Industry Update with Doug Cofiell
Ivystone CEO Doug Cofiell shares industry trends that will impact demand, affect inventory availability, and require careful attention to pricing for gift and home retailers in the coming months.
We just finished up market season and more than anything around market, we heard a lot of questions about what's going on in the macro economy and kind of where things stand. It's a very unusual time because we have started to see a falling GDP and a falling overall market at a time when we have nearly full employment. And we had a huge spike in gas prices that has now dipped a little bit.
We had these kind of rough times around the summer, which is normally around the time when people are receiving a lot of product. Vendors out there were able to catch up on goods, which is a great news for all of us. But there were a lot of shipments that took place all at once, and then people received a lot of product. And at the same time, there are vendors sitting with a decent amount of inventory. Thus, our patterns have changed a little bit. And what we're seeing is a regression to the mean, or a return to the normal trend. And what we're seeing is now a more typical pattern of what we usually see out there in the broader market.
Ordering Patterns at Markets
Given all these factors we saw some things that market that we were not necessarily surprised of, but we thought we'd fill you in on. Overall, we are seeing a very low cancellation rate on orders for fourth quarter future shipments, which translates to retailers having booked out early and expecting a good fourth quarter.
There's also there was there was evidence of a slight trade down in price point, which was not shocking. If you have a choice between an item that has a $50 retail versus a $75 retail, we saw a little bit of change and trade-down there, and a little heavier on the lower priced items.
We also saw a little bit of a dip in the 2023 future bookings, which usually is the result of uncertainty. Uncertainty comes from a variety of issues, but these last couple of years, there were a lot of things uncertain. So it's not terribly surprising. But I think what we should expect this year is that there is a little less pre-booking of everyday orders than there was in 2021, so we'll probably have a catch-up period as we come into the end to Q3 and Q4. For retailers, this means you need to jump in and make sure you have stock on those really solid items that that have sold for a year after year.
Trending Product Groups
Some other things we saw across the markets was the kind of the return of the of the fashion side of the business, particularly with a little bit less casual focus. You may have heard some of the results from the larger retailers that they had kind of a glut of casual wear, meaning that it's it's not going to be yoga pants and shorts every day.
The other thing we saw was that the pure furniture business saw pretty serious dip, which would make sense because it was it was just an incredible year in 2021. We're seeing a little bit of a slowdown in that heavier in stock, case good furniture, and a pick back up on the fashion side, which would make sense with travel back and the services back.
Job Market and Gas Prices
Overall, what we see is a balancing out of goods and services purchases, and part of the reason for the full employment is that people are coming back to work in the on the services side and those take up a lot of positions and a lot of jobs out there.
You will still hear about some layoffs. Those are probably going to be in businesses that were cranked up during 2021, particularly on the tech side. You'll hear stories of layoffs, or maybe hiring freezes. But on the services side, we're seeing heavy demand for for employment, and it is overall good for our business.
The other thing just to keep in mind is that although we saw the spike in gas prices, now that we see some moderation there, that's something the customer sees every day when they're out and about. Those gas prices are up and easy to see in bright lights. For consumers to see them come down a little bit, we expecte that to to spur on some demand.
As you approach your Q3 and Q4, we wish you the best through the most important time of the year. As as always, if we can do it anything for you at Ivystone, please reach out and let us know.