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2017 outlook for the home accents industry

Vendors cast aside doubts, express optimism for year to come

The Forbes 2017 Economic Outlook (Oct. 31, 2016), is headlined “Better Than 2016.” And that’s a position that the home accents industry is also taking as this new year kicks off.2017 outlook 1

As Reza Momeni told Home Accents Today, “We are optimistic for 2017 outlook because, A. The elections are over and political uncertainties are somewhat subdued; B. We have a strong U.S. dollar and this is always good for U.S. consumers; C. Energy prices are still low and stable; D. Home and apartment sales and rental are on rise which is good for the home furnishing industry.”

Jimmy Webster, president of Stylecraft, said he’s excited for his company’s 2017 based on “continued momentum with growth in the home décor sector, based on providing quality, value, on-time delivery and great customer service.”

As far as the national economy goes, Forbes reported, “As we head into 2017, the consumer will continue to play a large role in keeping the economy afloat and the early indications suggest that the consumer will be in a better position in early 2017 than they were in 2016.

“Following decelerating wage growth from mid-2014 into early 2016, we are starting to see a bottom form, and wage growth begin to reaccelerate once again. And even more good news, wage growth is increasing faster than inflation, representing a real increase in spending power. With more money in consumers’ pockets, an uptick in consumer spending is also likely.”

Recent improvements in Consumer Confidence also suggest 2017 will be stronger than 2016 economically.

“The Conference Board’s Consumer Confidence reading shows that consumer confidence has been generally increasing since May of this year. Furthermore, this is a leading indicator of consumer spending by nine months, suggesting an increase in consumer spending in early 2017,” Forbes reported.

Kiplingers’ annual economic outlook is calling for a 3.7% increase in retail sales for 2017; and single-family housing starts to grow by 11% (compared to 9% in 2016). Industry analyst Jerry Epperson, in the 2016-2020 Residential Home Furnishing Forecast (Nov. 11, 2016), predicts that existing home sales will be essentially flat for the year (inhibited mostly by the lack of homes for sale), but the continued growth in new homes will keep the housing market on the rebound.

Economists expect interest rates will increase in 2017, as well as inflation and energy prices, but the increases are expected to be nominal.

All in all, the stage is set for a solid year of growth – better than the industry has seen in some time, though there are still some reasons to be wary. Read on to learn what industry manufacturing leaders have to say at the start of the year.

 

BRIAN BERK, PRESIDENT, HOWARD ELLIOTT2017 outlook 2

The outlook for 2017 is “cautiously optimistic for better than average growth in the home accents industry.”

What are your reasons for optimism for the year? We are “cautiously” optimistic for the obvious reasons of simply not being able to decipher the direction the new administration will be taking on the economy. We believe we will experience average organic growth, but there will be additional home purchases and remodels as well as several hospitality projects coming to fruition in 2017. The consumers are becoming more sophisticated and while price is always a factor, many customers are still seeking quality over price.

What potential challenges or pitfalls do you foresee? The pitfalls that are on the horizon are dependent upon the policy decisions of the new administration and how those decisions will affect the fragile global economy. We are already seeing the fear factor from our customers in Mexico and South America. The strong dollar will continue to affect our international sales.

 

LENDELL GLASSCO, PRESIDENT, PARAGON

The outlook for 2017 is “mildly optimistic for the first part of the year with business improving as the year progresses.”

What are your reasons for optimism for the year? Industry numbers continue to show that housing starts and sales of existing homes should increase in the coming year. This should bode well for decorative accessory companies offering on-trend products to make these living spaces look beautiful.

What potential challenges or pitfalls do you foresee? In today’s world, with so much conflict and turmoil, it’s a challenge to show strong growth in an environment where a high level of consumer confidence is hard to sustain. It’s often the unforeseen things that come along that seem to derail optimism. The divisiveness of our country as witnessed in the presidential election and the “wildcard” effect the president-elect brings to the transition of our government may hinder a real positive vibe starting off the new year.

 

SCOTT WHITE, PRESIDENT, JLA HOME

The outlook for 2017 is … “In 2017, I think the industry will stabilize and prepare for solid growth after the uncertainty of the past year.”

What are your reasons for optimism for the year? We will kick off the New Year with the Atlanta market and our newly expanded and remodeled showrooms. We expect record attendance and sales with all products available for immediate shipping. In April we will open our new High Point building with over 60,000 square feet of showroom space. Our product lines continue to expand and our lifestyle brands have resonated strongly at retail this past year. We are on the forefront of design, color and trend and positioned securely for growth in 2017.

 

DAVID GEBHART, CEO, GLOBAL VIEWS2017 outlook 3

The outlook for 2017 is “cautious optimism (holding my breath).”

What are your reasons for optimism for the year? 2016 is ending on a more positive note than it began. Hopefully an uptick in optimism from the end consumers, and in turn with our retailer buyers/interior designers, will continue into 2017. Again – holding my breath. I think it may be a few months into 2017 before we truly feel a major shift towards substantially increased consumer buying interest in our products.

What potential challenges or pitfalls do you foresee? The unknown aspects of the new political reality hang over all of us. I think everyone I know, and our customers in particular, are looking for some stability and calm direction. Once they see where we are headed – hopefully in a positive direction – the challenges may well be behind us. Pitfalls will continue to exist in a world where events can turn so quickly, literally around the globe, to influence business opportunities both negatively and positively. I remain cautiously optimistic calm may prevail soon. Another major challenge as we go into 2017 will be how we as an industry engage our customers to return to attending the magnificent trade shows we have around the country. Market attendance is down, I don’t care what any market center reports in terms of attendance. Buying is much slower at these expensive shows than it has been in the 20-year history of our business (if you take out 9/11 and the housing bust of 2008/2009).

 

ARASH YARAGHI, PRINCIPAL, SAFAVIEH

The outlook for 2017 is “very positive.”

What are your reasons for optimism for the year? For one, 2016 is closing on a very strong note for Safavieh so we expect that this will continue into the new year. Another reason is the enthusiastic reception from our clients in the industry and consumers to our newest product lines. We always strive to stay in step with contemporary lifestyles and décor preferences and so far, we think we are doing a good job of it, which is reason for our optimism for 2017 and beyond.

What potential challenges or pitfalls do you foresee? Potential challenges always lie in the economy in general and the consumer’s budget for home décor. However, we have always offered high-quality products at sensible price points so we don’t anticipate any issues in this regard.

 

ANNA SCHWEISS, VICE PRESIDENT OF DESIGN AND MERCHANDISING, ORIENT EXPRESS FURNITURE

The outlook for 2017 is “bright and beautiful!

What are your reasons for optimism for the year? We have seen a very steady growth over the whole of 2016. As always the fall season grosses the highest sales of the year but we have been pleased to see other seasons doing well and showing higher growth than expected. Our e-commerce and designer care departments, which are focused solely on these categories of business, have seen dramatic growth as well as our key customers who are looking to us as their source for new 2017 product.

What potential challenges or pitfalls do you foresee? Our challenge continues to be with our smaller store accounts. Many of them are struggling in today’s economy and with the growth of e-commerce it is becoming more and more difficult for them to thrive. We continue to look for ways to better service them and be the best partner to help their growth. With services such as quick ship warehouses on both coasts we are able to act as their warehouse and take this tremendous burden off of them. Despite these challenges we are looking towards record sales in 2017 through the combination of beautiful new product offerings, new key accounts and dramatic growth in two already booming customer categories.

 

JAMIE YOUNG, JAMIE YOUNG COMPANY

The outlook for 2017 is “very positive.”

What are your reasons for optimism for the year? We feel optimistic about business in general as we have seen huge growth in the company and many different new opportunities to bring product to the marketplace. We have worked hard in looking outside of the box to find new ways to sell product. Everybody at the Jamie Young Company is energized by the creativity in both product and critical thinking to expand our mix and our customer base. With our in stock inventory, great customer service, and diversity of design, we can satisfy our customers’ needs very quickly and have become more of a one-stop shopping experience. We have introduced hundreds of new pieces, added to each category of business and continue to be a leader in design in our categories. The country is ready for fresh thinking and also wants to get back to business. We are ready for that as well.

What potential challenges or pitfalls do you foresee? There are always potential challenges when you are manufacturing overseas. Some things will be out of our control but with great management, proper planning and quick reactions we will manage whatever comes our way.

 

BRADFORD SMITH, CEO, ELK GROUP INTERNATIONAL

The outlook for 2017 is “overall growth will be even more positive than the last few years.”

What are your reasons for optimism for the year? Our optimism stems from, in part, the new political administration’s plans to provide a more accommodative, pro-business landscape. With potential tax cuts for businesses and individuals, this could provide more discretionary dollars to be spent by consumers in our industry while allowing businesses to hire more workers. In addition, if we see greater overall GDP growth, real estate prices should continue to rise which could provide homeowners with the necessary impetus to make additional investments in their homes.

What potential challenges or pitfalls do you foresee? The stock market is trading at historical levels based partly upon future expectations of the new administration’s promises. If these expected policies are not implemented, the expectations would be that the overall market would need to adjust their trading multiples predicated upon that failed reality. Businesses and consumers could feel disenfranchised by the system which could lead to muted growth or even economic contraction.

 

BRYAN WILLIAMS, EXECUTIVE VICE PRESIDENT, CRESTVIEW COLLECTION

The outlook for 2017 is… “Crestview is looking forward to a great 2017, continuing with a pattern of exciting growth experienced over that past years.”

What are your reasons for optimism for the year? The retail attitudes have been strong and show no signs of diminishing. Product development has new innovative projects coming forward in 2017 in all of our categories – accent furniture, lighting, wall décor and accessories. With our new product introductions, strong customer response, exciting product development and strong sales team in the field to service our customers Crestview is poised for another year of tremendous growth. Our team has been working hard to service all areas of our customers’ needs and wants.

What potential challenges or pitfalls do you foresee? Most challenges encountered over the year are opportunities that have to be realized. Changes in customers’ needs or directions are always challenging opportunities, shipping requirements / logistics, product categories, marketing programs, etc. On the product development side distinguishing between trends and fads is always part of the development team’s challenges.

 

SETH KING, VICE PRESIDENT SALES, SURYA

The outlook for 2017 is … “In 2017, I think the industry will stabilize and prepare for solid growth after the uncertainty of the past year.”

What are your reasons for optimism for the year? 2016 was an up and down year for a lot of our customers. Many consumers were holding back on purchases due to uneasiness about the economy and the upcoming election. As we move into 2017, we believe consumer confidence will increase, opening up more opportunities for sales across all home furnishings categories and price points. The stock market and housing starts are both up, and those are both strong economic indicators going into the next year.

What potential challenges or pitfalls do you foresee? Overall, we’re looking forward to a positive year with increasing sales momentum. We’ll continue to build out our rug and accessory categories, including our lighting line, which has been very well received by buyers and designers.

 

MAC COOPER, CEO, UTTERMOST

The outlook for 2017 is “strong, but with plenty of uncertainty.”

What are your reasons for optimism for the year? After years of modest growth, I think the ingredients are falling into place for potentially much more rapid growth. Lower corporate tax rates, less government regulation, and some pent-up demand could result in a very strong 2017. The upswing in the stock market reflects some of this optimism. Having the election behind us is also a positive, as the mudslinging and distractions are very divisive to our country.

What potential challenges or pitfalls do you foresee? The world seems more divided and volatile than in decades. The Middle East is very unstable, the major markets in Europe are weak, and the threat of terrorism seems to be spreading. On the domestic front, over-stimulation of the economy could lead to inflation later in the year. Finally, shortterm trade wars are possible as our country renegotiates many of our relationships.

 

CAMERON CAPEL, VICE PRESIDENT, CAPEL RUGS

The outlook for 2017 is “continued growth.”

What are your reasons for optimism for the year? We have had positive reactions and successful markets with steady growth over the past year. We expect it to continue.

What potential challenges or pitfalls do you foresee? The continued success of machinemade, less expensive rugs. The product is great and beautiful, but you must sell a lot more of a cheaper product to make up for lost margin dollars.

 

SEAN MCFADDEN, VICE PRESIDENT, INTERLUDE

The outlook for 2017 is “Positive. I think strong designs in the better category will continue to perform well.”

What are your reasons for optimism in 2017? Regardless of anyone’s feelings about the election outcome, a nightly warning of economic doom has largely vacated the media. This takes the edge off the “Should I buy this now?” thought process for a lot of consumers.

What potential challenges or pitfalls do you foresee? If we have an economic setback it will probably come from left field. Unemployment should be between 4.5% and 4.7%. Inflation doesn’t look menacing, and we should have modest economic growth. In a volatile world you never say never to disruption, but we should have a stable economy to work with in the U.S. It will not be robust, so gains will come only from hard work.

 

GREG JORDT, EXECUTIVE VICE PRESIDENT, HAROUNIAN RUGS INTERNATIONAL

The outlook for 2017 is … “The bar was set pretty high in 2016, but we feel we will exceed that performance.”

What are your reasons for optimism for the year? We are very confident – about our greatly expanded sales force, current hot selling product, and exciting new hand-knotted transitional looks that will be offered starting with Atlanta in January. We can’t wait. It’s going to be another great year.

What potential challenges or pitfalls do you foresee? Product flow is always a challenge in the hand-knotted category especially when, as we do, we program and stock in large sizes: 10x14, 12x15 and 12x18. We have been doing this a long time and are one of the best but it is something that we and our India office work on every day.

 

CYRUS LOLOI, PRINCIPAL, LOLOI

The outlook for 2017 is “really positive.”

What are your reasons for optimism for the year? We have Ellen DeGeneres launching in January. And I’m excited for reasons beyond that. The Loloi running product line, including Magnolia Home, continues to grow and continues to look better. We have our eggs spread in different baskets and I’m excited for how the business overall is growing.

What potential challenges or pitfalls do you foresee? The challenge is managing that growth. With infrastructure, employees, all of that – the normal growing pains businesses go through

Home Accents Today Staff | News & Commentary

Home Accents Today provides industry news, product trends and introductions, exclusive industry research, consumer data, store operations solutions, trade show news and much more.

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