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NRF chief bullish on home furnishings in 2004

Carole Sloan, January 19, 2004

Home furnishings will be among the strong merchandise categories that are expected to push GAFS sales up by 5 percent for 2004.

In contrast to 2003, this year is expected to be stronger in the first half, primarily because of weak comps, said Rosalind Wells, chief economist for the National Retail Federation. Tax refunds from the 2003 tax cuts that were retroactive to January 2003, but not recalculated until July, also will help the first half's performance, Wells said at the NRF's annual conference here last week.

The fiscal and monetary stimulus of the first half will dissipate towards the end of the year, she said.

In home furnishings, furniture specifically will benefit from a continued solid housing market "and could be even higher than the overall forecast," she explained. GAFS sales are for general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliance stores, and sporting goods, hobby, book and music stores.

Wells made her optimistic forecast taking into consideration the deflation impact on home furnishings businesses because of global sourcing. "There will be a lot of refurnishing as people move."

Looking at quarter by quarter, Wells predicted a 6.4 percent increase for the first quarter, 6.2 percent for the second quarter, 3.8 percent for the third, and 4.2 percent for the fourth quarter.

Other strong business segments will be electronic, and the high end across the board, the latter benefitting from "the wealth effect" of the stock market increases. The lower levels of retailing will benefit from a strong economy, as well as from the benefits of it being a presidential election year when the incumbent president makes extra efforts to improve the economy.

In a separate calculation, Wells estimated that on-line retailing for multi-channel retailers increased 30 percent during the holiday period.