The Labor Day has always been a key sale event for the furniture and broader home furnishings market.
But you ain’t seen nothing yet: Welcome to Promo A-Go-Go.
The combination of too much inventory that needs to be cleared out, margin levels that could be favorable based on inflation rates and the historical role this holiday has played in consumer buying patterns is shaping up to be a perfect promotional storm.
As we move into mid-August we should start seeing the first signs of furniture retailers, online sellers and Big Box national chains breaking their sales events with activity moving into high gear for the Labor Day weekend itself, Sept. 3 to 5. And don’t be surprised for many of these sales to run beyond the holiday itself and into the following weekend.
The reasons for all of this are clear:
• Following nearly two years of scorched-earth buying, supply chain breakdowns and intense demand from stuck-at-home consumers, demand plummeted this spring and retailers and suppliers alike found themselves swimming in excess inventory…not all of it prime product. In their rush to get anything to sell many companies bought whatever was available, resulting in less than optimal – and saleable – product. Now they have to get rid of it to help their cash flow, clear up space in their warehouses for new merchandise and free up money to order new goods.
• Much of this excess inventory was purchased at prices set before this year’s big spike in inflation that has caused prices to rise all across virtually the entire consumer goods sector. So many sellers can use comparison pricing that reflects today’s higher levels, resulting in more impressive savings – even if they are in fact all about accounting and timing. This will help retailers and vendors on their margin levels while still providing shoppers with good values.
• Finally, Labor Day weekend when kids are going back to school, summer vacations have ended and people begin planning for holiday events like Thanksgiving and Christmas has historically been a focal point for home furnishings buying – particularly furniture. President’s Weekend in February is another touchstone holiday for promotional activity but Labor Day may be the single biggest event on most furniture retailer’s calendars.
The consumer, who has been reading about overloaded inventories and retail sales for months is being conditioned to expect exceptional promotional levels, especially for Labor Day. The same stimuli worked over the past two years when they were told inventory levels were low and they better buy now, so this is the same triggers, only in reverse.
We won’t know the hard facts on exactly how big Labor Day will be for the furniture and furnishings industry for months afterwards until government statistics and filings from public companies come out. But as the noise levels ramp up over the next few weeks it should be a pretty good indicator of what to expect.
If you need a new credenza – or don’t need one but just can’t resist a good deal – there may never be a better time than this Labor Day.
Spot on Warren!!!