Doug Schock shook his head in disbelief while gazing at the empty bank of elevators, typically full as they shuttle thousands of buyers between dozens of showrooms filled with the latest styles in sofas, bedroom sets, and dining room tables and chairs.
Not so this fall at the High Point Market — the twice-annual home decor and furnishings trade show that sets the table for what consumers will see in stores next season.
“Those used to be packed. You used to have to elbow your way into showrooms,” said Schock, a territory manager for OneCoast Midwest Home. “I know the economy has been down since 9/11, but the housing slump combined with the weak economy, you have a double whammy.”
More than 85,000 industry insiders typically descend on North Carolina for the market, at which thousands of vendors fill 188 buildings and 12 million square feet of showroom space with thousands of new products. While the High Point Market Authority wouldn’t release attendance figures for this fall’s gathering, it was clear from a walk through the market’s winding corridors that the industry is the latest casualty of the ongoing housing and mortgage lending bust.
While some showrooms remained full of retailers hunting for next spring’s best sellers, many more were sparsely attended. Hundreds of sales representatives stood in doorways looking for customers, instead of participating in the traditional dance of hand-holding buyers as they walk though bedroom and dining room displays.
“The furniture market is being affected by the mortgage crisis,” said Russ Ortiz, president and chief executive of Shine Home, a California-based home furnishings boutique. “It’s definitely affecting some more than others.”
Last year, before troubles in the mortgage lending business accelerated the worst housing downturn more than a decade, the nation’s largest furniture stores posted a 6.6 percent increase in sales, said Jerry Epperson, a furniture industry analyst with Richmond, Va.-based investment firm Mann, Armistead and Epperson.
But U.S. consumer spending on furniture and bedding, the broadest measure of industry activity, is expected to grow by just 1.5 percent this year and 2.2 percent in 2008, according to a consensus industry forecast complied by trade journal Furniture Today. That would make 2007 the industry’s worst since 2001, when sales declined by 0.6 percent.
“No one wakes up in the morning has to replace their sofa or dining room table,” said Epperson, who expects a flat to slightly down year in furniture sales, with the growth coming in bedding sales. “When people are worried about their mortgage or if their house will sell, furniture is a deferrable purchase.”
There were still new products introduced at this fall’s market, including a push by several manufacturers into the trendy marketing of “green” decor — furniture made from materials that are organic, sustainable or recycled. Vaughan-Bassett Furniture Co., one of the nation’s largest manufacturers of wood furnishings, even unveiled a reforestation program under which it will donate a seedling for every tree it uses each year.
But the company also arrived at market with fewer new products than in years past.
“We strategically did not launch a collection with as many (new products),” said Doug Bassett, a spokesman for the Virginia-based company. “We think the dealers’ appetite is less.”
Schock said that with fewer people buying new homes, there is simply not enough guaranteed consumer demand for new furniture for retailers to invest in an inventory of the latest designs.
“I can tell you that people are tired of being conservative. They want to spend money,” Schock said. “But if you don’t know if consumers will buy the pieces you sell, you’re not going to want to stock up.”
The housing market woes come as the domestic furniture industry continues to struggle with the flood of cheap imports from Asia. After three years of growing losses and declining sales, Bombay Co. filed for Chapter 11 bankruptcy protection last month. Virginia-based Stanley Furniture Co. has laid off 200 workers and reported a loss in its most recent quarter.
Second-quarter profits at Furniture Brands International Inc., the maker of Broyhill, Thomasville and Lane brands, were off 66 percent. The St. Louis-based company said in April it was closing three North Carolina plants and cutting 330 jobs as it continues to move production to lower-cost factories offshore. It recently said its third-quarter loss will be larger than previously expected due to the soft business environment and weak orders.
“The housing downturn is going to lead to a weeding out of the weaker players,” said Morningstar equity analyst John Gabriel. “When things come back, that’s going to leave a larger furniture market for some of the stronger players.”