This week, I am paying homage to an idea from Sesame Street, which used to highlight ‘the letter of the day.’ My version is ‘the word of the week.’
Today’s word is ‘Big.’ As in, our industry has big challenges. Or, the big are getting bigger.
Throw in big news, big changes ahead, big price hikes coming, and you pretty much sum up what’s going on in this crazy neighborhood we call Furnitureland.
Let me explain. Very recently, Ashley Furniture, the biggest of the big players in our sandbox, announced another round of price hikes. While certainly understandable, especially considering record-high inflation and skyrocketing costs for labor, raw materials, container costs, fuel, logistics, and the likes, many retailers, already living between the proverbial rock and the hard place, are saying with that news, the rock just got heavier and the hard place even harder.
From where I sit, we should anticipate another flurry of price hikes and surcharges from many of Ashley’s competitors.
I think the explanation from Ashely competitors is likely to go something like this: ‘If the biggest player in our segment is forced to raise prices, surely you can understand why we are.’
Frankly, that argument has legs. For as long as I have been reporting on the furniture segment, Ashley has led the pack in terms of efficiency, logistical acumen, manufacturing wizardry, and the like.
Now, on to the issue of our industry and its big problems. Pick one.
We are dealing with skyrocketing costs of everything, record inflation, a real shortage of good employees, a broken supply chain, and the like, all coming on the heels of a recent and noticeable dip in consumer demand for our products.
In attempts to counter all this big mess, bigger retailers and suppliers are taking steps to get bigger—and by extension—more powerful. Recent moves by BJ’s Wholesale Clubs and Ashley make up a growing roster of companies acquiring logistics and transportation companies as a means of giving them a leg up on competitors.
Assuming this consolidation and growth continues—and I suspect it will—the question then becomes what is the outlook for companies that don’t have the size or assets to follow suit?
In keeping with our word of the week, they may have big challenges. Let’s face it, bigger companies will typically demand (and typically receive) preferential treatment, preferred pricing, and preferred access to the product as it becomes available.
To me, the future has never been more unpredictable. Except for this—I am betting more big changes are headed our way.
I conducted an informal poll with a number of my retail friends, and I can tell you that what they want most from you right now (knowing they probably can’t get the product), is truthful, accurate information as close to real-time as possible.
To reiterate: next to the actual product, the most valuable asset you can share with them is accurate, real-time analysis. You can go to a myriad of content providers and find out what happened this morning.
What you will be hard-pressed to find is a source that will tell you what the news of day means to you and your business.
Our goal at The FAM is to be that trusted source.
Make no mistake: The road this year is going to be one tough and bumpy ride.
While no one can promise to repair every pothole on every road in Furnitureland, I will promise you that whether in my columns, or in my upcoming podcast called Under The Hood, I will call it like I see it with the goal of keeping you in the passing lane of the fast track.
Buckle up, hop in and come along for the ride.
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