As sales start to slow, furniture retailers will be challenged with getting rid of excess inventory.
Washington — Furniture and home furnishings posted a 0.9% decline in retail sales in May, part of a weak month overall according to advance estimates from the Department of Commerce.
In May, furniture and home furnishings sales came in at $12.179 billion, down from April’s figure of $12.289 billion. However, the month’s figures were up 2.5% compared with May 2021’s $11.949 billion.
The all-encompassing snapshot for retail sales came in at $672.874 billion in May, down 0.3% from April’s $674.674 billion. But much like furniture and home furnishings, the retail industry was up compared with a year ago. May’s sales totals were 10.6% greater than May 2021’s $622.523 billion.
The National Retail Federation’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed May was unchanged seasonally adjusted from April but up 6.7% unadjusted year over year. In April, sales were up 0.4% month over month and up 5.5% year over year.
While most categories were down for the month, gas stations posted the greatest overall increase, up 4% in May. Food and beverage stores were up 1.2%; food services and drinking places rose 0.7%; and sporting goods, hobby, musical instrument and book stores grew at a rate of 0.4%.
Motor vehicle and parts dealers took the biggest hit in May, as that segment’s numbers declined 3.5%. Electronics and appliance stores saw a drop off of 1.3%, while miscellaneous store retailers (down 1.1%) and non-store retailers (down 1%) also reported notable declines.
“A lot of furniture retailers see that sales are going down and they are challenged to get rid of excess inventory,” observed Chip West, a retail and consumer behavior expert from marketing company Vericast, which works with a few furniture companies. “Earlier in the pandemic, furniture sales were booming so some in the industry cut back on advertising. Furniture retailers will need to increase advertising to improve sales and move inventory since they are competing with other options consumers have to improve their home. With consumers budgeting more due to rising inflation, it will be important to communicate value and promote any deals.
“As interest rates go up and the economy cools down, it’s going to affect the housing market. Home sales are slowing down and will slow further as people get taken out of the market and available inventory lessens. This will likely result in a shift to more people investing in their current home through home improvement. Furniture retailers will need to compete with other choices consumers have like DIY and professional projects,” West said.
The DOC’s advance estimates are based on a sub-sample of the U.S. Census Bureau’s full retail and food services sample. A stratified random sampling method is used to select approximately 5,500 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of more than 3 million retail and food services firms. —Allison Zisko contributed to this story.