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Consumer Confidence Opens the Door for Retail Sales

Steadily growing appetites for big-ticket items like cars and furniture have recently bolstered revenue for some of the largest local private companies, partly spurred by pent-up demand after years of consumer and corporate belt-tightening.

They include auto dealers Drew Ford (No. 14), and K Motors Inc., doing business as Toyota of El Cajon (No. 17), as well as furniture sellers Jerome’s Furniture (No. 18), bkm OfficeWorks (No. 28), and Parron Hall Office Interiors (No. 36).

Sales for these and most other retail-oriented companies have yet to return to pre-recession boom levels. However, Jerome’s Furniture has recently been expanding its footprint into the Inland Empire and witnessing rising sales, which operators credit at least in part to an improving housing market and consumer confidence.

“There are two components we look at — how the economy is actually doing, and how people feel about the economy,” said Lee Goodman, president and CEO of Jerome’s. “The consumer is looking at things like ‘how do I feel about my current job, or my ability to get a new job,’ and it all factors in.”

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Time to Grow

Goodman said sales recently have been driven by a combination of people replacing older furniture, doing long-delayed home remodels, and moving into new homes. The trends have encouraged the company to expand into the Inland Empire, most recently debuting in Rancho Cucamonga, and it is scouting sites in Orange County.

San Diego-based Jerome’s, in business for nearly 60 years and now operating eight stores, saw overall revenue rise 7 percent in 2011 over the prior year. To date, Goodman said same-store sales in 2012 are up approximately 5 percent from the first nine months of 2011, with overall sales up 10 percent and the month of September expected to post a 12 percent improvement from a year ago.

“We feel that a good September is a signal of a good fourth quarter ahead,” Goodman said.

OfficeWorks and Parron Hall derive sales primarily from customers in the government, corporate, education and health-care sectors.

Jim Herr, the second-generation president and owner of Parron Hall Office Interiors in San Diego, said the 65-year-old company in recent years has provided office furniture and related items primarily to federal government agencies doing move-ins, expansions and space contractions, although medical offices and hospitals have recently been a source of rising business.

A large part of its government business in the past decade has been for local U.S. Navy and Marine Corps offices and bases. Longtime relationships with those local military sites have led to furniture contracts at bases throughout the nation and world. For instance, it recently outfitted a military base in Okinawa, Japan.

Because of its strong slate of approved military contracts in the pipeline, Herr said the company should have good sales momentum for the next few years, even if the U.S. defense budget undergoes cuts next year.

“The military contacts we’ve made locally and nationally, and in those other markets around the world, have been really important in getting us through those times when the economy was tough and there wasn’t a lot of spending going on anywhere,” said Herr, whose company last year saw revenue rise 4 percent over 2010.

Getting Them Into New Cars

Sellers across most brands have recently been enjoying a rebound in local auto sales. According to the trade group New Car Dealers Association San Diego County, local dealerships saw revenue in 2011 — from new and used vehicle sales, parts and services — reach a record of nearly $7 billion, up 12 percent from the prior year.

That included a 10.7 percent year-over-year improvement in new-vehicle sales countywide.

William Drew, president and general manager of Drew Ford in La Mesa, with a history dating back to 1927, said that dealership’s sales are on track this year for a 6.1 percent gain over 2011, following an 8 percent rise last year over 2010. He said sales countywide are likely to remain strong for at least the next 12 to 15 months.

Drew said still-tight household budgets are spurring buyers to seek out more fuel-efficient models of vehicles like the popular Focus and Fusion, so owners can trim gasoline bills. Simple pent-up consumer demand, after years of putting off trade-ins, is also driving recent showroom traffic.

“We’re still seeing people turn in cars with 140,000, or 150,000 or 180,000 miles on the odometer,” Drew said. “That’s possible nowadays because of the improving quality of the vehicles.”

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