HIGH POINT — Upholstery and bedding are two categories retailers are betting on to boost their business in the coming year, according to Furniture Today’s Furniture Store Performance Report.
Stationery upholstery retained its top spot for share of sales at 20% among more than dozen categories, which may have given it the edge when retailers were asked about where sales growth was likely to come from in 2024.
About 32% of respondents expected stationery upholstery to experience as sales rise between 1% and 3%, while an additional 18% believed the category could jump by more than 3%.
Even more had a similar positive outlook on motion upholstery, with 21% expecting sales next year to be up as much as 3% and another 32% putting it in the plus-3% category.
Motion upholstery was third in terms of share of the sales at 13%, which is up three percentage points from last year’s survey.
Bedding, the No. 2 category for sales in this year’s performance report, was down a percentage point to 16%. However, retailers still feel upbeat about the mattress-foundation-adjustable base sector for 2024, with nearly 27% envisioning a sales jump of 1% to 3% along with 18% who see it up by 3% or more.
For many other categories, retailers are anticipating a status-quo year. Half or more of them said casual dining, formal dining, occasional tables, youth bedroom, entertainment furniture, home office, outdoor furniture and decorative accessories would have sales on par with 2023.
The biggest decline anticipated was assigned to home office, which about 36% of retailers felt would fall by between 1% and more than 3% in 2024.
Not surprising given the positive sales and outlook for upholstery products, these categories, especially fabric upholstery, also were well-represented on the list of categories in which retailers added new products this year.
More than half of the respondents said they added products in the fabric upholstery sofas, sectionals and recliners. Not far behind in the high 40s were casual dining and fabric and leather motion sofas, with additions to bedding and leather recliners cited by 45%.
Lighting fixtures, youth bedroom and desks, part of the office furniture segment, saw just 7% of respondents adding new lines to these categories.
Another trend of note from the performance report is the shift in where retailers are allocating their advertising dollars.
This year, the scales have shifted in favor of social media, up to 26% from 23% last year, and far ahead of network and cable TV, which just 12% of retailers said they are using vs. 27% who did so last year. Streaming TV picked up two percentage points (up to 6% from 4%), as did newspapers (up to 7% from 5%). Radio remained constant at 12% of the ad allocation.
More than half (56%) said they devote between 3% and 5% of their annual budget to ad spend. And most of that (59%), no matter the channel, goes to nonevent-related promos. Among holiday ad programming, Memorial Day holds a slight edge over Labor Day, which is just ahead of Thanksgiving/Black Friday.
Optimism in short supply
Retailers, who have already seen sales struggle for the better part of 2023 seemed more down than up about the rest of the year, with just 26% expressing optimism about business vs. 42% who were either somewhat or very pessimistic.
Going hand-in-hand with that, consumer demand for the remainder of 2023 is expected to stay about the same, according to 47% of respondents. No one foresaw a great increase, and 5% felt demand for home furnishings could greatly decrease.
As a result of these issues, about three-fourths of retailers said they are behind where they were last year through October, with just 21% putting themselves ahead of 2022.
On the plus side, inventory levels seem to have worked themselves out for most retailers. The minor overstock issue that impacted 60% of retailers last year has dropped to 37% this year, with another 42% pronouncing their inventory to be just right.
Among those with a minor or major overstock situation, closeouts and markdowns are the solution for 42%. Unlike last year, however, when retailers chose to either get rid of inventory or cancel orders, 25% this year said they are holding their inventory, waiting for conditions to improve.
Heading into 2024, the biggest challenges, according to survey respondents, are:
- weakness in the housing market, cited by 74%
- lack of discretionary income among consumers, 63%
- competition for consumer dollars from experiences such as travel and entertainment, 53%
- continuing high inflation, 41%
Just 5% of retailers said they were concerned about manufacturers going out of business in 2024.