Sales and consumer confidence may have dipped slightly in recent months, but they are still much improved over last year, according to a recently released report from the High Point Market Authority. The Fall 2010 Business Outlook and CEO Update includes recent research on consumer trends that affect the home furnishings business.
Brian Casey, HPMA President and CEO, says that despite a tough economy, there is good news for the lighting industry.
“In difficult economic times like these, it’s easier to attract consumers to more accessory-focused products, including lighting, because consumers are less likely to make whole-room changes,” says Casey. “Changing the lighting is a smaller decision that can change the entire ambience of a room.”
Casey said there is also an increased focus on quality across all home furnishings, as consumers are looking to make their purchases last longer.
Consumer spending is also increasing, according to the Business Outlook. The report showed household expenditures are on the rise, despite a slight downturn in recent months. The report cited data from the Bureau of Economic Advisors (BEA), which showed that personal consumption expenditures (PCEs) decreased by 1.4 percent in May. However, this was the first time PCEs dipped since they began steadily climbing in April of 2009. (PCEs are considered a good indicator of economic recovery, as they account for more than 70 percent of real Gross Domestic Product.) Similarly, the U.S. Census Bureau reported that sales in home furnishings were down 2 percent in June compared to May, but that sales were still up 1.2 percent over June 2009.
Another major finding included in the report is that customers have more money to spend. Data from the BEA show that from January 2009 to May 2010, disposable income rose steadily at three percent, except for a small dip in the third quarter of 2009. This increase in income has led consumers to feel more confident, as measures of consumer confidence show great improvement over last year. Even though the Conference Board’s Consumer Expectations Index declined slightly in June to 71.2, it is still much better than the lows of 2008 and 2009, when it dropped to below 30. An Expectations Index of 90 is considered to be a sign of a healthy economy.
As for the future, the Financial Forecast Center expects sales to continue to grow. The center predicts retail sales gains will stay at 3 percent until summer ends, then decrease slightly to 2.7 or 2.8 percent in November before jumping to 4.2 percent in December. After that, the center expects sales growth to fall back to 3.7 percent at the start of next year.
Click here to download a copy of the full report.