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Is the ‘Year of Dragon’ Driving a Home Furnishings Boom?

Thursday, 5 Apr 2012 | 2:46 PM ET
Shopping for bedding
Dan Dalton | Digital Vision | Getty Images
Shopping for bedding

The year of the Dragon is considered to be the luckiest of the Chinese lunar years, with many couples rushing to marry or have a child during this auspicious time. But the does the year also herald a home furnishing boom?

Perhaps.

International Business Machines is forecasting a surge in demand for home furnishings in the second quarter of this year. Its forecast calls for in-store sales of home furnishings to rise nearly 8 percent to $23.22 billion and online sales to surge 28.4 percent. Combined, the home furnishings market should grow 16.6 percent in the second quarter.

Among the reasons cited is the effect of the Chinese Year of the Dragon, which began on Feb. 4.

One factor is the desire to wed or have a child during this time, said Jill Puleri, global retail leader for IBM Global Business Services. These life-changing events often correspond with purchases of new homes and furniture.

For doubters, the last Year of the Dragon, which occurred 12 years ago, was a banner year for sales of home goods. Growth that year ranked the third highest in a 21-year period, according to John Squire, director of digital marketing and analytics.

There are a number of other factors, less reliant on lunar calendars, however, that should support this emerging trend.

First, consumers are feeling more comfortable about spendingin general, and since some consumers may feel it is unlikely they will move out of their home any time soon, they are looking to freshen up their surroundings.

Don’t expect shoppers to release this pent-up demand by buying large pieces of furniture, though. Instead, think about lower-ticket items such as linens, throw pillows, small appliances, and accent pieces, such as lamps.

Essentially, the concept of “accessorizing” is moving from the apparel market to home furnishings sector. Last holiday season, for example, consumers were purchasing jewelryto spruce up their outfits. Now, they are doing the same thing with home décor, Squire said.

One factor is consumers are keeping items longer. Plus, with the average home size getting smaller and rental activity increasing, some consumers may have to downsize their décor.

Look for retailers such as Bed, Bath & Beyond , as well as department stores such asMacy’s, to benefit from the trend, Puleri said.

The increase is a pretty substantial one from where it’s been in the recent past.

“One of the things we’ve seen is that the category has taken a back seat to others,” Squire said.

Shoppers have been more frugal and cautious with their money, and they have often traded from one category to another, as they worked to stay within their budget and prioritize their spending.

Now that consumers may be at the point to release this demand, there is an opportunity for retailers to use what they know about their customer to reach out to consumers that may be ready to buy, according to Squire.

If the signs of life in the housing marketpan out to be the start of a turnaround, all the better for the sector.

Questions? Comments? Email us at consumernation@cnbc.com. Follow Christina Cheddar Berk on Twitter @ccheddarberk.

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