HIGH POINT — The successful retailer is the one who is investing for the future — through expansion, improving existing stores and more, said Jerry Epperson, managing director at Mann, Armistead & Epperson.
“We are in what I consider a very exciting period,” he told attendees via Zoom at his State of the Furniture Industry presentation during High Point Market. “Looking at the next six months, I think we’ll have some good news.”
Part of the “good news” may come if interest rates begin to fall. While the Federal Reserve hasn’t dropped its rates yet, he said, “they haven’t raised them either.” Inflation is within the range of the Fed’s target, and while he doesn’t expect a rate drop when they meet in a few weeks, it could come as soon as August.
Once the Fed lowers its rate, that downtick is likely to be followed by additional cuts, said Epperson. In turn, he said, that will impact mortgage rates. “There are so many people who want and need homes,” he pointed out, adding that the inventory for single-family residences remains low.
Real estate inventory remains tight, which is making it difficult for first-time buyers. But a rate reduction could be the kick start to more home sales. On the other hand, he said, “a rate increase would not be good for anyone.”
Overall, said Epperson, the economy is lackluster. Certain sectors apparel, restaurants, entertainment and travel — have performed OK. Epperson views this type of spending as more opportunistic, noting furniture is a long-term investment.
One bellwether for the industry is how the mattress side is performing, said Epperson, because it is a category that doesn’t hold inventory to the same extent as others. Where mattresses have slowed in turnover currently, upholstery has picked up the slack. But most categories still have inventory waiting to be sold, he said, which is problematic. “There’s too much inventory, and it’s not current designs.”
“The retailer that knows its market is the winner,” said Epperson, who added that he becomes frustrated when he goes into an independent store that looks just like a national retailer. Independents, he said, can’t underbuy their national competitors, so they should be relying on their insights into what their local customer wants and show them something different.
He also encouraged retailers to return to ad spending. “We have dropped our ad dollars sharply this calendar year,” said Epperson. “Retailers are reluctant to spend without a reward.”
Retailers need to “look in the mirror,” he said, and evaluate whether they are spending enough on marketing, showing the right merchandise and promoting the improved features of today’s products, whether that’s long-wearing upholstery fabrics or innovation motion furniture.
Some opportunities that Epperson sees for retailers could come from targeting female shoppers, who are buying more homes on their own, and minorities, a group that is growing in influence and is seen to have increased disposable income. The hospitality sector, vacation home buyers and Baby Boomers who are staying in place while interest rates remain high are other potential customers for new furnishings in a tight marketplace, he said.
