By Esquire Advertising, Special to Furniture Today
HIGH POINT — After a year and a half of managing drastic challenges from shutdowns and safety measures to labor shortages and supply chain congestion, the furniture industry continues to see the lingering side effects of the pandemic.
And while on the road to recovery and heading into the holiday season, furniture retailers (and consumers) turn their attention to yet another mass disruption: the increasing levels of inflation and its associated impacts on furniture prices.
Economists have speculated and reported on increasing inflation rates throughout much of 2021, and now its effects have begun to clearly materialize at the consumer level and strongly so.
According to the US Bureau of Labor Statistics in a Nov. 10 consumer price index report, the past month saw national inflation reach its highest point in more than three decades.
Naturally, this 30-year high for inflation has translated into higher prices for most consumer products, with the CPI report showing an increase of about 6.2% across the board over the past year. While analysis may slightly differ, most cite the furniture sector as being one of the single most-affected consumer categories, with some of the latest reports showing general price increases of around 12% or greater.
Supply chain shortages
Why are prices of furniture outpacing other categories? The answer is a perfect storm of macro-economic issues stemming from the pandemic, combined with a critical disruption of the global supply chain and strong consumer demand.
Supply chains are experiencing unprecedented backlogs for all goods. At the same time, more and more Americans are venturing out into the world and resuming their shopping habits, supported by a pent-up demand.
Even as ports increase their operational capacities and with supply levels rising, the heightened shopping activity is contributing to widespread shortages for many materials and products, and that is especially true for furniture as it relies heavily on imports.
As a result, there’s a significant bottleneck in the supply chain from the factory floor to the showroom floor, giving rise to a new normal of long wait times and higher prices for available goods.
Prices impact consumer trends
Understandably, retailers may see these complications as worrisome while they try to fill orders as quickly as possible and ponder when consumers may choose to forgo their shopping plans due to lack of inventory and total costs.
But rather than hit the panic button, the data shows furniture retailing is still performing strong in both sales activity and consumer demand across most U.S. markets as a whole.
Reports on consumer foot traffic for brick-and-mortar retail locations confirm that overall demand with furniture shoppers has continued to increase throughout the year, with little to no sign of stopping as retailers prepare for the holidays.
In fact, Esquire Advertising’s latest traffic data shows the weekly rolling average of unique visitors at furniture and mattress locations to be at some of the highest national levels since the beginning of 2021.
For retailers, this upward trend should be reason for great optimism. Afterall, they have weathered a number of surprises and periods of uncertainty over the past six months, along with many dips and peaks in shoppers visiting their stores.
For instance, the summer months — and especially summer holidays such as Memorial Day and Fourth of July — registered very healthy shopping rallies. But then shortly after, most retailers experienced a substantial downturn in traffic leading into September, possibly a result of the Delta COVID-19 variant dominating headlines and affecting public sentiment and policy.
Nevertheless, since Labor Day, mattress and furniture stores have continued to see their overall consumer foot traffic levels climb steadily, despite the higher prices reflected through inflation and shortages. Individual markets vary, but this national trend is also observable across every regional level of the United States, with the average regional increase settling around a 48% increase since Sept. 1.
The Great Plains region has seen the least total increase at 30% during this period, while West Coast shoppers have ramped up their visits to California furniture locations, ringing in the highest average regional increase at 102%.
The South-Central region — with states including Kentucky, Virginia and Illinois — has also demonstrated one of the largest growth spurts of in-store consumer shopping, registering an increase exceeding 100% in recent months.
And while Texas retailers have seen some of the slightest gains of in-store shoppers with a collective 37% increase, many areas of the Lone Star state have also enjoyed consistently strong performances with in-store shoppers throughout the whole year, so a milder rise in activity is not likely due to distinct challenges of inflation.
The data for consumer traffic trends at furniture stores on both the national and regional levels reveal a few key points for retailers to consider as the year comes to a close:
- There’s no reported sign to batten down the hatches. Even with the overall inflation rate at a 30-year high and supply shortages driving up costs by double-digit percentage points, consumer demand and in-store traffic has continued to rise throughout 2021 and is currently surpassing previous peaks of the year.
- Consumers are entering the market at increasing rates, and they are eagerly looking for options in both furnishing and bedding. With product supply low across many markets, shoppers are on the hunt for specific items and the best deals. Retailers who can best target consumers and match them with their desired offerings and hot-ticket items will stand out as obvious draws for these shoppers in-need.
- Expect an earlier seasonal rush. Along with the pent-up demand consumers are still exhibiting after a lengthy pandemic, the shortage of various products is likely to have shoppers rushing out to their local stores early to beat the crowds. Retailers should anticipate this and plan accordingly while they still can. This includes streamlining their inventory as much as possible, immediately optimizing their seasonal and post-holiday marketing strategies, and securing personnel for busy shifts.