HP Market Outlook Paints Rosy Picture

February 4, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on February 5, 2010

The coming six months could be the best the U.S. home furnishings industry has seen in a good while, according to the 2010 High Point Market Business Outlook and CEO Update, a new, in-depth report published by the High Point Market Authority.

According to Brian D. Casey, president and chief executive of the High Point Market Authority, the 2010 Business Outlook was developed for home furnishings industry professionals focused on driving business in a challenging economic environment. In preparing the special report, the Market Authority team sifted through economic data and consulted with leading U.S. retailers who are bucking the current trends, along with industry experts in a variety of fields to explore their strategies for success.

"Reports from retailers across the country and industry experts from a variety of fields, as well as year-end numbers from 2009, suggest that we are back on the road to recovery," Casey said. "While none of the leading retailers we interviewed sugar-coated their experiences over the past year by any means, we found their responses to be thoughtful and upbeat."

For example, Neil Goldberg, chief executive of Raymour & Flanigan, Liverpool, N.Y., reported, "We're confident that the economy is turning around and that the consumer is back. We've seen positive trends in all of our 90 stores over the last few months and store traffic is up."

Mary Carol Gerrity, owner of the trend-setting Nell Hill's stores in Kansas, said a fourth-quarter uptick felt like a return to business as usual.

"I feel like everybody has been on this diet they are ready to get off of it. I am very optimistic about this coming year," she said. "We're finding that people are coming and buying the big pieces. They are really looking at their homes again."

Other comments included:
* Bernie Moray, CEO, Detroit-based Gorman's: "A year ago, consumers were experiencing a tremendous fear that they were going to lose everything. "A year later, a lot of people are waking up and saying, 'Gosh, we survived it. We're going to be o.k. The pressure is off a bit.'"
* Alan Kramer, vice president of merchandising, Star Furniture, Houston: "I think if anything, people want to be more comfortable in their homes now because they are spending more time there."
* Again from Raymour's Goldberg: "We've noticed that a lot of customers are cocooning€”that is, rather than spending money on travel, eating out etc€¦they are staying in their homes and spending deferrable income on improving the quality of their home life, including upgrading furniture and other home furnishings."

Highlights from the 2010 High Point Market Business Outlook include:
* In November, The National Association of Business Economists raised its growth outlook for 2010 to 2.9 percent, up from October€™s estimate of 2.6 percent.
* On Dec. 22, the U.S. Commerce Department reported that the economy grew at its fastest pace in two years during the third quarter of 2009, with real gross domestic product (GDP) moving upward for the first time since the spring of 2008. This jump showed a faster rebound than was expected by The Financial Forecast Center, which had predicted a return to growth in April.
* While unemployment is still a concern, like the GDP numbers, unemployment figures at the end of 2009 were better than expected. Forecasted to rise one-tenth of a point, from 10.2 to 10.3, the jobless rate actually fell back to an even 10 percent in November and held steady at that level in December. If this trend continues, it could dip below 9.5 percent by May.
* Sales of existing homes leapt up a surprisingly strong 10 percent in October, with about 400,000 more units changing hands than the market had expected. Analysts expected strong sales to continue through November.

The growth in home sales should contribute to a rise in home furnishings purchases, especially as changes to down payment requirements and mortgage terms give people more spendable income.
The effect of tax-rate reductions designed to stimulate the economy by putting more money in people€™s pockets on a paycheck-by-paycheck basis has been slight so far, but should team with rising consumer confidence to boost retail sales over the first two quarters of 2010.

"While unemployment figures remain a concern," Casey said, "the job search firm CareerBuilder released a survey at the close of the year showing that 20 percent of U.S. employers plan to increase their number of full-time, permanent employees in 2010, up from 14 percent in 2009. These somewhat brighter employment prospects may also be having an influence on the one indicator that matters most to retailers€”consumer confidence."

In fact, the Conference Board Consumer Confidence Index®, which had increased in December, improved further in January.

The report is available now for download by clicking here.