Consumers Demand Deals on Big-Ticket Items Amid Economic Uncertainty

With ongoing financial challenges constraining shoppers’ purchasing power, furniture companies’ recent earnings reports show that consumers may not be willing to buy, say, a new couch if they are not getting it at a bargain.

Hooker Furnishings, for example, shared on a call with analysts Thursday (April 11) discussing its fourth-quarter and full-year fiscal 2024 financial results that it saw consolidated net sales drop by 26%, noting consumer hesitance to purchase furniture amid ongoing budget pressures.

“Home furnishings industry demand is soft and consumer confidence ticked down recently after several months of improvement,” CEO Jeremy Hoff said.

PYMNTS Intelligence finds that consumers are more cautious about how they make large purchases in times of financial distress. The 2023 study  “New Reality Check: The Paycheck-to-Paycheck Report — The Economic Outlook and Sentiment Edition,” created in collaboration with LendingClub, found that 62% of consumers reported being unlikely to make expensive purchases during the year (outside of gifts, clothing and accessories, vehicles, leisure travel and electronics or appliances).

Belt-tightening behaviors are continuing. The most recent edition of the New Reality Check report, “Why One-Third of High Earners Live Paycheck to Paycheck,” which drew from a census-balanced survey of more than 4,200 U.S. consumers, found that 60% of shoppers are cutting back on nonessential purchases.

These behaviors may not let up any time soon. The February installment of the PYMNTS Intelligence “Consumer Inflation Sentiment” series, “The Cautious Spender: US Consumers Now Think First, Spend Second,” revealed that, as of January, 57% of consumers expected higher retail prices in the next 12 months.

Dialing Up the Deals

Hooker Furnishings was not the only furniture brand reporting earnings Thursday that felt the impact of a more cautious consumer environment. Lovesac, for its part, reported 5% year-over-year net sales growth in its fourth-quarter fiscal 2024 earnings, but to reach this growth, it needed to cater to budget-conscious consumers’ ongoing demand for deals.

“We had to dial promotions up a little bit more because we’ve seen … a bit of a lull in December as we tried to pull down off the typical Black Friday promotions. We did that again in February, and what we saw is the same dynamic as in December,” Lovesac President and Chief Operating Officer Mary Fox told analysts. “So, key competitors were up to 50% off during February and had very aggressive deals in clearance. … It’s clear we need to have a very compelling value in a category that’s deep in promotions.”

The company is leveraging consumer data to personalize these promotions to boost their effectiveness, with Fox noting that, in the quarter, the brand “successfully tested new targeting and promotional messaging.”

The PYMNTS Intelligence 2023 study “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” which was based on a survey of more than 2,100 U.S. consumers, found that 46% of retail shoppers are deal chasers, willing to go wherever they will get the best price.

Plus, the “Why One-Third of High Earners Live Paycheck to Paycheck” report noted that half of consumers have turned to cheaper merchants during this period of high inflation.