High Point Market Publishes 2010 Business Outlook

Forecast for the Coming Season Suggests U.S. Home Furnishings Industry on the Road to Recovery/Retailers Optimistic About Year Ahead

HIGH POINT, N.C., Feb. 4 /PRNewswire/ -- 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. The report is available now for download via the following link: http://www.highpointmarket.org/pdf/Spring2010BusinessOutlook.pdf.

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," says Brian D. Casey, president and chief executive officer of the High Point Market Authority. "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 regional powerhouse Raymour & Flanigan, 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.'"

"Mid-Western retailer Mary Carol Gerrity, owner of the trend-setting Nell Hill's stores in Kansas told us that the up-tick in business she was enjoying in the fourth quarter of 2009 felt like a return to business as usual," Casey says. Said Gerrity, "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. We're finding that people are coming and buying the big pieces. They are really looking at their homes again."

"A year ago, consumers were experiencing a tremendous fear that they were going to lose everything," related Bernie Moray, chief executive officer at Detroit-based Gorman's Furniture in the report. "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.'"

"I think if anything, people want to be more comfortable in their homes now because they are spending more time there," noted Alan Kramer, vice president of merchandising at Houston-based Star Furniture. And Raymour's Goldberg concurred: "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:

• 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 December 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 us waiting until April for a return to growth.
• 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.
• Brighter employment prospects may be having a positive influence on the one indicator that matters most to retailers -- consumer confidence.
• 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.
• According to Retail Forward's October 2009 ShopperScape™ report, 23 percent of consumers are "likely" to make a furniture purchase in the next six months and seven percent "very likely." The numbers get a little better for a home furnishings/home decor purchase, with 30 percent "likely" and eight percent "very likely."

"While unemployment figures remain a concern," Casey notes, "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 most promising development, however, particularly for those in the home furnishings trade," Casey says, "occurred as sales of existing homes leapt up a surprisingly strong 10 percent in October, with about 400,000 more units changing hands. This healthy upsurge was fueled by U.S. consumers rushing to take advantage of an $8000 tax credit that was part of the Obama administration's economic stimulus efforts."

"With store floors everywhere starved for new merchandise, and consumers heading back into the marketplaces, retailers are on the hunt for fresh and exciting products," Casey says. "We expect that to translate into increased activity at the High Point Market this Spring, where retailers will find more new product introductions, in every category and style, at every price point, than at any other market on earth."  

Indeed, as Mary Carol Gerrity of Nell Hill's related in the report, "The bottom line is, if you don't have it, you can't sell it. The consumer is very savvy. If we have the same thing we did a year ago, they know it. Last year at this time I was a little bit paralyzed. I drank the Kool-Aid we were all being served on TV, and what we found was that people who weren't even really affected by what was going on in the economy were being made to feel guilty about spending. So they held back. We got scared and I think that many of our suppliers also got scared because we weren't buying when we went to Market. This year, I'm not going to be foolish, but I'm going in with my eyes wide open and my sleeves rolled up, open to buy."

About the High Point Market Authority:

The High Point Market Authority is the official sponsor of the High Point Market in High Point, North Carolina. Featuring an extensive selection of exhibitors spanning every category, style and price point and attracting tens of thousands of visitors from more than 110 countries twice each year, the High Point Market is the driving force of the home furnishings industry. www.highpointmarket.org

SOURCE High Point Market Authority