Consumers aren’t broke; they just feel broke | Mike Root

For the past two years, I have heard furniture retailers ask the same question: “If unemployment is low and people are still working, why aren’t they buying furniture like they used to?”

The answer may be simpler than we think. The consumer isn’t necessarily broke. But many consumers feel broke. I know that on a few smaller commission months, I don’t want my wife shopping on Amazon, or anywhere else for that matter!

Economists can debate whether inflation is under control, whether wages have caught up and whether GDP is growing. The average furniture shopper doesn’t care about any of those statistics. They care about one thing: “How much money do I have left at the end of the month?”

That number has become much smaller.

According to Census data, inflation-adjusted median household income in 2024 was essentially unchanged from where it stood before the pandemic. In other words, after six years of economic growth, the typical family has not meaningfully increased its purchasing power. At the same time, consumers have watched housing costs, insurance costs, food costs and utility bills climb dramatically.

See also:

• CEOs talk strategy in the age of the informed consumer
• Consumer demand: Is health and wellness the new ‘must have?’

The result is a consumer who may be earning more dollars than ever before but feels less financially secure.

Furniture retailers see this every day. Customers still come into stores. They still need a sofa. They still need a mattress. They still need dining furniture. But they spend more time comparing, more time researching and more time waiting before making a decision.

What has changed is not necessarily demand. What has changed is confidence.

The housing market provides a good example. In 2019, a family earning roughly $66,000 could purchase a median-priced home for around $260,000. Today, household incomes have risen, but median home prices have climbed even faster, making housing affordability more challenging.

Historically, the housing movement has been one of furniture’s greatest sales drivers. New homes create furniture demand. Existing home sales create furniture demand. Remodeling projects create furniture demand.

When consumers stop moving, furniture purchases often get delayed as well.

That helps explain why so many retailers are reporting traffic, but fewer closed sales. The consumer is still shopping. The consumer is simply more selective.

This reality also explains why categories tied to health, wellness, comfort and quality of life continue to perform better than many traditional categories. When consumers feel financially constrained, they become more intentional. They buy fewer things. But they are often willing to spend money on products that solve problems:

• Massage chairs that help them relax.
• Reclining furniture and comfort recliners that improve daily living.
• Outdoor furniture that extends the enjoyment of their homes.
• Products that create experiences rather than simply fill space.

That may be the most important lesson for furniture retailers today. The challenge is no longer convincing consumers to buy furniture. The challenge is convincing consumers that your product is worth choosing over everything else competing for their limited discretionary dollars.

Consumers don’t feel wealthy. Consumers don’t feel optimistic. But they still spend when they perceive value. The retailers who understand that distinction will likely outperform those waiting for the economy to “return to normal.”

Because normal may already be here.