There’s been ample evidence over the past two years that consumers have been reallocating discretionary spending away from their homes and toward things they couldn’t do during the pandemic lockdown: travel, dining and entertainment. Even as the industry’s supply issues have leveled off and inventories have gradually begun approaching normal, the demand side of the equation has remained soft.
While some of the traditional fundamentals underpinning demand have improved, foot traffic has yet to rebound, and companies have struggled to define new metrics of success. At the recent High Point Premarket, many industry execs shared the only partially joking assessment that, “down single digits is the new up.”
This summer the extent to which consumers have shifted those dollars was thrown into stark relief by three events: Taylor Swift’s Eras Tour, Beyonce’s Renaissance World Tour and the Barbie movie. Before you scoff and dismiss the impact that music tours and a summer movie may have had on furniture sales, consider these numbers.
Taylor’s Swift’s tour is estimated to generate $2 billion in revenue before it concludes next month. That’s more than 90 of the Top 100 furniture retailers generated in annual revenue last year.
Add to that number an additional $2 billion in revenue that Beyonce’s tour is expected to generate, and then layer on the comparatively paltry $609 million that the Barbie movie has grossed through September. The combined figure of $4.6 billion is more than all but one of the Top 100 grossed in all of 2022.
Here’s two more numbers: $1,800 and $1,500. That’s the average cost of a ticket to a Beyonce and a Taylor Swift concert, respectively. What would that buy in the average furniture store?
How can people afford that?
If you read coverage of the tours, the most common answer appears to be dipping into savings and borrowing money from friends and family. That’s a double whammy in that it not only removes money from current discretionary budgets but will have ripple effects on future spending as those dollars get returned, either to the bank account or to whomever granted the loan.
Please don’t misunderstand. I’m not suggesting that anyone is sitting at home making a binary choice between purchasing a new sofa or attending a concert. However, household discretionary income is a zero-sum game. Money spent in one place is not available to be spent elsewhere.
This also is not to say that two music tours and a movie are eliminating all potential for sales. The business hasn’t collapsed. It’s simply softer than it could be and being nibbled around the edges by economic and cultural activities that are diverting consumers’ discretionary dollars.
There’s no obvious solution here. And I’m not suggesting anyone could or should host a concert in-store that could attract 20,000 or so “Swifties” or the so-called “Bey Hive.” But it’s worth noting that there are dollars out there, and finding a way for furniture to get its share is the $64,0000 (plus) question facing the industry in the coming year.