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The impact of the Economic Recession on the Furniture Industry
familyfurniture   6/2/2014 4:11:05 AM
It has been shown that economic recession has negative impact on the Furniture industry. One may be tempted to ask how and in what way recession impacts the Furniture industry. Recession as used here means -a period of economic slowdown and uncertainty. During recession, consumers tend to cut down on personal spending. Living Room Furniture is one of those house hold items categorized as discretionary purchase item. Discretionary products are those products referred to as non essential goods; consumers generally postpone purchases of discretionary items, until the economy begins to recover. In addition to Furniture, other items such as clothes and automobiles are also considered as discretionary items.

Leslie Carothers, an executive Director of the Kaleidoscope partnership a social media company, was asked why economic recessions negatively impact the Furniture industry. She noted in her response that "The economy absolutely affects the industry, as furniture is a discretionary item; she added "When the economy is good people are definitely more willing to invest in furniture as well as better quality living room furniture as they have more money for such investments."

One of the reasons why individuals cut back on consumer spending is to save money, due to the uncertainty often associated with economic slowdowns. Some employers may cut back on the number of employees as a way to reduce their spending. It is a natural step for many companies to reduce their work force during periods of economic slowdowns. Most of the employees laid off during economic slowdowns are very unlikely to buy new furniture because of the loss of their job and for those who are lucky to keep their job many are not likely to engage in discretionary purchases.

Above all, furniture companies also face severe job losses and employee layoffs during economic recessions. This means in pure economic terms that productivity within the living room furniture manufacturing companies would decline, in line and in association with labour cutbacks. In a research project, carried out by Marvin Anagboso and Craig McLaren entitled, "The Impact of Recession on Retail Sales Volumes", the authors showed that during the 2005-2010 recession period, job losses in the Furniture manufacturing Industries were significant in the core regions of North Carolina, Mississippi and Tennessee with the largest Furniture manufacturing industries in the Southern United States. According to this report, these three Furniture manufacturing states lost 21,000 jobs out of the total 24,000 jobs, lost overall in those states, during the 2005-2010 recession periods. The impact of job losses within the living room furniture manufacturing companies further depresses productivity and net sales of furniture products and accessories within the sector.

In conclusion the writer notes that there are other factors which contribute to the overall growth and problems facing the Furniture industry. Some are not directly related to recession, problems such as globalization and increased competitiveness it creates within the Global Furniture industry and participants, there is also the issue of China's entry into the Global Living Room Furniture market.



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