From Home Furnishing Business
Furniture Stores Top Selling Months
Many life events spur home furnishings purchases. But along with buying a new home, marriage, and having children, the time of the year plays an important part in overall furniture store sales (Figure 1). These sales are less important to other furniture distribution channels, for example, big box stores, but are the bread and butter of furniture stores. These event sales also serve the function of clearing out merchandise to make way for new styles.
Economic events can always alter consumer confidence, but the overall monthly ebb and flow of furniture store sales has changed through the years. Once the pinnacle of furniture purchases, the November/December holiday season has lost some of its sales glamour, not only for furniture but all consumer products as a total group. It is still the biggest season in total retail sales of consumer goods, but no doubt the 4th quarter has lost market share. For furniture stores, May and August have always been steady and strong, but March has emerged as a huge sales month. Online filing of income tax returns has resulted in quick returns for the end of February and especially throughout March.
Throughout the 1990’s and up until the mid 2000’s leading up to the Great Recession, November and December trended as the largest sales months for furniture stores, often combining to capture 18 percent to 19 percent of annual sales. The exception was in December 2002 and 2007 when economic downturns and uncertainty impacted furniture store performance in December. However, since coming out of the Great Recession, the entire 4th quarter has garnered less importance to the Furniture Industry. Table A tracks monthly indexed furniture store sales. Note that an index of 100 represents the average month (annual sales divided by 12 months). An index of 115, for example, indicates sales were 15 percent higher this month than the average.
Two decades ago in 1997, the 4th quarter far outreached the previous three quarters in furniture store sales (Table B). At 27.6 percent, the 4th quarter was 4.4 percent higher than the 1st quarter’s dismal 23.2 percent. Over the next 15 years, both quarter 1 and quarter 3 percentage of sales increased, while quarter 4 dropped below 25 percent. Although 2016’s holiday season performed better than 2012, quarter 3 rises as the year’s top-performing period.
Furniture store monthly sales center around calendar events and holidays. These events translate into the highest performing months in most cases.
While the 1st quarter contributed less than 25 percent to furniture stores sales in 2016, tax refunds issued at the end of February and throughout March propelled sales upward impacting March significantly (Table C). January is negatively impacted especially in markets sensitive to winter weather. And with no big sales event to lure customers, it is the worst performing month of the year for furniture stores. February has the draw of big Presidents’ Day sales which helps the weather-sensitive markets recoup somewhat. However, consumers seem to be holding out until spring when income tax refunds arrive. In 2016, almost two-thirds of total annual refunds totaling $203 billion (out of $317 billion) were paid before March 25. March is the only month in the quarter that consistently out performs the average for all months, which is 8.3 percent of sales.
The 2nd quarter typically produces lower furniture store sales than the remainder of the year because of a historically poor performance in April. Memorial Day sales in May always produce excellent sales– an average of 8.4 percent throughout the past two decades. In recent years June has also performed above the average (Table D).
Since 2002, Quarter 3 has climbed to the best selling quarter of the year – mostly due to high August sales. The end of summer sales and the lead into Labor Day has kept the month of August percentage of sales at 8.8 percent until 2016 (Table E). Last year the Labor Day holiday weekend fell solidly in September which boosted it to the highest performing month of the 3rd quarter. Meanwhile July 4th events are producing average sales during a traditional consumer vacation period.
Table F shows how market share of November and December combined has dropped from 19 percent in 1997 to 17.2 percent in 2016. While still commanding above average sales, the holiday season has lost some appeal as more consumers are choosing to take advantage of income tax refunds in the early spring and late summer sales. In addition, other consumer goods and electronics also compete for consumer dollars during the holiday season. Meanwhile, October has become the second worst performing month behind January averaging 8.0 percent of sales since 2002.
In a perfect world, furniture store retail sales would produce 8.33 percent of sales per month. And while all retail entities have seasonal variations based on consumer life events, which are beyond the retailer’s control, and holiday sales, which are within its control, every month that falls short of this mark potentially sends consumers to other product markets. If the 4th quarter of 2016 had generated the percent of sales as the average of the 1990’s, an additional $1.3 billion in furniture and bedding sales would have shifted to the holiday season. Is this loss a result of a shift to other seasonal sales and events, or is it a decline in the importance of furniture purchases to the consumer in the 4th quarter?