stacy Sims. “It’s the easiest, most cost-effective way to target them,” she explains. The Grapevine, Texas-retailer also has a specific merchandising strategy for the demographic. “We continue to experiment and try different looks with cleaner lines and more color, in a range of price points – our Millennial customers have a wide range of budgets.”

Second Half of 2017 holds great promise

Economic and demographic trends are setting the stage for success as we reach the busiest time of the year for furniture retailers. “Historically, 55 percent of home furnishings spending takes place in the second half of the year,” said Epperson. “In the last two years, it’s been closer to 57 percent. We’ve taught the American public to wait for big promotions and they’ve come to expect it. There are more holiday sales. Black Friday and Cyber Monday are now stealing from October.”

Epperson does not see promotions as the key to maximizing your share of this growing spend, however. He favors a compelling merchandise mix, and a great shopping experience. “The greatest opportunity for small and mid-sized retailers today is to offer merchandise that the huge stores cannot,” he said. “Create an environment that’s exciting and rewards the consumer with things they can’t find anywhere else. The wonderful thing about High Point Market is it has everything – from the most well-designed, high-end products to the least expensive – there’s something out there for everyone.”

Beyond the world’s most expansive product selection, Fall Market will show you the best new ideas in marketing and operations, and offer unparalleled opportunities to build your business network with leading retailers, designers, manufacturers, and innovators. Join us, October 14-18, for the most exciting and productive event in home furnishings.