With inflation still putting a big hurt on the consumer, and with shoppers focused on the steadily spiking costs for food, gas, and utilities, I’m talking about how business in the furniture industry is slowing while inventory is piling up.
Back in December of last year, I wrote a column for IHFRA that I ended up taking a lot of heat over. Keep in mind that this was at a time when orders were going through the roof and inventory was playing hide and seek with everyone.
In that column, I went out on a limb and warned the industry the day was coming where, almost in a blink of an eye, demand would dwindle while we went from no inventory to a sudden glut of it.
After the article was printed, I got a flurry of calls asking if I was deep in my cups. I responded that while I had been drinking, it had only been coffee.
So, here we are, some five months after I wrote that article, and I’ll be darned if the business isn’t slowing while inventory is piling up.
What follows is a portion of that article from last December.
“Now, far be it from me to preach doom and gloom, but as someone who has always tried to shoot straight, I think next year is going to be, at least at the outset, one heck of an uphill climb.
Earlier this month, the Department of Labor shared the sobering news that inflation in America hit a 39-year high. Adding fuel to that fire is another statistic that says consumer confidence is at a 10-year low. As a result, for many Americans, ‘tis the season to feel jolly’ has been replaced with ‘tis the season to feel broke.’
So, why am I making such a fuss over these two realities? Because, when mixed, I think they are pointing to even more challenging times for the home furnishings sector.
Here’s why I think this: In the best of times, furniture is a highly deferrable purchase. Human nature is such as consumers begin to get spooked by spiking prices for gas, food, apparel, and just about everything else, the tendency is to pull in their horns, even on necessities.
And if they do, they sure are not going to be throwing large sums of disposable income at home furnishings retailers, especially since so many did that a year or so ago when, due to the pandemic, many found themselves the recipients of larger unemployment benefits, mortgage forbearance, and three separate rounds of stimulus checks from Uncle Sam.
Right now, many of us in our sector are asleep at the wheel, dreaming about those thousands of containers filled with furniture that will sooner or later hit retailers’ stores. And in that dream, the boats keep coming and so do the orders… and retailers keep selling… and consumers just can’t get enough of our sofas, case goods, mattresses, home accents… and on and on.
But then, the alarm clock a.k.a. reality rudely wakes us from our reverie. And as we rub the sleep out of our eyes, we realize it was only a dream. Yes, the ships finally came in and yes, the retailers filled all those back orders but unlike in our dream, the day came when orders no longer exceeded demand.
In fact, in the not-too-distant future, we could wake up to the fact that the pipeline is now not only filled but it could also very well be backed up with excess inventory… lots, and lots of it. And if that happens, prices, which had finally caught up to where they had belonged for years, could easily slide downwards again.”
Believe me, it gives me no comfort in having called this one correctly. And speaking of comfort, if it makes you feel any better, pure-play home furnishings retailers are not the only sector taking it on the chin.
Don’t believe me? Ask the top guys at Walmart and Target. Each of those retail giants recently pointed to ongoing economic challenges due to record inflation, changes in consumer buying, and a subsequent glut of goods that these big boys are likely going to mark down to keep their heads above water.
That was confirmed in part last week when Brian Cornell, CEO of Target, told investors that the company, “ended up carrying too much inventory in several categories.”
Walmart also recently said it needs additional time to offload current levels of excess inventory.
With inflation still putting a big hurt on the consumer, and with shoppers focused on the steadily spiking costs for food, gas, and utilities, my call, at least for the near-term, is that we are still stuck in that mud… waiting for a tow truck.
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Precision Textiles recently acquired a 100,000-square-foot warehouse in Star, N.C., about 10 miles from its existing manufacturing facility in Troy, N.C. With the addition of the new site, the company will have a total of 260,000 square feet of production, distribution and warehousing space in the region. The new warehouse is being used to support its recently opened Troy facility, which began operations at the end of 2021.
Precision opened the 160,000-square-foot facility in Troy – its first domestic manufacturing facility outside of its New Jersey headquarters – last year. Since then, the company has created 100 jobs in the local area, and nearly doubled its needle-punch nonwovens production and fiber output.
In an effort to cut costs and create a more efficient product photography process, Phillips Collection has adopted the Aperture Platform by Outward, Inc. As the first major furniture manufacturer on the East Coast to utilize the Aperture Platform, Phillips Collection has seen a dramatic increase in productivity, which it attributes to the platform’s technological capabilities and ease of use.
“While most furniture companies spend anywhere between $200 and $500 on a single product shot, the Aperture Platform costs less than $10 per shot after all is said and done,” says Jason Phillips, vice president of marketing and sales at Phillips Collection. “Another benefit is that it takes shots in 20 different lighting settings, so afterward, I can make shadows look sharper or less distinct.”
For years, the company had two full-time photographers on staff that shot silos, and Phillips says it’s very expensive. And with 4,000 items of repeatable furniture, as well as also have a lot of one-of-a-kind items, Aperture saves time when every one of these needs to be photographed and put online. Streamlining the process enables Phillips Collection to focus its in-house photographers on more lifestyle and editorial photography, while silo costs are reduced by more than 90%.
Kuka Home has completed construction on a 775,000-square-foot dining and accent furnitureplant in Ho Chi Minh City, Vietnam. The addition, which began construction in March 2021, is the final phase of the 4.1 million-square-foot plant. Expected to employ some 3,000 workers over time, it will begin shipping this month. The company’s mix of dining and accent furniture includes accent chairs, dining chairs, barstools, ottomans, storage benches and home office.
Broad River Retail awarded $65,000 in scholarships to seven recipients through its Founders Scholarship Fund for the 2022-2023 academic school year. Scholarship amounts were awarded in different tiers: silver, gold, platinum, and diamond. The scholarship grants were up to $15,000 annually, divided equally between two semesters. The funds may be used for tuition, books, fees, and approved housing provided by the school.
“Memory Makers” and their family members who received scholarship funds include:
• Emelyne Henderson, Memory Maker Experience
• Melanie Maldonado, Retail Operations
• Laura Spencer, Retail Performance
• Douglas Innocenti, Jr., son of a Memory Maker
• Nicole Castoro, daughter of a Memory Maker
• Mikala Lymus, Inventory Control
• Cameron Flowers, son of a Memory Maker
The Founders Scholarship Fund was established to create opportunities for Memory Makers and students affiliated with Broad River Retail to create their best memories and to thrive without financial burden. BRR launched the Fund in 2019. The inaugural class of recipients for the 2019-2020 academic year had five winners awarded a total of $50,000 in scholarships.
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