Fall High Point Market - October 2015
High Point Market Charlotte, NC
We love the High Point Market in the fall when the weather is clear and cool, and this year we got a perfect Chamber of Commerce commercial: blue skies, calm winds and nice temperatures. Also we had strong attendance, good buying attitudes and no stock market crash. Let’s claim victory.
Quote of the Market #1: “If you aren’t doing well now, you’re in real trouble” opined a senior leader in our industry.
We had lots of discussions centered on e-commerce and the continuing trend towards “click and mortar” strategies. Today, furniture sales via the internet are approximately 5%, and most prognosticators believe that figure will rise to 15-20% over the next 10+ years. Wal-Mart’s disclosure during the market that they are being clobbered by Amazon.com and other online retailers confirms the monumental shift in the retail world. We also noticed that Wayfair, the fast growing (with no profits!) e-commerce company had over 100 executives at the Market. Wow, how the world is changing.
Technology is clearly driving modern business in other ways, including stronger and more integrated ERP systems, faster big-data processing and better use of dash-board and management reporting tools. IoT [Internet of Things] is increasingly a differentiator of the “haves” and “have nots” within our industry.
Reshoring and on-shoring of upholstery continues, with new factories opening up and suppliers investing deeply in building North American capacity. Our real estate division has been swamped with selling factories to furniture companies seeking more US capacity. Several recent announcements have been made regarding new or expanded upholstery plants in Mexico, both on the border and in the interior of the country. Our recent trips to Tijuana and Mexico City confirm the viability of this strategy for some of our stronger industry players.
We do not see huge new investments in US casegood plants, but the ones that have done so are experiencing solid business and are pleased with the money spent. Domestic casegoods are a particular focus for the hospitality sector, and we expect to see some M&A action in this arena soon.
Deals – Deals – Deals: 2015 is the strongest M&A year since the Great Recession, and is now rivaling the peak deal years of 2004-2007. Valuations are strong again, and there is generally an “open window” to sell a furniture business. We are very busy, and 2015 will be our best year ever, with a strong backlog going into 2016. Call us and let us help you think through the valuation and marketability of your business.
We are looking forward to the BDNY (Boutique & Design New York) show in a couple of weeks. Hospitality companies are doing well right now as hotels and motels are refurbishing and building new projects. Hope to see many of you there!
Quote of the Market #2: “Ralph was the hardest working, most professional business man I have ever known,” opined one client, upon learning of our father’s recent death. Thanks to all who called or sent cards and e-mails. Ralph Stump was an awesome Dad and partner, and he loved working in the furniture industry. He lived a joyful and productive 86 years.