Discounting trend great for furniture shoppers

It may seem odd to mention now, with a housing slowdown upon us and recession fears suddenly real, but it is a great time to buy furniture.

Even before the housing bubble burst, the furniture industry was in the throes of consolidation, as an influx of imports from the Far East spurred price competition that cut profit margins and forced many mom-and-pop stores to close and discount retailers like Costco to jump in.

For consumers, that means lower prices at the big-box furniture store.

“Discounting is the name of the game today,” said Leonard B. Lewin, author of “Shopping for Furniture: A Consumer’s Guide.”

Three decades ago, he said, consumers could count on sales twice a year, in July and August and in January and February. “Now there are sales every day of the week,” Mr. Lewin said. “There isn’t a store in town that isn’t routinely discounting 40 percent off the manufacturer’s suggested retail price.”

Last year, the top 100 furniture stores posted a 6.6 percent increase in sales, to about $32 billion, according to Furniture Today, an industry publication. That was down from an 8.3 percent gain in 2005.

Ashley Furniture HomeStores supplanted Rooms to Go as the top store chain in 2006, according to the ranking.

The government reported yesterday that sales at furniture stores rose 0.5 percent in August from July as overall retail sales edged slightly higher on the strength of auto sales. Economists are keeping a close eye on consumer spending, which has slowed this year in the face of higher gasoline prices and the cooling housing market.

The discounting trend is even more pronounced in the home furnishings market, according to a recent report from Morgan Keegan & Company, a brokerage firm based in Memphis. Sales have remained weak this year at companies like Pier 1 Imports, Bombay, Williams-Sonoma, Kirklands and Cost Plus World Market. Discounting is likely to continue through the end of the year, the report said.

Even Bed Bath & Beyond, which has gained market share at the expense of competitors, is feeling the ill effects of recent economic trends.

Source: New York Times, 9/17/07