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From Home Furnishing Business

Editors Note: Ready-Aim-Fire

by, Bob George

Or is it “FIRE-READY-AIM?” As the industry remains in its stagnant state decreasing <.81%> Q4 over Q3 and <.95%> over the same quarter last year, both manufacturers and retailers feel a need to do something even if it is WRONG. Focus on the last word.

In the eighties, management gurus led by Tom Peters, as documented by his book Search of Excellence, stresses a strategy with a “bias for action,” a preference for doing something, anything, rather than sending a question through cycles of analysis and committee reports. The results were good companies on the dust heaps of history. Our industry has many examples starting with manufacturers: Broyhill, Lane, furniture brands and continuing with retailers: Levitz, Wickes and more recently Klaussner, Art Van, Mitchell Gold and more.

It is difficult to watch as incoming manufacturers’ orders significantly fluctuate month-to-month impacting the ability to forecast production six months out. Exacerbating this is the long standing practice that retailers can cancel orders with little recourse. This, added to the manufacturers concern about the recent bankruptcies of industry icons such as RoomPlace and Ruby Gordon, creates a sense of something needs to be done. Likewise, retailers weekly see the very real downward trend of consumer traffic to the stores – down 14% 2019 – 2023. While revenue for the same period is up 10% (top 50% quartile), with net income remaining in the upper single digits due to increase in average unit prices and the impact of volume variances, it is still troubling.

Translating “FIRE-READY-AIM” to what to do will require “STRATEGY-TACTICAL PLANS-EXECUTE.” The first part of strategy is to address the unique trends after the pandemic, specifically: Industry Trends
The GENERATIONAL TRANSITION from the Baby Boomers to Generation X to Millennials (See our feature story from the Nov/Dec 2023 issue.)
NEW COMPETITION from new distribution channels that offer a different retail experience attracting the incoming generations (See the feature story in this issue.)
CHANGING STYLE PREFERENCE necessitating a balancing of both the retailer and manufacturer merchandising assortment (See our feature story from the Jan/Feb 2024 issue.)
• The CHANGING BUSINESS MODEL from independent furniture retailer to direct to consumer and everything in between; What will define success in the next decade?
What is Your Specific Strategy for Each?
It is not a time to base your strategy on qualitative facts (opinions), but quantitative facts (data). Unfortunately, our industry has been oriented to past facts – what worked before. It is not the time to roll the dice. Watch for the incoming.

 



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