From Home Furnishing Business
Editor's Note: We are getting what we prayed for, BUT…
The industry is not complaining about the windfall of consumer demand that has descended on both furniture retailers and manufacturers. What was thought to be “pent up” demand has continued as a renewed focus on the home by consumers as illustrated below
The major concern is how long will the demand continue. In our last issue we forecasted an increase of 5.9% over 2021 which we forecast to be a 18.8% increase over the previous year. However, furniture retailers don’t have the luxury to reflect because they must react to external factors that are challenging their ability to manage:
• Increasing prices at retail to offset the increased freight transportation cost with containers moving from $3,500/ container to north of $15,000 (read this month’s Statistically Speaking), not to mention inbound freight.
• Increased product cost from vendors because of their increase in imported raw material and labor.
• Personnel shortages. Even with increased wages of 15-20%, stores remain understaffed and some have had to close stores temporarily
• With furniture prices up 12%, will consumer demand continue even without increasing advertising back to normal? • While struggling to find merchandising and coping with unexpected inventory build impacting both warehouse space as well as cash flow
Believe me retailers are not complaining about the significant increase in net operating income. But watch the financial key performance to make sure your vital signs are in line with the industry.