April orders fail to match mood at furniture market

Tag : Chinese Furniture Wholesalers

By Richard Craver | Journal Reporter
Published: July 2, 2008
Whatever optimism that was generated at the spring High PointMarket burned off in April like a morning fog, according a monthlysurvey on home-furnishings orders.
Orders fell 8 percent, to a value of just under $2 billion,compared with April 2007, reported Smith Leonard PLLC, afinancial-services company based in High Point.
"While the mood at the April market was good, it does not appearthat orders were as good as the mood, at least by the end of themonth," said Ken Smith, the director of furniture services forSmith Leonard.
The industry, particularly U.S. manufacturers and marketers, hasbeen in a deep orders slump since June 2006. It has been hamperedby higher energy prices, the national housing crisis, andincreasing credit-card debt and job insecurity among consumers.
Since June 2006, there have been just two months with an increasein furniture orders, as measured by Smith Leonard.The survey foundthat 71 percent of the participants reported lower sales than inApril 2007. For the year to date, 86 percent of participants havehad lower orders than in 2007.
"Consumer confidence, which we believe is the real key to furnituresales, is really in the dumps," Smith said. "And all the latestnews has not been anything that has shown signs of bringing itback."
Another industry survey, the Furniture Buying Index, reflects asimilar tone among consumers. The index was down three points inJune to a reading of 58 -- the lowest that it has been in 15 years.
"The economic-stimulus package has not helped furniture sales,"said Britt Beemer, the chairman of America's Research Group ofCharleston, S.C. "Four-dollar-a-gallon gas prices and economicuncertainty has driven down demand."
Smith said that another reason for concern about the decline inorders is that many manufacturers and marketers raised prices atthe market in an attempt to pass along the higher costs of rawmaterials and transportation.
Also adding to the higher costs are increased regulatory andworker-benefit expenses in China, said Jerry Epperson, the managingpartner of Mann, Armistead and Epperson, a financial-servicescompany based in Richmond.
"We expect price increases of 3 percent to 7 percent on domesticmerchandise and between 5 percent and 20 percent on importedproducts," Epperson said at the time.
Smith said that it's time for most manufacturers "to settle in and hunker down for whatmost likely will be a very difficult summer and fall."
"If you haven't raised prices at retail or wholesale, you probablyshould now. At least then, when consumers do come back, there maybe enough margin to make it worthwhile,'' he said.
"If everything else the consumer is buying costs more, whyshouldn't furniture?"
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com .