Retail Observer

RETAILOBSERVER.COM FEBRUARY 2023 50 L et's peek ahead at what the furniture industry should look like through the balance of 2023, given the uncertain macro- economic environment. Most economists and Fortune 500 CEOs still seem to believe that we are headed into a mild recession, as do most of the retailers and suppliers we speak with. While no one can say with certainty, the prevailing belief is that the furniture industry will see an approximate 5% decline in dollar sales this year, with the mattress industry trailing by another 1-3 percentage points. Unit sales are bit harder to forecast, but we expect them to be further down than dollars due to the continued impacts of inflation. This, in spite of the discounting we have seen in the marketplace. To share a bit more about the pricing environment, we are still expecting some price increases in select categories due to continued pricing pressure on inland freight, raw materials and labor. Also, despite the downturn in demand and the return of negotiation and deals from our vendor partners, many manufacturers still own inventory (or have contracts and commitments) that is costlier due to previous and significantly higher oceanic freight rates. This has kept prices stubbornly high and has led to BrandSource member dealers sharing in the margin pain by moving through surplus goods by discounting. However, the upside is that most of our members are approaching "normal" inventory levels, with nearly all of them expecting to be right-sized this quarter, driven in part by unexpectedly strong demand during the 2022 holiday promotional period. We are seeing some elasticity here in pricing among shoppers and across our vendor partners, implying there is still underlying demand when customers believe they are getting a good deal. Finally, keep these four consumer trends in mind when making your buying decisions: • Sustainability. The emphasis on going green will not only continue this year but will expand as customers are looking for products with minimal environmental impact. Descriptors like "sustainable," "eco-friendly" or "green" will grab the buyers' attention. • Form and Function. Consumers will continue to spend more time at home, so comfort will remain another key focus, albeit with an equal emphasis on design – meaning products must not only feel good but must be fashionable as well. • Home Office Products. With more and more folks working from home, we'll see continued demand for home office furniture, with some forecasting category growth of 6%. What's more, according to marketing strategists, many home-based consumers are expanding their workspaces and upgrading their home offices to accommodate hired help or visiting clients. • Bold Colors. Expect to see more eye-catching pieces with bold colors throughout the year, as single-bold-color items can draw attention to an area of the home or add a bit of fun to a space. This means plenty of colorful and patterned furnishings as you shop the shows this spring. One last piece of advice (actually, two): • Customers need to find you – so market yourself! • Your website must be easy to navigate, priced right and aligned with your in-store experience, overall advertising and plan-to-sell strategies. Remember, some retailers have viewed Amazon, Wayfair and other direct sellers as a threat, when in reality the move to online shopping could offer an advantage to independent dealers who serve their local communities with beautiful showrooms and educated staff. Michael Posa Furniture Trends RO Michael Posa is General Manager of Home Furnishings at AVB BrandSource and heads the group's home furnishings initiative, Furniture Technology Source (FTS). Contact him at Michael.Posa@avb.net. RO THE ROAD AHEAD IN HOME FURNISHINGS What furniture dealers can expect for the balance of the year

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