Monthly Issue
From Home Furnishing Business
Editor’s Note: Don’t Throw the Baby Out with the Bath Water
July 24,
2024 by HFBusiness Staff in Business Strategy, Industry 
by Bob George,
I realize that the good old days are hard to forget—specifically those years when net operating income almost tripled from 5.5%* of total revenue (2018) to 14.3%* in 2021. Yes, it was scary in 2019, and when net operating income fell to 4.4%* (2020), then we were off to the races.
However, now it is not the heady days of the pandemic, but at 11.5%*, it is still double the performance of 2018. While the industry is stagnant, there are some signs of recovery. Traditional furniture retailers have maintained the gross profit after the pandemic, 47.2% (2018) to 51.1% (2023). The next cost cutting target is labor across the operation.
This component held at 18.19% during the pandemic. Proceed with caution. Management should attempt to control the expense as inflation drives labor costs upward. However, the strategic strength traditional retailers have is SERVICE against the emerging competition of home improvement, mass merchants, Internet, and so on. The consumer wants service, whether it is design assistance from the retail sales associate or dependable delivery and scheduling. Carefully evaluate going outside your organization.
Short term savings may not pay long term dividends. And another thought, could you be losing that employee that will make you successful, as those highlighted in this issue? PROCEED WITH CAUTION.
