April 23, 2020
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COVID-19’s Effect on the Furniture Industry
The COVID-19 pandemic has had an incredible effect on the furniture industry. While some retailers that sell furniture have been deemed essential businesses and have been allowed to continue operations through stay-at-home orders, most have either been forced to close or voluntarily closed. The same is true of furniture wholesalers, although for many wholesalers they have the luxury of being able to do most of their work from home, something that is not possible for their customers in retail. While DSA Factors has been providing updates on the small business community throughout the COVID-19 pandemic, one of our largest areas of specialization is in furniture, so it made sense to report on the status of the furniture industry at this time. Therefore, we have decided to use our data to give a report on the state of the furniture industry at this time.
For the start of the year it was pretty much business as usual for the furniture industry. Even though the COVID-19 virus was spreading across China at the start of the year, it didn’t seem to have any impact on the furniture industry in America. Part of the reason may be that the Chinese New Year holiday took place as the virus first started spreading, and factories are normally shut down for several weeks during the holiday period. In fact, it was business as usual for the first 3 weeks of March as well. While the NBA suspended their season on March 11th, and the other sports quickly followed suit, the guidance at that time was simply to avoid large gatherings. It wasn’t until March 19th that California issued the nation’s first statewide stay-at-home order, which was quickly followed by Illinois on the 21st and New York on the 22nd.
The fourth week of March, after millions of Americans were ordered to stay at home, we saw a drastic decline in the furniture industry with over one third of furniture wholesalers closing up shop that week. At the same time, sales, which had remained steady up until that point, were down by 70% that week. As April began, more and more furniture wholesalers started closing their businesses, although sales have remained steady at 70% below normal levels throughout April. As of today, a little less than a third of furniture wholesalers are still doing business.
However, there is one sector of the furniture industry that hasn’t been hit as hard during this pandemic, that is the casual furniture sector. As the weather start warming up and people are forced to stay at home, the casual furniture sector is expecting to see some large sales numbers as people start to invest in their own backyard more and more. While many casual furniture retailers remain closed, they are still placing orders as they are very optimistic that many Americans are going to want to make their own outdoor spaces more comfortable.
While it would be a lie to say that the casual furniture sector has not been hurt by the COVID-19 pandemic, it is doing much better than the furniture industry as a whole. Just like the entire furniture industry, the third week of March was the last week of business for a third of casual furniture wholesalers. However, half of casual furniture wholesalers remain open and are still doing business today. While the last week of March saw sales drop by 75% for casual furniture wholesalers, those sales numbers have been improving throughout April and are now at normal levels.
For retailers, those who are in casual furniture seem to doing better as well. Furniture retailers in general started having trouble paying for merchandise that was invoiced during the final week of February. This makes sense as these invoices would have become due in the final week of March as stay-at-home orders were being put into place and many retailers were forced to close their doors. For merchandise that was invoices in March, 60% of it has not been paid yet. However, retailers in the casual furniture sector have been doing better. Casual furniture retailers are about a week ahead on their payments with most invoices from February having been paid, and only 50% of merchandise invoiced in March remaining unpaid. Only time will tell if these trends hold up, but for now it seems like the casual furniture sector is doing alright.
DSA Factors continues to monitor the COVID-19 pandemic’s impact on the economy. Check back regularly for more updates in the future. Stay safe and stay healthy.
