Epperson: Long-term demand looks bright

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Analyst Jerry Epperson from Mann, Armistead and Epperson, gave his state of the furniture industry on Sunday morning.

HIGH POINT – Jerry Epperson doesn’t know which problem is worse: consumers steering their dollars away from furniture to other categories or historically high demand that furniture makers have a hard time tapping due to supply chain and labor constraints.

These days, it’s the latter, but in his regular High Point Market “State of the Industry” presentation via Zoom, the industry analyst and managing director of Mann, Armistead & Epperson  told his audience at the HFA Retailer Resource Center that the furniture industry has a lot to look forward to as it works through capacity challenges that likely will extend well into next year.

“It will be mid-next year, at best, before we recover” from current constraints in shipping and labor, he said. When that happens, trends among multiple demographics show a lot of potential for decades of growth in furniture sales.

First, the Baby Boomer generation, long the engine behind consumer products sales, is dwindling in size – from around 78 million at peak to 74 million – but still has purchasing legs.

“What I found as a Baby Boomer is we continued to work” past traditional retirement age, Epperson said. “Lots of Boomers are moving into a dream home. They now have the capital to move into whatever they want. … When we moved into our condominium, we’d measured it out and thought we’d use our old furniture, but we ended up buying a lot of furniture.

“The stock market has been very good to us,” he continued, “and a lot of government dollars recently went to us, and with kids grown, that mean it’s going to smaller households,” making that influx more available for spending.

That said, consumers typically buy most of their furniture from ages 35 to 54, and a smaller Generation X demographic – around 55 million consumers – left retail space built to accommodate Boomers underutilized, especially with the growth of online furniture sales. There’s good news though.

“Now Millennials are coming along, and they’re a little bit bigger generation even than the Boomers,” Epperson pointed out. As the new generation hits prime buying years, “this will be like the (purchasing) wave when the Baby Boomers hit starting in the late ‘60s and early ‘70s. That age group will grow every year until 2035. More and more people are coming into their key buying periods and will need our product. Generation Y is just as big as the Millennials.”

And while a smaller demographic relative to Boomers and Millennials, Gen Xers won’t max out their purchasing for a while yet.

“A lot of people said in the past that Gen Xers wouldn’t move out to suburbia, just rent smaller spaces in cities,” Epperson said. “I told people that would change because of one element: children. Your life changes when you have kids; you need safety, you need space. We’re having yet another housing boom where people want to move to the suburbs.”

The good news there, he added, is that renters typically spend less than half the amount of homeowners on furniture and mattresses: “We’re getting back to 67% of our households being homeowners.”

Retailers also should pay particular attention to what Epperson called the single most important factor in future purchasing decisions: the growing spending power of women and minorities.

“Women and minorities have the same educational opportunities” as men, he said. “Sixty-two percent of college graduates last year were women. … What does it tell you that 80% of (future) physicians in school right now are women? Women’s incomes are growing much faster (than men’s). Not only are they playing catch-up there, they’re moving into positions of greater responsibility. I encourage everyone to learn how to say ‘Yes, ma’am.’”

Throw in the trend toward working at home.

“The ability to work from home has more benefits than anyone ever realized – less pollution, less office attire and more casual apparel, more powerful laptops,” Epperson said. “I think the home will continue to grow in importance. You now can shop, bank, see the doctor or go to church from home. This is going to transform our nation in terms of levels of productivity, innovation and new ideas.”



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