What FTS members can expect in 2023
By Michael Posa, Furniture Technology Source
It’s unbelievable, but here we are at the end of the year. Let me be the first to wish you all a Happy New Year!
OK, so we’re a couple weeks early, but this is still a good time to look ahead at what the furniture industry should look like in 2023, especially given the uncertain macro-economic environment.
Most economists and Fortune 500 CEOs seem to believe we are headed into a mild recession, as do most of the retailers and suppliers we speak with. While no one can say with certainty, the prevailing belief is that the furniture industry will see an approximate 5% decline in dollar sales next year, with the mattress industry trailing another 1-3 percentage points behind that. Unit sales are bit harder to forecast, but we expect them to be further down than dollars due to the continued impacts of inflation. This, in spite of the discounting we have seen in the marketplace.
To share a bit more about the pricing environment, we are still expecting some price increases in select categories due to continued pricing pressure on inland freight, raw materials and labor. Also, despite the downturn in demand and the return of negotiation and deals from our vendor partners, many manufacturers still own inventory (or have contracts and commitments) that is costlier due to previous and significantly higher oceanic freight rates. This has kept prices stubbornly high, and has led to BrandSource members sharing in the margin pain by moving through surplus goods by discounting.
However, the upside to this is that most of our dealers are approaching “normal” inventory levels, with nearly all expecting to be right-sized during Q1, driven in part by unexpectedly strong demand during the Black November period. We are seeing some elasticity here in pricing among shoppers and across our vendor partners, implying there is still underlying demand when customers believe they are getting a good deal.
So those are the current facts and future predictions; now let’s pause and revisit the past, and how it may present us with an opportunity.
The last three years have drastically changed the way people buy furniture. We knew that more and more consumers were beginning their shopping journey by first researching products online, but according to market research firm Searchmetrics, the percentage of furniture searches that now result in sales has skyrocketed to nearly two out of three (62.3%).
Indeed, the degree to which consumers are using their computers and phones to shop and buy furniture means that merchandising your website is as or even more important than merchandising your physical store. Fortunately, AVB Marketing has numerous tools to help you do this!
Some retailers have viewed Amazon, Wayfair and other direct sellers as a threat, when in reality this trend of online shopping could also be an advantage to independent dealers who serve their local communities with beautiful showrooms and educated staff. The only two caveats to that are:
- Customers need to find you (re: market yourself!).
- Your website is easy to navigate, priced right, and aligns with your in-store experience, overall advertising and plan-to-sell strategies.
Let’s now go back to the future with some key trends for 2023:
Sustainability. The emphasis on going green will not only continue into 2023 but will expand. With global warming on the minds of many, customers are looking for products with minimal environmental impact. Descriptors like “sustainable,” “eco-friendly” or “green” will grab the attention of buyers. As a corollary to that, “Clean lines and muted colors are becoming increasingly popular as people look for ways to create a sense of calm in their homes,” noted consumer home furnishings site The Spruce.
Form and Function. Consumers will continue to spend more time at home, so comfort will remain another key focus, albeit with an equal emphasis on design — meaning products must not only feel good but must be fashionable as well. As interior designer Aleem Kassam of Kalu Interiors told The Spruce, “Our clients are looking for comfortable and stylish pieces with an emphasis on function will stay on trend in the new year.”
Home Office Products. With more and more folks working from home, we’ll see continued demand for home office furniture, with some forecasting category growth of 6%. What’s more, according to marketing strategists Huumon Creative, many home-based consumers are expanding their workspace and upgrading their home offices to accommodate hired help or visiting clients.
Bold Colors. Expect to see more eye-catching pieces with bold colors in 2023, as single bold color items can draw attention to an area of the home or add a bit of fun to a space. This means plenty of colorful and patterned furnishings as you shop the shows this spring.
Until then, best wishes to all our FTS friends for a happy, healthy and bountiful new year!
Michael Poser is General Manager of Home Furnishings for YSN publisher AVB BrandSource and is point person for the group’s home furnishings initiative, Furniture Technology Source (FTS). Contact him at Michael.Posa@avb.net.