AVB’s chief merchant Chad Evans shared his marketplace outlook and strategies for staying ahead.
Lower interest rates will kickstart demand
By Alan Wolf, YSN
The home goods industries are poised for a rebound if the Federal Reserve, as anticipated, begins lowering interest rates this fall.
That was the promising message from Chad Evans, AVB’s VP of Merchandising, in his 2024 Convention marketplace overview on Monday. As he explained in his main stage address, the expected fiscal easing will unlock pent-up housing demand, and, consequently, spur renewed sales of furniture, appliances, mattresses and consumer tech later this year and next, as homeowners look to fill their new abodes.
The relief can’t come soon enough. On the home furnishings side, high inventories — a remnant of the pandemic — are pushing down average selling prices, Evans said. That, along with the container rate surcharges that some vendors are imposing, are making it tough to hit last year’s top-line numbers, with industrywide retail sales falling as much as 15% year-over-year during the past 12 months. This “caused some heartache in the marketplace,” he noted, forcing some major players — retailers and vendors alike — to close stores or close shop.
Deflation is also impacting appliances, albeit in the form of heavy promotions and discounting at the box stores. The net effect: a substantial decrease in dollar volume despite an increase in unit sales, he said, with median advertised prices down 10.7% in June for front load washers and nearly 22% for dishwashers compared to last year.
The good news is that BrandSource dealers continued to best the industry and gain share in a down market. In home furnishings, members outpaced the competition by an average of 7% in retail sales year-to-date (“a pretty significant margin,” Evans said), while the group’s appliance dealers out-boxed the box stores by a sales delta of 8.3% year-to-date.
“This is not to say it’s not a grind,” Evans noted. “I get it, it’s tough out there. But you are all doing the right things. You all are doing a wonderful, wonderful job and I congratulate you.”
To keep the cash registers ringing and market share growing until, during and after the Fed cuts interest rates, Evans offered these tips:
- Promote Your Promotions. Credit card limits are at an all-time high, he said, indicating that consumers are strapped for cash and looking foremost for price. “Make sure you have the right promotional message,” as conveyed by AVB Marketing’s free promotional website banners, he said, and offer payment options like consumer financing “to drive them onto our websites and into our stores.”
- Address the Duress Customer. With more than 70% of the appliance business now comprised of replacement sales (and climbing), members must stress that they have the merchandise in stock and can deliver it today or tomorrow.
- Charge Accordingly. Charging less than the box stores for delivery, installation and haul-way “is a recipe for disaster,” Evans said, and he urged members to use the new and no-cost Add-On Optimizer, available in the Backroom, to calculate fair and competitive service fees.
- Trade Up Your Mattress Mix: Consumers may be buying fewer mattresses than they did in 2009, Evans said, but they are buying better products. His advice: focus on the $2,000-and-higher price tier, as “That’s what consumers are buying right now.”
“As long as the price is right and you have it in stock, you will continue to win,” Evans said.
YSN publisher AVB BrandSource is the nation’s largest merchandising and marketing co-op for independent appliance, mattress, furniture and CE dealers.
