A reversal in fortune: In the early days of the pandemic, consumers who were stuck at home decided to update their spaces, which helped boost sales at retailers such as Wayfair, Williams-Sonoma, and RH. But with many of those remodeling jobs complete, and fewer consumers embarking on new projects, those merchants are seeing their sales suffer.
- That’s evident in the retail spending data. Sales at home furniture and furnishings stores are up just 1.4% through the first eight months of the year, and electronics and appliance store sales are down 5.0%, per the US Commerce Department.
- “The housing market is in a recession, and it's just getting started,” said RH CEO Gary Friedman, during the retailer’s earning call earlier this month. “It's probably going to be a difficult 12 to 18 months in our industry.”
The big takeaway: The US Federal Reserve has one blunt tool to combat inflation: interest rate hikes. And, after the Fed raised interest rates another three-quarters of a percent last week for the third time in a row, it signaled that it is determined to continue raising rates until inflation breaks.
- That’s bad news for the housing market and, in turn, home goods retailers as the current downturn is unlikely to pass anytime soon.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefings—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.