Wednesday, January 9, 2013

Furniture Stores: Are They Always Going Out of Business?

A classic furniture store marketing approach is to hold “going out of business” sales to attract furniture shoppers hoping to find bargains amidst the ruin of a failing business. More than one observant shopper has noticed perpetual going out of business sales at certain locations, leading them to wonder if the owners of the store ever intended to close their doors for good. But is the “always going out of business” cliché true?

Oregon, relative to the size of its economy, is the leader in dedicated furniture stores employment in the west. Oregon’s concentration of employment at furniture stores is 9 percent above the national average. Washington and California, despite employing more people in their larger furniture stores industries, have concentrations 18 percent and 8 percent below the national average. Idaho’s employment concentration is slightly below the national average, while Nevada’s concentration is equal to the national average.

Furniture stores, like any industry related to the housing market, were hit especially hard by the recession. The number of furniture stores in Oregon peaked at 435 in early 2008. Two years later there were 365 furniture stores left and the number of stores remained close to that level through 2011, before dropping another dozen stores in early 2012. The number of people working in Oregon’s furniture stores reached a high of 4,353 in December 2007 before store closures and cutbacks whittled the number down to just 2,802 in early 2012.

Just how prevalent perpetual going out of businesses sales were at Oregon’s furniture stores is unknown, but the marketing tactic is now history. Since 2008, it has been illegal to conduct an endless going out of business sale, also known as a “sham sale” in Oregon. Any business that holds or advertises a going out of business sale must file a notice of the sale with the Secretary of State, unless the sale is conducted as part of a court-ordered bankruptcy or receivership. The rule applies to all businesses. Since it took effect, 35 furniture stores have filed notices of intent to conduct going out of business sales in Oregon

Read the full article, written by State Employment Economist Nick Beleiciks, in January's issue of Oregon Labor Trends.

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