In an article in USA Today yesterday, the paper reported the combination of consumers stung by the credit crunch, a devalued housing marekt and overall increase in prices of gas and food has caused a severe decrease in spending on home goods. And that doesn’t include the fact that homebuilders have slowed on construction and home sales are down significantly as well. Consumer confidence is half of it was a year ago.
All of this adds up to consumers foregoing the purchase of major home appliances and furniture as well as decorative items as small as vases, candles, etc.
The slowdown impacts everyone from home remodeling companies like Lowe’s and Home Depot, to home furnishing companies such as Pottery Barn, Williams-Sonoma, Z Gallerie and more.
According to the article, 30 furniture store chains have closed in the past three years, with 15 of those closings occurring last year.
Not all home retailers are gloomy, but customers have gone into value mode, with those stores that cater to that mentality achieving somewhat better results. Chains that also offer value-added services such as design consultations are betting those things will pay off.
THE REAL WORLD TAKEAWAY
Don’t give up, but don’t expect double-digit growth either.
As small retailers, we have to keep pushing to get customers in the door and then push to make the sale. Good marketing, a great offer, or value added service like a special event or consultation can help bring more customers in. You have to figure out what works best for your business.
But there’s a rate of diminishing return on doing these types of things. Before you know it, you’ll always have offers out there and your customers won’t feel compelled to come in today since they can get a deal anytime. So don’t let yourself get sucked into the vortex of discounts.
And adjust your expectations as to your sales and profits for 2008. We’re in a recession [and a pretty deep one from what analysts are saying]. In these tough times the goal is to make enough profit to personally survive. Achieve greater profits than that and you’ll be one of the lucky small retailers who buck the trend this year.