Whose Foot Is On the Brakes?

July 31, 2019  by HFBusiness Staff in Business Strategy, Industry   

But that increase of only 1.8% in Q1 / 2019 compared to Q1/2018. Made me ‘gulp’ a bit, but I quickly regained my composure, blaming the government shut down that made consumers delay major purchases. Since March, with the exception of certain markets, it has been lackluster. Everyone has begun blaming it on consumer confusion, that because of the 25% tariffs, furniture has increased by the same amount and they should postpone their purchase until they are removed- they will, won’t they?

I wait with bated breath until the end of July when Impact Consulting’s Market Model is released. However, it doesn’t look good with preliminary furniture store sales up only about .5% and preliminary indications that the industry will be up quarter to quarter 2.5-3.0%. Better than quarter one (1.8%), but no cigars.

What is causing the lack of performance can be related to our most basic influencer- housing. The table below provides some basic comparisons.

Yes, housing starts in Q1 / 2019 growth was a negative 1% after a weak growth rate of 3.8% last year (2017 – 2018) which was substantially below the previous three years.

Even with housing inventories falling (<8.6%>) in the quarter and household formations increasing 1.1% up from .8% for the previous three years. Housing starts are down, available rental units are up, however.

Unfortunately, this does bode well for the traditional furniture retailer, but is good for the more disposable product at Target, Wal-Mart, and Amazon. Should we reconsidered our merchandise strategy?

This month’s Statistically Speaking dives into the detail. However, someone definitely has the foot on the brake.