How Consumer Demand Will Change Furniture Retail After The Pandemic
“Will this last forever”? Consumer demand remains strong. The housing market shows no sign of weakening. The focus on the “home” as the center point of life continues – seemingly also after the pandemic. Furniture retailers definitely don’t complain about interest and sales. And with heavy delays and a less-than-solid supply chain, consumers don’t have a choice but to be patient. Everybody seems to be sitting in the same boat. The consumers might soon be singing a different tune, though, cautions Ray Allegrezza. Ray is an industry veteran and the executive director of the International Home Furnishings Representatives Association (IHFRA).
In his two most recent blog posts at Home News Now, Ray focused on two essential elements. The first one is consumer behavior after the pandemic. The second post takes a closer look at China and Vietnam with an emphasis on export numbers and trade investigations. He calls it a wake-up call. In one of our recent posts, we highlighted how important it is to build client profiles. Customer retention will become a key element of any retailer’s bottom line. This high demand will (most likely) not last forever. Time to get ready for what’s ahead.
Guest Post By Ray Allegrezza
By The Time This Pandemic Is Over Will The Consumer Be Singing A Different Tune?
Last week, while I was listening to the radio, I think I stumbled across what could be the current theme song for the furniture industry. The tune was from an artist named Olivia Lane and the song is called ‘So good it hurts.’ One could easily make the case that her tune sums up how many of us are feeling about business lately — It is so good that it hurts. And the fact that orders continue to ridiculously outpace our ability to satisfy them has suppliers, retailers and reps all singing the blues, but loving the concept.
Based on conversations with members of each community, I get the feeling that they see consumers patiently waiting in line (for weeks or maybe months) to snag that new sofa, mattress or dining set. Since I am on a musical role, let me throw one more song at you … this one from Sam Hunt called ‘Nothing Lasts Forever.’
While Sam may be crooning about love, I am here to sing what I hope is a wake-up call. While I don’t want to rain on anyone’s parade, or unplug the radio, I do want to express my concern that by the time we get product flowing again, consumers may have slipped out of line in search of the next new thing. Sure, consumers are smart and savvy, but they can be fickle. Always on the prowl for the next new thing….and armed with a few extra bucks thanks to Uncle Sam… we should not assume that they will be there patiently waiting for us once we tighten the weak links in our historically weak supply chain.
But don’t take it personally.
From what I’ve been reading and hearing, they may opt to skip shopping for a bit altogether.
Here’s one reason why: A very recent study by First Insight, a leading research team, found that 60% of the 1,000 shoppers polled said that new spikes in Covid-19 may take in-store shopping off their “to-do” lists. The study also found that just under 60% of the respondents said they feel unsafe working with an in-store sales associate.
So, what to do?
Clearly, none of us can make the pandemic go away. But since the pandemic is an equal-opportunity disrupter, every other disposable-income purchase (with the exception of absolute necessity items) is facing the same challenge — garnering the consumer’s share of mind…and by extension…their share of spend. At the end of the day, it is up to each of us, whether we are suppliers, retailers or reps, to sing our own unique song that makes our respective customers fall in love with us.
A Twilight Zone Moment for the Furniture Industry
Every day, I probably get a dozen or so calls a day from reps, suppliers and retailers wanting to talk about the business…and specifically, where we think it may be headed.
In the spirit of full disclosure, while I enjoy speaking with my peers, I want to be the first to admit that my crystal ball broke years ago. And if truth be told, even if I had a crystal ball, I doubt that it would give me a clear peek into the future. Here’s why: In my 30+ years reporting on this industry, I have never seen a more perfect, perfect storm.
The Pandemic Isn’t To Blame For Everything
I realize that the pandemic has turned the world…and our business…upside down, but even before we ever heard about Covid-19, our sector was barreling down a road fraught with potholes and speed bumps in the form of price hikes in raw materials, paradigm shifts in consumer shopping preferences, the ongoing growth of online commerce, shifts and consolidation at both manufacturing and retail, tariff issues and so much more.
Again, and that was before the pandemic reared its ugly head.
What’s occurred since the pandemic reminds me of one of my favorite episodes of The Twilight Zone. The episode, starring Burgess Meredith, was called Time Enough At Last, and is a study in irony.
A Study in Irony
The story is about a mild-mannered bank teller who only wants to spend every waking moment reading classic literature. A nuclear blast wipes out humanity, but the teller, who was in the bank vault at lunch reading, is spared. He finds his way to what is left of his town’s library and is thrilled to see seemingly endless piles of books. But the teller, who can’t see without his glasses, stumbles, steps on and ruins his glasses and is condemned to spend the rest of his life unable to see any of the thousands of books all around him.
In our case, the cruel irony right now is that we have far more orders than we have furniture to fill those orders.
With pockets lined with stimulus money and after months stuck at home, consumers are buying furniture with both hands. But with Covid-19 still ripping supply chains in pieces, supply simply can’t match demand and I don’t see that changing anytime soon. And if that alone did not make things interesting, keep in mind Chinese New Year was just around the corner and you know that always further rattles the supply chain.
And speaking of China, they are struggling to satisfy consumption in their own country. So, if they begin to divert exported goods and opt to sell them in country, look for further empty shelves here.
China and Vietnam: Two Different Sets of Issues
To give you an idea of China’s clout, the country exported close to $540 billion in goods and services back in 2010, based on statistics from the Office of U.S. Trade Representatives. And while not topping the list, furniture and bedding in that year accounted for a whopping $35 billion. But as they say during those late-night infomercials, “But wait…there’s more.” In our case, the “more” could be two issues brewing regarding Vietnam.
A recent press release from the Office of the U.S. Trade Representatives said that under instruction from President Trump, the office is investigating “two significant issues with respect to Vietnam.
- “The USTR will investigate Vietnam’s acts, policies, and practices related to the import and use of timber that is illegally harvested or traded, and will also investigate Vietnam’s acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to U.S. commerce.
- “USTR will conduct the investigation under Section 301 of the 1974 Trade Act. As part of its investigation on currency undervaluation, USTR will consult with the Department of the Treasury as to issues of currency valuation and exchange rate policy.”
With my crystal ball defunct, if asked to read the tea leaves, my best guess considering all of the above is that 2021 will be a year of unprecedented opportunities and unprecedented challenges.