How the Recent Stimulus Will Affect Furniture Retailers
One of the many measures used to counteract the effects of the COVID-19 pandemic has been direct economic stimulus payments to millions of Americans. While the amount received by each person or family depended on variables like income level and the number of dependents, the vast majority of Americans received multiple payments during the pandemic.
Those payments were essential for many to keep up with bills that piled up since the start of this event. The pandemic has left many people out of work or business, so these payments have been a badly needed lifeline.
But that’s not the case for everyone. For people who didn’t see an impact on their income, the payments are simply a financial boost. We expect shoppers will pass some of that boost on to furniture retailers who struggled right along with so many other sectors.
An Extended Struggle
It doesn’t require any advanced analysis to understand why furniture retailers have struggled during the pandemic. Initially, many stores had to close for some time. Then, even when they opened, those stores faced restrictions on how they could do business – and they were selling to a market with an unsure financial future. Consumers tightened their wallets and purses, spending on anything non-essential slowed to a trickle.
Another issue is the in-person nature of furniture shopping. While other retail sectors leaned even harder into the world of e-commerce, that’s not such a natural transition for furniture sales. Most consumers want to sit on the couch before they buy it or feel the quality of the table and chairs. When you add it all up, the recipe for an ugly year in the furniture business was complete.
A Long-Awaited Boost
It’s important to remember that all of those people who would have made a furniture purchase in the past year are still looking to replace old pieces in their homes. That need didn’t disappear – just delayed. Now that stimulus payments have landed in millions of bank accounts, and the time is right for a big boost.
As a good sign that a sizable jump in retail furniture sales is on tap, we only need to look to the last round of stimulus payments. The retail economy’s Furniture and Home Furnishing sector jumped 12% in the aftermath of those payments, and that round of checks was smaller than the latest version. As larger payments combine with the world moving ever closer to the end of the pandemic, it seems inevitable that retailers will enjoy a powerful resurgence in the weeks and months to come.
Furniture retailers need to be ready to take advantage of the boost provided by the stimulus payments. As a starting point, having ample inventory available is a great way to capture business while the market is hot. If too many items are not available for a long time, some customers may turn elsewhere. While many companies run very lean through the heart of the pandemic, now is probably the time to start stocking up wherever possible.
Also, it’s essential to make sure safe business practices are in place and that people follow all local regulations. Although vaccinations are well underway, this public health event has not yet ended, and many areas still have strict rules in place. Following these rules properly will not only keep you on the right side of enforcement, but it will also help make customers feel safe in your store. With plenty available to sell, and an appropriate model for operations in place, now is the time to make up for losses over the past year.
Smart People + Good Data = Better Credit Decisions
Sign up for FMCA! We’re a community of credit professionals who motivate and help our members succeed in their credit careers- whether just beginning or sharpening the axe with decades of experience.
We provide comprehensive credit reporting, collection services, industry leading educational opportunities, and a network of like-minded individuals to learn and grow with.
If you liked to see what we’re all about, sign up for a free trial to see for yourself! You get 3 free reports.