What’s up with rising prices of home décor? If you’ve been out to your favorite Dallas furniture store to buy a sofa or a lamp lately, you’ve likely experienced sticker shock.
It would be easy to think that the downturn in the housing industry would result in less demand for home goods and therefore lower prices. Not so. Like everything else in today’s marketplace, prices of home furnishings have slowly been creeping up.
So what’s to blame for rising prices? It would be easier to ask what’s not to blame.
Blame Mother Nature. Bad weather around the world has wiped out crops. Flooding in Pakistan last summer destroyed an estimated 20 percent of the country’s cotton yield. Add to that a decline in production of the commodity in China, the world’s biggest producer, and it’s easy to see why cotton prices, at $.50 pound 18 months ago, have now risen past $2 pound. It’s no surprise sheets and towels have become more expensive.
Blame shortages of product. After the initial shock of the economic downturn, retailers got savvy and reduced inventories. So did home goods producers. Now both finished goods and raw materials are in short supply.
As an example, domestic supplies of leather hides have shrunk to historic lows. A recent Wall Street Journal article titled “Leather Costs Hit by Supply Squeeze,”, reported, “U.S. federal data show cattle-hide prices are at their highest level in nearly a decade, jumping 24% in the last year to $82 apiece.” That leather chair you’ve been craving has become a bit pricier than you anticipated.
Blame China. Underpaid Chinese workers are demanding and getting higher wages and benefits leading to an increase in factory production costs. Not surprisingly factories then pass the increase along to American importers. Many workers are also leaving physically demanding jobs in textile or furniture factories and moving to better gigs in technology, creating a shortage of labor.
To top it off, as the country’s middle class grows, so does its demand for home goods. Demand for furniture and décor accents is at an all time high. As local purchases of these products increase, less is available for export adding to shortages in overseas markets.
Blame the industry. The American home décor industry is notorious for importing goods from Asia, primarily China. With U.S. consumers accepting no less than the absolute lowest prices, where else could décor manufacturers go? Yet the rising cost of imports has put producers in a quandary. Returning to domestic manufacturing isn’t an option. Many domestic producers are now looking to Vietnam and Thailand. Same story, second verse.
Blame rising energy prices. As the last month has told us, increases in the cost of oil impact everything from transportation prices to production of petroleum-based raw materials. Decorative accessories made of resin, textiles created from synthetic fibers, and containers traveling by ship or truck will all be impacted.
The good news? Manufacturers and retailers of home products are hesitant to pass along dramatic increases to consumers. So for right now, both parties will absorb some of the hit, passing along only a portion to shoppers. The bad news? Don’t expect prices to stay low for long.