Over the past year optimism in the future of the manufacturing industry has reached new highs. Tax reform and a pro-business environment have increased confidence in the economy strengthening the labor market and bringing unemployment down to 4.1%, the lowest rate since 2000. While the current growth is slow overall, wages have risen by 2.5% over the past year, and increases among low-income earners outpaced those with high-paying jobs. According to Elise Gould, Senior economist at the Economic Policy Institute, both of these benchmarks are signs of a stable economy.
The manufacturing industry has shown significant gains this decade, adding nearly 200,000 jobs in 2017 alone. The industry has increased its workforce by over a million employees since 2009 and reached the highest employment levels since the end of the Great Recession that same year.
Consumer confidence in the economy and its continued growth, along with increased job creation in manufacturing, has given U.S. furniture manufacturers reason to remain enthusiastic about future sales predictions. This optimism is especially welcome in communities such as Grand Rapids, Michigan, which has a history of furniture manufacturing that dates back to the early 19th century. Grand Rapids and the surrounding area is host to over 150 furniture companies, an additional 225 suppliers, and employs more than 15,000 workers in the industry.
While the furniture industry in the U.S. is expected to grow in the future, manufacturers must respond to a changing marketplace and changes in the retail buying habits of U.S. consumers. Manufacturers will face new challenges as the retail market continues to change, and those that remain well informed of current trends will increase their ability to capitalize on the opportunities the current economic situation offers.
Increased Renting and Smaller Households
Pew Research Center statistics show that in 2016, 36.6% of families rented their home, the highest in over 50 years. Renters are more inclined to invest in lower cost furniture and have also fueled the growth of furniture rental companies. Apartment dwellers also have to deal with space restrictions, limiting the size and types of furniture that fit the space.
Current data suggest that single-person households will increase over the next decade as many millennials delay the decision to start a household. Even with a lower disposable income and more debt, millennials accounted for 37% of the furniture and bedding market in 2014 and have demonstrated a willingness to support sustainable products, even at premium prices.
The internet has dramatically changed consumer buying habits, becoming a preferred shopping platform for many people. Online retail shopping has given consumers nearly endless options when it comes to any product, and furniture is no exception. The presence and influence of virtual stores will continue to grow and is a challenge that furniture manufacturers must address.
Manufacturers can respond to these consumer needs by developing lines of low-cost furniture, as well as space saving and multi-purpose pieces designed for smaller living spaces. A push for the manufacture of sustainable products and a well thought out online strategy will open up untapped markets. Manufacturers that embrace technology and available services such as professional web design, less than load (LTL) freight, and sustainable practices will grow and prosper in the coming years.