Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 8, 1995 TAG: 9501060052
SECTION: BUSINESS PAGE: F-4 EDITION: METRO
SOURCE: CLAUDINE WILLIAMS STAFF WRITER
DATELINE: LENGTH: Medium
Disposable income and consumer confidence play major roles in determining how the marketplace will react, said Gerald Birnbach, chairman and president of Rowe Furniture Corp., which manufactures much of its residential furniture in Salem.
Rising interest rates will make it difficult for people to afford furniture, Birnbach said.
That concern also is evident in the forecast of a panel of economists from the trade magazine Furniture Today. The group predicts a 5.2 percent growth in consumer spending this year and 3.8 percent growth in 1996. That's off significantly from its estimate of a 7 percent sales growth in 1994.
"I think the political climate had something to do with it," said Rob Logan, president of Logan Furniture, a Salem retailer.
Logan said the outcome of this year's congressional elections may have made people a little more uncertain of the future.
"People are a little more cautious," Logan said. "They have more of a wait-and-see attitude."
And when people are unsure of the government, they may buy less furniture, Logan said.
Residential furniture shipments, a measure of sales by manufacturers to retailers, increased 10 percent in 1993, said Joe Logan, director of finance and economic research for the American Furniture Association.
In 1995, the association predicts shipment growth will drop to 6.7 percent.
They attribute 1993's shipment increase to a growing market in home construction. But in 1995, the association said, the market will decline, and retailers will see the impact in the furniture industry by the end of the year.
Some retailers such as Franklin Furniture manager Doug Felici remain optimistic.
That's because, he said, the predicted decline in the market will not affect sales of moderately priced furniture, such as that stocked by Franklin. Rather, that company expects a 25 percent increase in sales for 1995. Last year's sales increased by 15 percent.
"Regardless of interest rates going up or down, they are shopping in stores to get better furniture at a lower price," Felici said. "That is why we will do better than many other businesses."
Also, because many consumers wait months to buy furniture after moving into new homes, last year's increases in housing construction and sales are likely to have impacts on the furniture market for the next two years, said Furniture Today economists.
by CNB