By Nancy Meyer
NEW YORK-- No, Virginia, there really isn't a Santa Claus' at least not this year.
That's what some in the lighting and home decor industry fear, as the sales outlook for this holiday season and beyond is rather bleak.
By all accounts, retail sales of lamps, lighting, decorative accessories and other discretionary home decor items have been far below last year, and below very modest expectations for at least the past three months. The downturn is tied directly to the housing slump, along with the first reported decrease in home remodeling the industry's seen in years.
From independents to mass merchants, inventories are heavy and the outlook is dim.
"My part of the world is still quite soft; I've never seen so many people holding off buying," said an independent lamp and accessories sales representative in New England. "It's not just the small people, but the midpriced players, too, who are telling me they're trying to sell what they already own. It's still very tight up here."
The housing crisis is having such a widespread effect that some independent lighting showrooms "said they could lock their doors and save money," a New York area sales representative said. "Unless you're willing to give it away, you can't sell."
Sources said some mass retailers are putting pressure on vendors to come up with markdown money and other exit strategies for the inventory they own. Most vendors are already getting squeezed tightly by economic factors overseas, and are having to be more creative in their internal efficiencies and product development to keep costs down and make enough profit. Most mass retailers, sources said, don't want to hear about price increases.
"We're in survival mode right now," said a lamp vendor to several major chains. "It's going to get brutal."
Another manufacturer, who asked not to be named, said the majors have even revised downward their sales expectations through the end of 2008.
At least two mass players recently conducted line reviews, and vendors who presented new products described the buyers as "desperate."
Meanwhile, several vendors will be raising prices starting the first of the year. Some are waiting for the January trade shows to implement them, while others have been phasing in new products that are slightly higher priced than what is currently being marketed.
For their part, the components suppliers and factories have been hit with higher raw materials and labor costs, a reduction of the Chinese export tax rebate, and an environmental crackdown that's going on in southern China, where plating facilities are being shut down because they can't meet new water treatment rules, sources told HFN.
Todd Langner, president of Hunter Lighting Group, had just received price quotes from overseas suppliers that were "significantly higher" than last year. A comparable product that Hunter was quoted on two years ago is up 20 percent, Langner said. "And between last year and this year, it's up between 10 and 20 percent," except brass, which is even higher.
But amid all this turmoil, there are some bright spots, like Internet and catalogs, both pure-play and those with affiliated brick-and-mortar outlets.
"There are smart retailers who are identifying opportunities to win," said Steve Ricci, principal of the Ricci Sales Agency in Park Ridge, N.J.
Ricci said some of his larger accounts are focusing on their Internet business and acquiring new product lines to put on their Web sites.
"We're starting to see the consumer understanding whether you're truly a lighting specialist," by the way the product is treated on the Web site, how customer service is handled and other factors, he said.
"In my broadest Internet bases, business is down, but they're not specialists in lighting. The lighting specialists' Internet business is up," Ricci said.
Langner concurred. Hunter's line of decorative indoor and outdoor fountains seem to perform better in Internet and catalog retailers than in brick-and-mortar stores, he said.
"That end seems to be holding up so much better-it's the fastest-growing part of our business," Langner said. "They're the best meetings we have,[the retailers] are open to everything."