Ringing in a Rousing Recovery

2021 economic outlook: continued consumer confidence to drive high levels of demand

Less travel, more time at home, and increased new home construction compel optimism for 2021. “Our share of wallet is gaining. Demand is strong with a big lift in living room, home office, and outdoor,” said Andrew Koenig, President of City Furniture. “Internal improvements in areas like marketing, supply chain, and technology make us bullish.”

With 21 showrooms across Florida and an expansive e-commerce site, City Furniture is among many retailers across the country anticipating a profitable new year. “The demand created by the COVID-19 shutdown has lasted longer than we thought, and it isn’t showing any signs of slowing down,” said Ken Smith, Assurance Partner and Editor of Smith Leonard Accountants and Consultants’ Furniture Insights newsletter. “Home furnishings and appliance retailers aren’t catching up with their backlogs as quickly as they had hoped. Sales are good, which is drawing prices up, but inventories for most are way down.”

“The challenge for 2021 will be handling the new orders while bringing backlogs down to acceptable levels.”

Consumers expected to seek unique and American made products

Gat Caperton, President and CEO of Gat Creek, a West Virginia manufacturer of hand-made, solid-wood furniture, agreed, “Furniture manufacturers and importers all have large backlogs going into 2021. The lockdown created a lot of demand and restricted supply significantly. It ended a nearly three-decade run of over-supply. I expect the industry will find equilibrium around mid-year 2021.” A member of the Board of Directors of the Sustainable Furnishings Council, he predicts that younger demographics and an increasing consumer preference for American made and environmentally responsible furniture will boost his company’s sales in the new year.

Gat Creek

Jerry Epperson, Managing Director of Mann, Armistead & Epperson, Ltd., Investment Bankers and Advisors, urged retailers to expand their scope of vendors to meet demand. “When the government shut down businesses, retailers canceled orders, coasted, and picked up inventory a little at a time. Once the shutdown was over, small to mid-size stores found that big manufacturers prioritized their larger customers. This should push them to seek smaller vendors with diverse products. They don’t want their orders to be just a drop in the bucket. To ride the wave of demand in 2021, you need unique merchandise to get people in your store.”

“Retailers focus too much on price.”

Epperson advised retailers to avoid discount pricing because there is less sensitivity when inventory is low and delivery times are longer. “The customer doesn’t buy our products often enough to know a good price. You can advertise a sofa for $499, $799, or $999. Most customers can’t tell if it’s the same product. They base their perception on the credibility of the retailer. Demand has overrun traditional store loyalty. Keep in touch and communicate regularly with website updates, social media posts, and email blasts to stay top of mind with your customers throughout 2021.”

Christi Barbour, Founder and Partner with Barbour Spangle Design, said that while 2020 brought challenges for her firm, she’s very optimistic about the new year. “We used the shutdown as an opportunity to reconnect with our team, analyze how COVID-19 would change our business, and to develop ways to provide services to a larger audience. One such area is in commercial design where we are experiencing growth in our healthcare and multifamily projects. Our healthcare projects involve creating hospitality-driven common spaces focused on public safety. The increase in multi-family is a response to relocations from cities and a low inventory in starter homes. We’re looking forward to residential staying strong, and commercial continuing to rebound next year.”

Barbour Spangle

“Residential is booming.”

Sales expected to increase in the new year

With 2020 a rollercoaster ride of unprecedented ups and downs, the outlook for 2021 seems more like a steady climb up a nice long hill. Manufacturers, retailers, and designers anticipate continuing demand, less price sensitivity, and more stay at home time. Many are planning significant changes to take advantage of the encouraging forecast. “This will be a good time to increase the capacity of our factory, “said Caperton, “it’s likely we’ll expand our factory by 30% in 2021.”

Anticipating new opportunities in 2021, our experts recommend diversifying your product line, finding new suppliers, taking advantage of high demand to shift your focus away from price, and looking for new opportunities in new sectors. These are the ideas you’ll want to keep in mind as you make your plans for Spring Market. As you flesh out those plans, be sure to take advantage of our Exhibitor Search to find new suppliers, and get your first look at the new products for spring 2021 in our What’s New section, set to launch in March.