If you shopped around for a new piece of furniture lately - and we truly hope you did - did you notice the price hikes? Starting last year and continuing into 2022, we did see a few price increases, sometimes very significant and mostly unpleasant. Unfortunately, seems like it's a new reality we'd have to live with for some time, so let's try to see why those things happened.
There are quite straightforward and direct reasons for increased price point for most of the furniture products.
Supply Chain Problems
Pandemic really changed all normal supply chain routes, introduced an unprecedented variety of problems in global transportation network and also drastically increased global tariffs for sea transportation, mainly container shipments. We've wrote about supply chain problems not that long ago.
With container prices sometimes reaching 10x costs comparing to pre-pandemic levels and few months delays all over the board furniture market had no other way to react.
Factory Closures & Production Disruptions
A lot of businesses / furniture related manufacturers and factories had to close for month / reorganize or in some way adjust to changing conditions. A lot of places were forced to be closed for weeks and months. A lot of raw supply materials sources ended, or manufacturing became economically inviable. This led to overall shortage of furniture products supply - which meant less warehoused goods for general customers.
Supply & Demand Imbalance
As it can be seen pretty much across few key areas, supply got dried up which led to increased demand. This inevitably leads to higher prices. This is pure economic law - if you have a limited number of products, you can sell, and you don't expect a re-supply soon the prices for what's left will be raised.
Today you can buy less for your money than a year before
You may know nothing about economics but it's hard not to see overall world inflation currently at its highest rise since 1980s. According to latest official data, we have around 8% yearly inflation in US at this moment. Federal Reserve already started battle with inflation by raising rates, and we'll see how these steps help further down the road.
While a lot of folks argue if 8% is a correct number, you may 'feel' like actual inflation is quite higher. This is of course quite subjective thing: it's apparent a lot of things may increased in actual cost way over 8% (like housing or cars, for example) - this is highly subjective and approximate judgement.
At least from our point of view overall furniture price increase is quite more than 8%.
What to expect?
Worse may be behind us already. At least for furniture we can see some of supply problems are resolving, however we expect some things will be out of stock until the end of 2022 and possibly part of 2023 as well. What we can see, however, supply is not as dry as it was in 2021, and at least you can find or choose something today.
It's hard to predict if we're going to face the recession at this point - most likely no, but we can already see a slowdown. How significant is that - we can only judge after some time has passed. In times of uncertainty and doubt people tend to spend less on non-vital things, which is quite understandable.
2022 will be a choppy year. However, we don't expect a major shakeups or negative developments. It will take some time. Such a global things like multi-year pandemic will not simply go around unnoticed.
Everything will be fine. But if you need your furniture today you may need to pay a little more. There's no way to avoiding that and most of the prices will never return to a lower prices that existed before.