The forecast for the spring High Point Market, which officially begins today, is cloudy with pockets of frustrations with the overall solid economy not yielding a hoped-for boost in home-furnishings sales.
The semiannual trade show, the world’s largest for home furnishings with an average 75,000 attendees, is not open to the public.
The spring show is considered more pivotal since 55 percent of home furnishings are sold in the second half of each year.
For Winston-Salem and Forsyth County, the main market spillover effect comes from, on average, 5,600 hotel-room nights booked, as well as dining by marketgoers. The bookings directly affect Visit Winston-Salem because the bulk of its funding comes from the county hotel-occupancy tax.
Industry analysts and officials said topping their market list are more signs of economic stability amid the escalating tariff war rhetoric between the United States, China and potentially other trading partners. The sharp recent rises and falls of the stock market aren’t helping in that regard, they say.
“Retail sales of furniture and mattresses have not lived up to the level that should be expected given the performance of economic growth, housing turnover and gains in consumer income, job growth and consumer confidence,” said Jerry Epperson, the managing partner of Mann, Armistead and Epperson, a financial-services firm in Richmond, Va., and a leading home-furnishings analyst.
“Everyone will have an opinion on President Trump, the proposed tariffs, while the wood furniture vendors will be discussing the new consumer product safety regulations on furniture tipping,” Epperson said.
He said mattress manufacturers are focused on the “continued rise in boxed mattresses, the rapid growth in the internet mattress retailers, such as Casper and its 100-plus clones, and the emergence of China as a player.”
“Our numbers show that a decade ago, 3 percent of all mattresses sold in the U.S. was imported. In 2016, it was 8 percent, and last year it exploded to about 13 percent,” Epperson said. “Those percentages are in dollars, not units. Units would be even more.”
He said consumers are likely to pay more for home furnishings later this year as raw-material costs for manufacturers are rising unrelated to potential steel tariffs.
“Some countries, like China, have seen the relative currency issues force prices higher in recent months,” Epperson said.
Ken Smith, the director of furniture services for Smith Leonard PLLC, a High Point financial-services firm, said he has been told that prices could increase by 10 percent for some upholstery and metal furniture because of the new tariffs of 25 percent on steel and 10 percent on aluminum.
“I don’t know for certain how the mechanism work for people who buy from China, or if that is impacting them even if not bought from China,” Smith said. “Other metal furniture could be affected.
“Even with the high consumer confidence, the University of Michigan report cautioned that the ‘relative lull in consumption’ may continue into the second quarter,” he said. “We are sure that the unstable stock markets are not helping matters, especially at the upper end.”
Epperson said tariff worries need to be put into the context in that “it would take a minimum of seven months for them to go through the approval and implementation process.”
“I believe all of this is simply negotiating,” he said.
Epperson said none of the 1,300 items being considered in the $50 billion Chinese response tariffs had a residential home-furnishings component.
However, he cautioned that “any of the 1,300 items we know of could be negotiated out and another item replace it that could be anything.”
On April 5, Paul Toms, who was the chairman and chief executive of Hooker Furniture Corp. at the time, told analysts that “both current retail conditions and our business results can be best described as mixed.”
“Our businesses cross various home-furnishings product segments, price points and distribution channels, so at any given time we have winners and losers,” Toms said.
Smith said the High Point Market should get a boost in momentum from the debut of new showroom buildings, revamped showrooms and a trend back toward celebrity home-furnishing brands.
Vaughan-Bassett Furniture Co., as typical, is leading the celebrity-brand push, this time in a partnership with Ben and Erin Napier, the hosts of HGTV’s “Home Town,” to develop collections of solid wood and veneered casegoods collections. The first groups will debut at the October market.
“Ben and Erin Napier showcase American-made products and support businesses and workers across the nation through their store, Laurel Mercantile,” said Wyatt Bassett, the chief executive of Vaughan-Bassett.
Laurel Mercantile’s flagship brand is Scotsman Co., which features Ben Napier’s handmade reclaimed furniture designs.
“Since the launch of our TV show, we have been approached by several companies wanting to develop furniture collections for them,” Ben Napier said.
“We were determined, however, to work with a manufacturer in the United States, and not with an importer,” he said. “We know Vaughan-Bassett is committed to their hometown of Galax, Va., and to the people there.”
“We believe,” Erin Napier said, “that our brand and message perfectly align with the Vaughan-Bassett brand and message: a commitment to great design, to superior quality and to lasting value that can only be achieved by making it here in the United States.
“We know from experience that this is a powerful message and that it resonates with the American consumer.”
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