2022 Promises Plenty And Not Enough

Experts see demand for home furnishings surging while supply remains stifled

Jerry Epperson predicts strong growth in home furnishings well into 2023. While he tempers his optimism with concerns about interest rates, logistics, labor shortages, and the disruptions of the pandemic, positivity prevails. “Resilient manufacturers, retailers, and designers have adopted innovative strategies to succeed and grow despite these daunting issues,” he says.

Epperson, managing director of Mann, Armistead & Epperson, Ltd., said three generations of consumers fuel the continuing need for home furnishings. “It starts with the 20- and 30-year-olds who are already here. We don’t need to wait for them to be born to anticipate their impact on sales. It continues with the 35- to 55-year-olds who are in their peak purchasing years. Even Boomers want new furniture to fit their downsized empty nests.”

“Consumer confidence is high, and they have never been wealthier.”

Ken Smith, the former managing partner of Smith Leonard, a High Point accounting and consulting firm, shared Epperson’s upbeat view. The Executive Summary to the October issue of his Furniture Insights® newsletter noted, “New orders in August were down 14% from August 2020, but that month showed a 51% increase over August 2019. We compared August 2021 to August 2019, and orders were up 30%.

Furniture Insights

“Year to date, new orders were up 29% [over 2020] and up 35% over the same period of 2019.”

“Pandemic-related concerns have created uncertainty for consumers,” said Jeff Harris, CEO, co-owner, and president of Furnitureland South in Jamestown, NC. “Ironically, their response has been to seek control over their homes and create sanctuaries that are no-judgment zones.”

In other words, uncertainty over the availability of goods seems to be driving demand for more goods. Retailers and designers are seeking solutions to help them keep pace with this rising demand.

“There are no easy answers to supply chain issues”

Seeking to compete with larger competitors who enjoy greater clout, smaller retailers are finding power in numbers. Buying groups like Furniture 1st are one way to level the playing field. “We had shared container programs going strong before the pandemic, but now we have a committed monthly amount that sells out in two to three days,” said CEO Andrew Kauffman.

In addition to sharing containers, buying group members benefit by sharing information. “Our members value networking the most,” said Kauffman. “During COVID, they shared ideas and asked questions at monthly town hall meetings. At Market, they communicate directly through a dedicated app to find sources for extra capacity.”

Most designers operate as solopreneurs, always seeking to streamline the buying process to have more creative time with clients. This is particularly difficult with delivery delays. Seattle-area designer Shannon Adamson credits Designer Trade Service for helping her stay on top of the orders in her supply chain. “I get automatic updates, so I don’t have to track deliveries. It’s as if I have a brilliant assistant managing all my business details.”

“Ultimately, those with the most competent supply chain teams will win.”

For manufacturers, “Open, collaborative communication with their retail partners is crucial in this unprecedented period of supply chain disruptions and escalating ocean freight rates,” said John Iasiello, whose industry experience includes leadership positions with A.R.T., Emerald Home Furnishings, and Riverside.

In addition, Iasiello notes that longer lead times call for longer-range planning by buyers. “Manufacturers must emphasize the need to program orders due to increased lead times. It’s a fact that the retailers who extend planning horizons can gain market share. A greater discipline and focus on keeping best sellers in stock is critical.”

Everyone we spoke with agreed that Spring Market will provide an excellent opportunity to have the face-to-face meetings that are critical to keeping open the lines of communication that will help us address our constricted supply lines. We will also get our first opportunity to assess the economic strength of the remainder of 2022 as Jerry Epperson presents his “The State of the Industry” report in the HFA Retail Resource Center Seminar Room on Sunday, April 3, at 9am. We look forward to seeing you April 2-6!