by HIGH POINT — In an industry update ahead of the recent International Home Furnishings Representatives Assn. board meeting, Ray Allegrezza said the industry sits “in the eye of a perfect storm,” enjoying never stronger demand while struggling like never before to meet it.
“Our biggest asset — a seamless supply chain — is once again our biggest liability,” IHFRA’s executive director said in a message to members (and posted to YouTube). “ Even before the pandemic it was fragile and was often knocked offline by price hikes, worker shortages, driver shortages, container shortages. And now, they have all hit at once and have hit us harder than I can remember, thanks to the pandemic.
“Oh, and let’s not forget the usual disruption from Chinese New Year.”
Allregrezza doesn’t see many of these challenges ending anytime soon. Demand, he said, will continue to outpace supply, “trade shows, as we have known them, are likely to change not only dates, but format.
“The supply chain will limp along at least into the third quarter, container costs will continue to be prohibitive, traditional furniture retailers will be so busy in survival mode that they may not hear the ongoing sounds of e-tailers taking bite after bite out of their business models, and reps …will need to learn to become problem solvers, not order takers, like never before.”
But despite these challenges, he also offered up reasons (backed by surveys and statistics) to remain optimistic about growth continuing for the industry. The first came by way of a Home Furnishings Assn./Piper Sandler survey that, among other things, showed retailers calling for fourth-quarter sales growth of 15% (though some of that projected gain comes from written Q3 business spilling over into Q4).
Allegrezza also said the health of the home furnishings sector also depends on a strong housing market, and there’s no room to complain there, either. Single-family housing starts rose 0.4% in November to a seasonally adjusted annual rate of 1.186 million units, according to a recent U.S. Department of Commerce Report. That’s reported to be the highest level in more than 13 years.
Existing home sales are rising, too, with the National Assn. of Realtors reporting a 25.6% jump in November from the same month a year ago, Allegrezza noted. A forecast by Realtor.com, a News Corp.-operated website licensed from NAR, projects single-family housing starts will grow 9% this year while existing home sales will grow 7%.
And Allegrezza pointed to some external trends likely to impact the industry, though not necessarily always in a good way, including lower unemployment, looser lending standards, lower interest rates, higher inflation and a permanent shift to working remotes.
Watch the video for more.
