Despite recent market corrections, the U.S. economy is healthy, unemployment is low, consumer confidence is high and The Fed has its eye on inflation. So broadly speaking that dovetails with an increase in retail spending, right? Why is retail growth a little wonky? What is happening with today’s shopper? Nearly every retailer asks themselves questions like these regularly, and many have already begun to find solutions. While retail sales did increase by 3.9% in 2017 thanks in large part to the strong underpinnings of the U.S. economy, this growth curve has been fairly flat since 2011. Here are some hypotheses to explain this retail growth trend and how this impacts furniture shoppers in particular today.
Tax returns are delayed, again
IRS tax return delays didn’t seem to be a factor in retail until about two years ago. The bad news is not much has changed and this year is definitely worse. Tax returns are delayed, again, and for some came as late as February 27th for those who filed early. For shoppers who use the security of a tax return to make big purchases, this can have a significant impact on traditional retail tent-pole holidays like Presidents’ Day. Furniture retailers who recognize this impact can grab shoppers with appealing merchandising and creative promotions during future time periods with tax return delays in mind.
Education debt is ever-present
Topping $1.48 trillion in 2018 among over 44 million borrowers in the U.S., student loan debt is more than credit card debt and growing. Some of these borrowers struggle to make payments, and over 11% default on their loans. Those still in the grips of paying student loan debt don’t have much financial flexibility, especially when it comes to purchasing things like that sectional sofa in 2018. Not all debt-carrying shoppers may need to be completely frugal, but will likely be shopping smart and seeking financing or other deals from furniture retailers to allow them to get what they want and need.
Home supply/demand is a wolf in sheep’s clothing
Home supply and demand figures on average are pretty good nationally. However, looking at the data on a more micro-geographic level paints a different picture. For example, the growth of pricing on home re-sales are not as drastic in places like Cleveland and Detroit, even by pre-recession growth standards. In some areas of the nation there’s a loss in housing units and in others, there’s a gain. This is unique even by county! Never before has individual furniture store data been so important.
Experience-driven desire isn’t the norm in furniture shopping yet
“Kids these days” are realistically no longer Millennials. Among them, the Xennial generational bridge is squarely in its mid-30s. At 75 million strong and growing, this collective cohort is influencing workplaces, the economy, spending, home purchases and the like. Call it this generation’s hitting their stride in “adulting”. While discerning with purchasing power, (if #’s 1-3 are any indication), few furniture retailers are tapping into Millenial’s particular desire for an experience economy. Furniture retailers who can create a better, more integrated and easy shopping experiences are those that can bring this generation along and who are likely to influence others.
What’s the most interesting is how dynamic this climate is, looking at the growth of the U.S. economy, its labor market and its impact on retail trade and ecommerce and what that means for furniture retailers like those who are on the Blueport Platform. Let us help you grow and succeed and keep up with shopper behavior and its dynamism.