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Confidence

August 13, 2011
con-fi-dence [kon-fi-duhns] noun: full trust; belief in the powers, trustworthiness, or reliability of a person or thing: We have every confidence in their ability to succeed.

Everything about its definition is so ambiguous that it amazes me anyone thinks they can measure consumer confidence every month. Certainly, I don’t know how it can be measured with such certainty. The consumer confidence index fell to 54.9 from 63.7 at the end of July. Decimal points. Really!

However, I don’t think we have to be able to measure it to know that consumer confidence is not high right now. Did I say consumer? I think I should add to that retailer, manufacturer, and rep confidence. None of those seem very high, either.

Gosh, here I am getting ready to go to our major market in what appears to be a major downturn in the economy. The stock market is going up and down more often than I have to get up and down to pee at night. One article in the financial section reports Target's 2011 July sales were better than July last year. A positive sign, right? Until I read the article right next to this one which says J. C. Penny’s July sales sank! This type of confusion does not inspire kon-fi-duhns.

But wait, let’s look back over my year. With the exception of March and June, our monthly sales figures since last August have been better than the previous year;s months. At the end of July, I was pretty optimistic and expecting to go into market with an “open to buy” attitude. However, with the “debt ceiling” debacle, our credit rating drop, the stock market losses, and the problems going on in the EU, I think I will be going to market with an “open to slit my wrists” attitude.

To prove the old adage, "Misery loves company," several reps told me business in their territories had fallen off dramatically in June and July. Now remember, we are in the deep south where our June and July temperatures have been so off the charts no one wants to be outside. Whether we have record setting high temps or not, business always starts to slow down in the summer. But, just like this summer’s extremely high temps, this summer’s business has been extremely low.

If I felt the heat was the sole cause of slow traffic, I would continue to be somewhat optimistic about business. Usually fall’s cooler weather sparks renewed interest in patio furniture. Not so sure about this fall, though. For example, I was thinking about buying a new refrigerator during our state’s sales tax holiday last week. The day before the holiday, the stock market fell 500 points. I put off that purchase! I may not represent every consumer, just a lot.

What does this mean for the upcoming market? Well, if I were a manufacturer, I would be wondering how those 10% - 15% price increase for 2012 are going to play with retailers and consumers. Chinese labor costs have increased. Raw material costs have increased. Even with the decrease in the cost of oil, transportation is still high. So, I have no doubt those increases are necessary.  On the other hand, if world-wide consumer demand drops, all of these costs will drop, too.

As a retailer, I am wondering just how deep I want to go with my early buys. Do I really want to have truckloads of furniture in my warehouses if consumer traffic is as slow next year as it has been in the last four weeks or so? More important, if manufacturer’s are forced or able (for you optimists out there) to drop their prices, do I want warehouses full of goods I bought at the higher prices?

As a rep, I would be thinking about additional distribution routes. If furniture stores in your area aren’t in the outdoor category this year, I bet they will be next year. If you have an exclusive on a line this year, don’t be so sure about next year. You may keep the exclusivity for the part of the line your buying but lose it on the rest of the line.

The only thing I can say for sure about this year’s market is, “It ain’t going to be pretty!” Which gives more meaning to my sign off,

Yours in confused retailing, Bruce