Supply Chain and Inventory Issues – How Home Furnishings Retailers Adapt
In the last 12+ months, we have experienced unprecedented supply chain and inventory issues. They have dramatically affected the furniture industry. A combination of closed factories, backed-up ports, container scarcity, and labor shortages took its toll on the industry. Returns, cancellations, and even chargebacks are becoming a real (cashflow) problem.
In this article, we will discuss what’s causing this and what furniture retailers can do to ensure that they are delivering not only the furniture requested by their customers but also exceptional customer service during this time. Continue reading to learn more!
Supply Chain Issues Impacting the Inventory Situation
1) Congested ports in California
One of the main supply chain problems currently backing up the furniture retail industry is the congestion at the ports in California. In the second half of 2020, almost 1 million shipments were processed through the ports in California, which was 50% more than what occurred during the first half of the year. In addition, the Port of Los Angeles reports taking 94% more imports than the previous year. (Source)
With the increase in demand in the furniture industry, it’s easy to see how the ports could become overwhelmed. However, that is not an excuse that customers are likely to accept.
2) Limited amount of trucks and drivers
As the demand for furniture increased, the number of available drivers (and thus trucks) declined. This makes the current situation that much more dire. As consumers continue to order desks, sofas, beds, and other furniture, manufacturers from overseas continue to produce and ship those products. However, there just aren’t enough trucks and – more importantly – drivers available to deliver these products from the port.
3) Container Prices & More Shutdowns
Container prices are continuing to rise, and retailers are beginning to push back. According to Home News Now, some retailers are finally taking a pass on certain containers when the quote is too high, while others have more generally moved to limit how much container business they do.
The news just doesn’t seem to be getting any better, it’s the end of July 2021 and now there have been significant halts in production due to the recent COVID-19 shutdown in Vietnam. Vietnam recently bypassed China as the leading sourcer/importer for U.S. furniture.
On behalf of members and the industry, the HFA (Home Furnishings Association) has reached out to President Biden and the White House to seek help with the broken supply chain. Read the letter written by HFA CEO, Mark Schumacher.
Solutions for Furniture Retailers – How Others Combat Supply Chain Issues
1) Focus on customer service and create innovative solutions
Some furniture retailers have come up with creative solutions to satisfy their customers through this difficult time. With the supply chain and inventory issues, everyone is experiencing, customer service must become the main focus.
Communication is Key
You may not be able to control the problem at the ports, but you can continue to communicate and provide your customers with updates. If you keep your customers in the loop on their order status and progress, they are less likely to cancel an order. They are also more likely to become a return customer thanks to the positive experience.
Give Them Something Tangible
Some retailers are going the extra mile to ensure customer satisfaction. One furniture store has even begun to provide its customers with rental furniture while they are waiting on their delivery. For example, if a consumer purchases a sofa that is 8-12 weeks out, the store provides a rental sofa for the consumer to use during the lead time. The consumer still physically receives an item to help hold them into the sale.
Creative Inventory Sourcing
Some store owners are struggling to get their hands on ANY products or inventory. One persevering retailer decided to take their own vehicles and drive around to physically find products to stock their showroom. Whether they were buying overstock from other independent furniture stores or persuading major bulk retailers and department stores to sell their stock at a discount, this store owner never gave up! If there is one thing we’ve learned during the past year it’s – furniture retailers are willing to do what it takes to care for their business and staff.
Another creative approach is to buy up DTC (direct-to-consumer) return items. As consumers order from e-commerce platforms such as Amazon, Wayfair, or Overstock, items sometimes don’t fit. One savvy retailer advertised on social media that his trucks would pick up items that otherwise end up in a landfill. His delivery crew is picking up items directly from people’s front door. And in some cases, they turn around and sell it again on the same day.
2) Focus on offering American-made products
The supply chain problem is exacerbated by geographical distance. Focusing on American-made products can help retailers find readily available products. Open yourself up to working with domestic manufacturers, such as Vaughan Bassett Furniture. This will help you get your customers the furniture they are looking for in a (more) timely manner.
U.S. retailers have also been shifting their sourcing to neighboring countries, Mexico and Canada. International Furniture Direct (IFD) is a case goods manufacturer with two factories in Mexico and four domestic warehouses spread across the United States. Items arrive on trucks and there is no need for scarce (and therefore expensive) shipping containers.
3) Try offering a larger variety of similar products from different brands
When you find that popular pieces are on backorder, try finding similar pieces from different manufacturers. This gives your customers more variety to choose from. And this ensures that they experience fewer problems with expected delivery dates.
Diversify your catalog and let inventory be the driver. Increase the number of brands you carry, but reduce the number of SKUs per brand. Focus on specific collections or product lines that have a healthy amount of stock. Focusing on a group of SKUs from each brand helps you build a reliable custom catalog of readily available products.
Some retailers are taking it a step further and reduce their SKU count overall. They do this by focusing on a handful of items for each category. For example, they are buying in-depth for five to seven different collections and focus on selling those.
4) Carry ready-to-assemble (RTA) furniture and direct-to-consumer (DTC) options
These days, consumers are increasingly open to the idea of ready-to-assemble (RTA) furniture. These items may be more readily available than traditional choices. The ready-to-assemble segment has grown over the past 2 years as companies have taken steps to solidify their presence in the category and expand into domestic manufacturing. Flatpack shipping (parcel via UPS or FedEx) is easier than LTL shipments. Offering direct-to-customer (DTC) options may also help minimize delivery time since the products don’t have to be shipped to the store first. Homestyles is a dedicated DTC brand by Flexsteel. A majority of their product line is RTA and they ship in flat packs for damage-free shipping and easy assembly.
RTA is not limited to smaller DTC brands. The world’s largest furniture manufacturer Ashley Furniture recently acquired an entire production facility for their RTA line. And their “Direct Express” direct-to-consumer shipping program consists of thousands of SKUs. Assembly videos shown at the point of purchase (online and offline) help to ease the concern that installation might be too complex.
Expand Your Inventory With the Endless Aisle Kiosk From Wondersign
Furniture retailers from all over the country have been searching for solutions. They’re looking for ways they can provide their customers with quality products and reasonable delivery times. The Wondersign catalog kiosk app is an ‘endless aisle’ solution. It allows furniture retailers to visualize their custom catalog of products. This expands the selection that is physically displayed in their showroom. Wondersign also gives retailers the power to control their selection based on what is in stock or coming soon. As the platform is consuming both manufacturer inventory and the retailer’s own showroom & warehouse inventories in real-time.
Whether you are looking to offer more American-made furniture, near-shore options, RTA items, or a range of DTC products, Wondersign has partnered with 45+ manufacturers and brands that cover it all – from furniture to bedding, mattresses, and accessories.
A Wondersign customer located in Denver, CO has been relying on their kiosk for nearly 90% of their sales. They were having trouble getting stock for their sales floor. So they have focused on only ordering what customers purchased through special orders. Their first location placed a kiosk and the monthly sales increased to $200,000! Compared to their other location (without a kiosk), that remains under $50,000 a month, that’s 4x the revenue.
Learn more about how we can help your furniture business overcome supply chain and inventory issues. Reach out to a member of our team today.