By Emily Hawkins
Homeware retailers are facing a turbulent 2023 as mounting operational costs and hesitant consumer sentiment piles the pressure on the sector.
It comes as Made.com was still teetering on the brink of collapse on Monday after customers have pulled back from spending on pricier items like furniture.
Last week, the ailing sofa seller said it had cut short its hunt for a buyer, as well as suspending new customer orders.
Its co-founder Brent Hoberman attacked the firm’s management team for investing in masses of stock while customer demand had begun to decline, in a post on LinkedIn at the weekend.
However, Made.com isn’t the only retailer to face choppy waters recently. London-listed sleep wellness retailer Eve also called in administrators earlier this autumn, as the mattress business struggled to shore up rescue cash.
Retailers selling big ticket and non-essential items that people can do without or delay buying had “really drawn the short straw,” Danni Hewson, financial analyst at AJ Bell, told CityA.M.
Many shoppers were avoiding buying costly goods such as new computers, TVs and furniture in September, the most recent retail sales data from the British Retail Consortium (BRC) showed.
Turbulence isn’t set to end for the sector anytime soon, with Hewson forecasting that furniture firms would struggle well into next year and “most likely even longer than that.”
Homeware businesses have also struggled with the end of a post-Covid housing boom and rising mortgage costs, Hewson added.
“People who moved home over the last couple of years are likely to have done all they want to do for now, and would-be home owners are likely to be putting off a house move until interest rates reach their peak,” she added.
Shipping costs and delays have seen prices lift while delivery times have also gotten longer, meaning that “some sales that would have helped bolster the sector’s coffers simply didn’t go ahead,” Hewson said.
“Middle of the road” stores would face the brunt of a slowdown, while high-end stores would be “cushioned” and value lines appear more attractive to consumers looking to save.
However it may not all be gloomy news, as sofa seller ScS suggested to CityA.M. this month that some shoppers may invest in home makeovers instead of opting to move house amid historically high mortgage rates.
The warned of “subdued” trading in recent weeks against a backdrop of household bills increasing.
The post Homeware retailers ‘draw short straw’ in economic crunch as Made.com nears collapse appeared first on CityAM.
