Housing slump takes toll on US furniture industry

Doug Schock shook his head in disbelief while gazing at the empty bank of elevators, typically full as they shuttle thousands of buyers between dozens of showrooms filled with the latest styles in sofas, bedroom sets, and dining room tables and chairs.

Not so this fall at the High Point Market - the twice-annual home decor and furnishings trade show that sets the table for what consumers will see in stores next season.

"Those used to be packed. You used to have to elbow your way into showrooms," said Schock, a territory manager for OneCoast Midwest Home. "I know the economy has been down since 9/11, but the housing slump combined with the weak economy, you have a double whammy."

More than 85,000 industry insiders typically descend on North Carolina for the market, at which thousands of vendors fill 188 buildings and 1.11 million square meters of showroom space with thousands of new products. While the High Point Market Authority would not release attendance figures for this fall's gathering, it was clear from a walk through the market's winding corridors that the industry is the latest casualty of the ongoing housing and mortgage lending bust.

While some showrooms remained full of retailers hunting for next spring's best sellers, many more were sparsely attended. Hundreds of sales representatives stood in doorways looking for customers, instead of participating in the traditional dance of hand-holding buyers as they walk though bedroom and dining room displays.

Mortgage crisis

"The furniture market is being affected by the mortgage crisis," said Russ Ortiz, president and chief executive of Shine Home, a California-based home furnishings boutique. "It's definitely affecting some more than others."

Last year, before troubles in the mortgage lending business accelerated the worst housing downturn in more than a decade, the largest US furniture stores posted a 6.6 percent increase in sales, said Jerry Epperson, a furniture industry analyst with Richmond, Virginia-based investment firm Mann, Armistead and Epperson.

But US consumer spending on furniture and bedding, the broadest measure of industry activity, is expected to grow by just 1.5 percent this year and 2.2 percent in 2008, according to a consensus industry forecast complied by trade journal Furniture Today. That would make 2007 the industry's worst since 2001, when sales declined by 0.6 percent.

"No one wakes up in the morning (and) has to replace their sofa or dining room table," said Epperson, who expects a flat to slightly down year in furniture sales, with the growth coming in bedding sales.

"When people are worried about their mortgage or if their house will sell, furniture is a deferrable purchase."

New products

There were still new products introduced at this fall's market, including a push by several manufacturers into the trendy marketing of "green" decor - furniture made from materials that are organic, sustainable or recycled.

Vaughan-Bassett Furniture Co, one of the largest US manufacturers of wood furnishings, even unveiled a reforestation program under which it will donate a seedling for every tree it uses each year.

But the company also arrived at the High Point Market with fewer new products than in years past.

"We strategically did not launch a collection with as many (new products)," said Doug Bassett, a spokesman for the Virginia-based company. "We think the dealers' appetite is less."

Schock said that with fewer people buying new homes, there is simply not enough guaranteed consumer demand for new furniture for retailers to invest in an inventory of the latest designs.

Agencies

(China Daily 10/09/2007 page15)