Navigating the Storm: Insights and Predictions for the U.S. Furniture and Rug Sector Amid Economic Uncertainty

Over the past few months, I’ve been getting a lot of questions from overseas furniture and rug manufacturers, as well as U.S. importers, all wanting to know how things are going here in the States. They’re curious about my perspective on the market and what I think the future holds for the furniture and rug business.

?Honestly, not much has changed since I last shared my thoughts. As a retail store owner, I’m still seeing much caution among consumers. People are in a “wait-and-see” mode, especially when it comes to spending on furniture and rugs, and this is dragging on the recovery of our industry.

?We’re still feeling the effects of the post-pandemic slump, and it’s hitting everyone from budget retailers to high-end stores. Sales are down across the board, with rising mortgage rates and a slowdown in home sales making it harder to sell non-essential home furnishings and improvement projects.

The consensus among industry experts is that high interest rates and ongoing inflation are to blame. These factors have reduced the number of homes being bought and sold, which naturally means less demand for big-ticket home projects. It’s been a tough summer—our sales barely made it across the finish line, and even though we’re doing better than last year, we’re still not close to our 2022 numbers. And it’s not just us; the decline in online sales and business for large retailers is pretty clear. It feels like we’re in the toughest housing market in decades. Companies like RH have recently reported revenue losses. Even Ethan Allen saw a drop in sales. Online retailers like Wayfair are also feeling the pinch, and even giants like Home Depot and Lowe’s have posted declines in their sales.

When it comes to the recent Vegas market, people have mixed feelings. Traffic was down, which wasn’t surprising, but the drop was bigger than expected. This tends to happen in election years, and with things being slow for both brick-and-mortar stores and big-box retailers, many businesses were hesitant to take on new product lines. Suppliers are trying to help boost sales, but the reality is, there just aren’t enough buyers out there right now. Store traffic is still down as both middle-class and working-class consumers hold off on making non-essential purchases, waiting to see what the election will bring.

For middle-class consumers, there’s a real concern about maintaining their standard of living. They’re trying to manage mortgage payments and save for future expenses like education or retirement. This makes them more cautious about spending on non-essential items like furniture and rugs. On the other hand, the working class is feeling the pinch even more acutely. They’re dealing with job insecurity, and rising costs of essentials, and often can’t justify spending on things that aren’t absolutely necessary.

We’re all dealing with the same challenges in this macroeconomic environment—high interest rates, persistent inflation, and fewer homes changing hands. Some of the customers who do come into our showrooms are looking for a new style that simply doesn’t exist yet and, some are still demanding high-end luxury products, but it’s not enough to keep the entire industry afloat. However, manufacturers who can offer more affordable alternatives that still deliver on quality and style will likely come out ahead.

Despite all this, I still believe there’s a path forward. Furniture and rug manufacturers need to focus on creating upscale designs that offer great value and have that “wow” factor that can really grab consumers’ attention, even in tough times. It’s about diversifying product offerings and strategically targeting both middle-class and working-class customers who are always on the lookout for innovative designs and functional features. Plus, there’s a real opportunity to use technology to create products that mimic the appeal of handmade items. (This might require bringing in an expert in the field.)

In general, we are observing declines in sales, varying from single to double digits, depending on the company's size. The upcoming election will undeniably influence consumer confidence and the market. If things unfold as expected, with the election of leaders prioritizing policies supporting economic growth, reducing inflation, lowering interest rates, and making positive moves in cryptocurrency that could enhance financial stability. As a result, we may see middle- and working-class consumers feeling more confident and willing to spend. But realistically, I don't expect a true recovery until the second half of 2025. However, I am cautiously optimistic that our industry will get back on track.