"Best market ever." "Best market in 10 years." "Traffic seems a little light." While these statements are seemingly at odds with each other, I think it's evidence of something bigger that's been going on for several years now. Here's what it is, along with what else we heard on the High Point floor…
Like many other sectors of retail, furniture stores are consolidating. Even still, from my perspective, the 2015 Fall High Point Market was a success. I witnessed plenty of buyers walking the floors and they appeared to be doing brisk business, further confirming my thesis that it's a very good time to be in the furniture business. Right now, the wind is at our backs.
M&A activity is picking up in the industry, whether for strategic purposes or private equity investment. The retail consolidation is driving the manufacturers to try to deepen their relationships with customers, and one way of doing so is to offer a broader line. That means that upholstery companies are looking for case goods lines and vice versa. Companies that already have both are looking for mattresses or patio, all in an effort to strengthen customer relationships. That is driving a level of merger activity that hasn't been seen for several years. And the industry's growth has attracted the attention of the private equity community. Growth in the furniture sector is currently one of the successes in the U.S. economy and PE firms want to put their money where there is sustainable growth.
For companies that are trying to expand production, whether because of re-shoring or to accommodate organic growth, labor is becoming an issue. Several companies mentioned that their ability to fully meet customer demand is being constrained by the lack of skilled labor. As the industry contracted after the recession, many of the skilled laborers - upholsterers and sewers - moved on. It is going to take time to get young people interested in the industry again. That said, it was exciting to talk to companies that are working with educational institutions - high schools, community colleges, technical schools - to make furniture an exciting industry to work in again.
Purchasing Furniture Online
E-commerce continues to make great strides in the industry. One company in particular that is getting a lot of buzz is Wayfair because they seem to have solved the 'last mile' issue. One of the barriers to on-line purchasing of large furniture pieces has always been who is going to be responsible for getting the piece to the homeowner, and how does it get returned if it doesn't work. Wayfair, with its 'white glove' delivery service is getting close to cracking that nut, and as a result, is going to force others play catch up.
Those are a few comments and observations from this year's Fall High Point furniture show. This year proved to be a strong year for the furniture sector and the momentum built should carry well into 2016.
Michael Hudgens is Southeast Regional Manager of
CIT Commercial Services. In this role, he is responsible for overseeing new business, client retention and profitability. Hudgens earned a bachelor's degree and an MBA from Clemson University.
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