Could 2024 see more furniture store closings? Maybe, says PFP

HIGH POINT — One might think that slower business and challenging economic headwinds means there’s a marked increase in stores going out of business. Tom Liddell, senior vice president of Planned Furniture Promotions, said that’s not necessarily so.

“Virtually everybody we run into makes the assumption that our business is through the roof, and things are going crazy. That’s not necessarily the case because not every opportunity is the perfect fit for us,” Liddell told Furniture Today during a conversation at the High Point Market. “Just because a store is going out of business doesn’t mean it’s a good opportunity for our company, and we might not offer the services they’re looking for.”

That said, Liddell noted that PFP is seeing an uptick in businesses at least conducting due diligence. He said when a retailer reaches out, they receive an exit strategy document with all the key things that they should look think about.

“We are getting a lot of people that are getting their ducks in a row to close their store. While we’re not actively running those events, they are researching what it is we do, how we do it, and they’re planning for the demise of their business, whether it be in the next six months or the next six years remains to be seen,” he said.

Liddell said he hears retailers talk about all sorts of reasons for closing, including a lack of business, tighter margins and staffing. “I talked to two clients, and the reason they’re going out of business is they can’t get employees. They can’t get loyal, long-term salespeople or delivery staff,” Liddell said.

If a retailer owns its own real estate, that’s a valuable asset, which could be the centerpiece of any potential retirement.

“One thing people should look at is the value of their real estate. Commercial real estate seems to be withstanding the economic downturn pretty well,” Liddell said. “We’ve had clients who sold their buildings for significantly more than they thought they could have got.”

Liddell said it’s important that retailers understand the right time to say goodbye. He said waiting too long can be expensive.

“The most important thing I would tell people is not to wait too long if their business is trending downward,” Liddell said. “What happens is it’s not unusual for a client to call us and have a potential for significant cash flow and profits to wait two or three years later. And they’ve ticked down on their letter of credit from the bank and borrowed against their letter of credit and expanded their debt, and what could have been a nice potful of money turns into half of what they could have received.”

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