Views:0 Author:Site Editor Publish Time: 2021-02-03 Origin:Site
There is a scourge spreading across the industry that threatens to blunt the momentum of renewed consumer interest in all things home. Its effects are not mitigated by vaccination or subject to state and local decisions to close businesses or keep them open. Unlike the pandemic, its impact will not vary from state to state or market to market.
This affliction is not new; it challenged the industry as recently as just two short years ago.
I’m speaking, of course, about rising costs and price increases. One of the most impactful right now is freight, with container rates in the $1,300 to $1,500 range to California and nearly double that to New York ports. At a time when manufacturers are looking to ramp up production overseas and speed that production to eager U.S. consumers, the impact of these steadily rising costs has made their efforts more costly and difficult.
In the context of other rising costs, it is increasingly likely, if not already underway, that retailers will be seeing price increases passed along in the coming weeks and months. It seems equally inevitable that consumers will be confronted with similarly increased prices.
This is not a bad thing.
For too long, the furniture industry has been victim of reverse inflation. No other industry still sells its products at the same price today as when the Dodge Aries was America’s hot vehicle choice. For those too young to get the reference … it was the early 1980s.
Don’t get me wrong. No one wants to raise prices: not suppliers, not manufacturers, not retailers. But if there was ever an environment in which the impact of raised prices could be minimized, this is it. Time and again I’ve heard from retailers in recent months that it’s less about what’s hot than what’s available.
With demand being what it is, with many younger consumers coming into the market for the first time, and with others coming back for the first time in some years, price sensitivity is likely to be less an issue now that at any time in recent years.
These are not issues that are going away anytime soon. They will certainly define the first half and will likely play a key role in shaping the year’s performance overall. For some, they will represent an existential challenge, for others a major opportunity.
Our staff is currently engaged with the industry to uncover the strategies companies are employing to deal with issues related both to rising costs and to enhancing capacity and eliminating backlogs. As these issues continue to challenge furniture retailers, we are reaching out for those strategies as well.
We welcome those who are willing to share their stories and challenges and those who believe they are positioned to maximize the emerging opportunities. We also welcome opinions on all sides of these key issues. If you would like to share your story or your opinion, please reach out.