Retail Observer

RETAILOBSERVER.COM JUNE 2022 54 M any of the challenges we were facing in 2021 didn't simply go away with the New Year. We're still seeing supply chain challenges, labor issues and COVID infections, and inflation is still high (March +8.6%). Now we face a Ukraine/Russia conflict that is dramatically affecting energy prices here in the U.S. Despite the challenges, we are seeing improvements in many areas that are bringing opportunities for independent retailers to continue to offer great solutions to consumers in need. HERE ARE FIVE REASONS YOU SHOULD BE EXCITED. 1. The Fed is doing something about inflation, and we can expect to see rate hikes throughout 2022. The Fed raises rates to slow the economy and stabilize prices. This should also have a positive impact on supply chains over time, as excessive demand driven by the pandemic slows. A rate hike, while raising the cost to borrow money, also increases rates on household savings accounts, which will improve an already strong household financial position, discussed later. 2. While GDP won't grow as fast as in '21, it's still expected to be strong. The start of the year will grow less than 3% annualized in Q1 2022, but the rest of the year's GDP is expected to be between 3% and 3.5% . 3. Households are in the best financial position in a long time, driven by excess savings. U.S. households currently have $2.3T in savings, with strong levels of disposable income also available. This is important to note, as there is a fading of the fiscal support that drove higher purchases in the beginning of '21. 4. Lead times on the mattress side have greatly improved. Most manufacturers are back to normal lead times, generally less than two weeks from order to ship, which should help drive a healthy GMROI (Gross Margin Return on Inventory) for the mattress side of your business. On the furniture side, we're still seeing challenges for much of the import side of the business. However, many manufacturers have either begun putting in place increased warehouse space in the United States to help move inventory as it comes in, or they've moved toward more domestic manufacturing and alternative sources, including Mexico. 5. The real estate market is still hot ! It's expected that the high demand for homes will continue in 2022, as millennials are entering the market in their peak earning years. Freddie Mac predicts 6.8M home sales in '22, equal to what happened in '21 and 300k more than '20. Home prices are expected to increase 7% in '22, driving higher net worth for many homeowners. So, while some of the challenges are persisting this year, it's clear to the Nationwide Furniture and Bedding team that there are plenty of positives that will continue to drive strong results for the independent retailer. On top of that, our team has been hard at work looking for new opportunities to help our members' businesses thrive. In fact, we've spent the first part of the year focusing on markets, new vendor programs, and maximizing our own PrimeTime event to bring retailers the right mix of solutions to help sustain market share growth and capture new customers. That work will continue into the back half of this year, where we're seeing plenty of ways for dealers to keep on riding this wave of success. Mike Derro Furniture Trends RO Mike Derro, Vice President of Furniture Nationwide Marketing Group RO 5 REASONS RETAILERS SHOULD BE EXCITED RIGHT NOW

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