Furniture Importers Can Make Big Money Over Next Few Years If They Can Solve This Problem Part 1
Furniture demand shot up in 2020, and the increase in demand does not look like a momentary spike ready to plummet. Demand for furniture should continue to be high for the next few years.
While most would probably call 2020 a bad year, Universal Cargo has already blogged about how it turned out to be a great year for ocean freight carriers’ profitability. Similarly, 2020 has set furniture importers and sellers – the whole home furnishing industry, really – up for big profits. But there’s a big if to go with that. Home furnishing companies can make big money over the next few years if they get past supply chain issues plaguing the industry.
Many companies that import furniture, something Universal Cargo has helped businesses do for the last 35 years, are taking advantage of the increased demand for their goods while others are struggling to take advantage of the opportunity because of supply chain problems.
The furniture industry already suffered from supply chain issues before 2020 with things like trucker shortages, sourcing reliability, and carrier irregularity on pricing and capacity. When the pandemic hit, it exacerbated supply chain problems with plenty of disruptions bottlenecking the flow of goods. All this, while consumers’ expectations of immediate gratification on furniture orders never seem to relent.
Lockdowns Start the Increase in Furniture Demand
It would be easy to see the surge in furniture demand as a short-term thing while people are stuck at home because of lockdowns during the pandemic. Shutdowns have certainly increased demand in a number of ways:
- Schools being closed has forced kids into a virtual classroom at home. To accommodate this, parents have bought furniture and house accessories like shelving units to make things comfortable and organized for their children. I myself bought a shelving unit to create cubbies to help my kids keep their work and school supplies organized.
- Businesses also have been forced to shut their doors, sending employees to work from home. Furniture spending on home offices has been a big boon for the home furnishing industry as well.
- Spending so much more time at home, in general, has caused people to spend money on home improvement, including furniture buying just to make the home more comfortable and pleasant. Money that would normally go into things like going out or vacationing has been used in this way.
All of the above things do sound momentary. Lockdowns and extreme social distancing won’t last forever, and once enough people have set up their home offices, virtual school spaces, and invested in making their places more homey, that demand should settle back down, right? Well, there’s another big factor increasing demand for home furnishings: buying homes.
Home Buying Should Keep Furniture Demand Strong
In response to the pandemic, the Federal Reserve dropped interest rates basically to nothing. This is big for house buying. It takes mortgages way down for new buyers, increasing the number of people buying homes. Of course, with house buying comes furniture and home furnishings buying. What’s more, Jacob Passy reports in a MarketWatch article, “The central bank said it will keep interest rates at or around zero until the end of 2023 most likely.”
To go along with cheaper mortgages, there are things happening like the exodus of California and other states like New York, New Jersey, Illinois, and more where state regulations are pushing out businesses, and people are moving to other states where they can afford to buy homes and their money goes further. In 2019, before the pandemic even hit, 653,551 Californians moved away from the state. Since the pandemic hit, California’s government has taken the opportunity to take more control and add more regulation, sometimes arbitrarily, to the businesses and people of the state. Things like Governor Newsom’s extreme regulatory orders, which he’s been caught ignoring himself, add to dissatisfaction many feel with how the state is run, and will likely make the state’s exodus grow. Similarities can be seen in other states, including the ones mentioned above.
Ultimately, that means demand furniture and home furnishing buying should continue to be exceptionally strong through the next few years, but there are risks to the low interest rates. We’ll get into those risks as we continue to look at furniture importing opportunity and related supply chain issues in Part 2 of this series.
In the meantime, Universal Cargo is here to help you with your importing, exporting, and even domestic shipping needs.