Pandemic-driven furniture demand brings record sales, 'decimated' supply chain, long waits
If finding a can of Lysol has been challenging for you, try buying that sofa you spotted in a showroom.
It might be as late as August before you can receive it, based on visits to stores in Southwest Florida. Even a simple side table may not arrive until April.
This all follows a "crazy" 2020 rollercoaster ride for the industry that Home Furnishings Association CEO Mark Schumacher also described as "absolutely unprecedented."
First came some fast and furious building, buying and renovating as newcomers flocked here to avoid the tighter quarters of big city living.
Then people needed to furnish those new or newly renovated homes, which sent customers flocking to stores or to online buying, some boosted by stimulus checks.
But while companies cashed in bigly during the final quarter of 2020 as compared to a year ago and even set records, they didn't bring in as much as they could have.
"We've never seen this type of a surge," Schumacher said. "The biggest frustration for home furnishing retailers right now, is business is good. And they wonder how much better could it be if we had all the product available we needed."
Supply chain obstacles have led to shortages. Prior to coronavirus, retailers already had been dealing with hurdles related to an intended cost-savings move that shifted some production to Vietnam.
Other factors have played a role, such as the brief closings of plants in the early stages of the COVID-19 spread and the tariffs that came under former President Trump.
"It really is the domino," Schumacher said. "You have countries like Vietnam, when they had factory shutdowns early on in this crisis. They spooled back up, and they're cranking out product that is sitting over there because there aren't enough containers available to bring it over to the U.S. And once it gets here, the ports are all backed up because there's so much product, and then you have a lack of trucks and trains to transport it and get it out to retailers.
"It's kind of clogged up all the way through the system. Some of the lead times right now are just mind-blowing. There are stores that are writing sales for product that won't be in the customer's hands for six months."
Even though his Southwest Florida-based enterprise set a historic high in 2020 exceeding $55 million in sales, CEO Daniel Lubner of Clive Daniel Home is well aware of the challenges, saying he has "never seen supply so low."
"The really, really, really, just crazy interesting thing (is) I've never seen demand so high," Lubner said. "The supply chain is decimated. It's like when you try to take the headphones out of the junk drawer, and they're all tangled together. It's going to take months to untangle. Doesn't matter if you're talking about appliances or motor parts or sofas, the supply chain, in general, has never been this disrupted."
Ramifications, obstruction and hackers
Some of the chaos has sent shoppers to the Internet, as part of a continuing trend. Home-furnishing entities saw web transactions escalate by 66 percent year over year through November, according to 1010data, a group that analyzes consumer habits. E-tailer Wayfair made money for the first time, posting an 84% revenue gain in the second quarter.
But the digital world is far from immune.
That's been the experience of Naples-based Anaya Home, which sells its furniture and Indian-influenced products online and through a network of brick-and-mortar partners around Florida and North America. It's been maneuvering around the falling boulders, and its work was honored this month by HGTV as one of the top trends of 2021.
"We saw delays of several weeks at the Port of New York when trying to move the containers from the ship to the rail yard due to unprecedented levels of imports and congestion. We then experienced additional delays on the rail line," said owner Jonathan Call. "Raw materials were not available for some of our pieces due to border closures in India (because of the pandemic.). I am proud of our logistics team as they worked hard to keep things moving and were resourceful in rerouting the containers to different ports."
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Hackers added to the industry's complications, as in the case of a cyberattack on Steelcase, North America's largest furniture contract manufacturer, that stalled its global operations for two weeks toward the end of the year. Delaying $60 million in shipments, it noted the halt contributed to a 35% drop in revenue in its most recent quarterly reports.
With a population accustomed to instant gratification, all these impediments have created opportunity, such as thrift venues that "can provide immediate fulfillment of the customer’s needs," said James Shedden, St. Matthew's House director of retail for a half-dozen Southwest Florida locations. "Our store sales have risen by 7% over last year. We have heard that some of the higher-end furniture stores are delayed four to six months in order fulfillment."
A mix of frustration and understanding is reflected on Facebook, in passing conversations in a furniture parking lot or anywhere people can safely interact.
"I wanted to purchase a desk," said Ken Lazier, a technology manager. "They said they are 20 weeks out, if then."
But that hasn't slowed everyone from buying the latest products, whether for a newly purchased or current home. For example, Modsy, the virtual interior design platform, found that 69% of Americans engaged in a home redesign project last year.
"I ordered furniture in the beginning of December and now being told April delivery," real estate associate Maria Clifford said. "I was given a heads up when I ordered. Plus they're not charging me until I actually get the pieces."
Schumacher shared his theory about the consumer appetite:
"When things reopened, I don't think any of us could have predicted the pent-up demand. Sales right out of the gate, even with restrictions in stores and appointment-only situations for a lot of retailers, sales went through the roof because, guess what, everybody spent those weeks working from home, looking around and realizing they had a lot of needs when it came to home furnishings, whether it was for their home office, whether it was in other areas of the house."
That sparked "incredible" demand, Schumacher said.
But how long would it last?
"Everybody kind of felt that, wow, this is going to hit big and then we're going to ease off, and we'll see what happens," he said. "We were wrong. Even with huge gaps in the supply chain and a lack of inventory, most retailers in the home furnishings space, once they really starting gearing up and (getting) back in business, had record Julys, record Augusts, record Septembers to where we got to the end of the year, and a majority of retailers who were closed for a number of weeks early in the year finished 2020 up, from the previous year, which is mind-blowing because in some cases, their business was off an instant 20% just when everything closed."
Officially, furniture sales are in the midst of a five-month streak of year-over-year increases, with December bringing in $10.1 billion, according to the U.S. Department of Commerce.
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Lessons learned in the aftermath of 2017's devastating Hurricane Irma helped Lubner and Clive Daniel, which is ranked among the Top 90 nationally in industry revenues, prevent some of what competitors are facing.
"We're sort of always ready for the crazy scenario of what happens if we can't function for a month or two, based on past experiences we've had," Lubner said. "We put together what we called an Irma-geddon playbook" that included paying staff members during the lockdown.
Inspired by that same pledge four years ago, employees showed up for work anyway and with no electricity or deliveries to make, they ended up happily assisting colleagues, clients and residents in the streets of Naples while on the job. "We were literally taking down hurricane shutters for strangers. Just driving around town," Lubner said.
Among other efforts, preparation this time translated into renovations of showrooms and other areas and a new website with a focus on its main Tamiami Trail store north of Coastland Center and another spot in Boca Raton.
"We were able to do a couple of logistics moves. We expanded into a new warehouse. That was a great way for me to keep my warehouse guys socially distanced, safe and working," Lubner said. "You would never be able to do any of the things I described in March, in the middle of season. But we, for the first time ever, had the luxury of time on our side, and we were able to do these projects."
So while March and April were "almost non-existent, as far as business," he said it got better: "In May, we saw things snap back in a hurry, and that's when we sort of saw the writing on the wall that the rest of the year was going to be a pretty special year."
With the "Irma-geddon" strategy in hand and realizing what they were observing and what was coming despite the rough early patch, the company aggressively invested as illustrated in an example Lubner provided in working with suppliers.
"If I normally have a bed on the floor and I sell it quite well, because I have the two showrooms, I might have three or four of them in the warehouse," Lubner said, but he knew in this new era he had to abandon that approach. "If they had 20 that they were making, I bought 20. If they had 30, I bought 30. We put the pedal to the metal and bought as much inventory as we could possibly get because we thought there was going to be shortfalls. I didn't think it was going to be as bad as it is right now."
And that's how his furniture and interior design firm might be sitting pretty as compared to large chains, where that number "gets them through Tuesday at 2 o'clock (but) 20 beds for me gets me through any crunch that we're going to see."
But if Lubner has any questions about the start of 2021 and the future, he can look to another current presence in the Design District near downtown he calls CDH-2, which targets independent designers and "is not a scratch and dent store. It's for that special order or for that overstock or that one of a kind piece that I can't put on the floor."
"This is just for the bubble of furniture we don't know what to do with," he said. "By the 17th, we were already having a record month."
2021: New SWFL stores, expansion
But there's other reasons Lubner said he feels "pretty bullish" about this year:
"We are a hybrid company. Our core competency is interior design. We happened to have retail storerooms, and we happened to have inventory so we can do that as well. If someone wants to come in and buy an accessory or a piece of furniture, we've got those systems down. But most of our projects tend to be longer lead times. We know what that order book, crystal ball, looks like for the next 12 months."
That future also includes the upcoming closing on real estate to open a Sarasota venue he hasn't previously publicly disclosed, and this is part of plans to grow his staff of 197.
"What's interesting about that is it's COVID-inspired. I always knew I was going to have a third location, and I wanted it to be in Sarasota," Lubner said. "That timeline was accelerated because of what we witnessed with COVID, (and) had it not been for COVID, I probably would have waited."
He's not alone in his optimism.
Although not officially announced yet, don't be surprised to see a new chain in Southwest Florida in the near-future.
With ambitious plans for more than 40 stores on the Peninsula, Conn’s, a Texas-based specialty retailer of furniture, mattresses, home appliances and consumer electronics with 150 outposts in 15 states, plans to open in Bradenton and Tampa Feb. 5 and Orlando Feb. 19, following its Sunshine State debut in Pensacola in November.
“As we expand the Conn’s HomePlus footprint, we are excited to increase our presence in the Sunshine State,” said Norm Miller, chairman and CEO. “The expansion planned throughout the state will open more opportunities to positively impact the customers and communities we serve, while solidifying our commitment in Florida.”
How serious is Miller? He's opening a 413,000-square-foot distribution plant in Lakeland.
At the same time, Furniture Factory Direct, which already had a spot at the Miromar Design Center, officially opened doors Jan. 15 at Estero-based Miromar Outlets.
In recent days, Ashley Furniture Industries, a major player in Southwest Florida and the nation's largest furniture retailer and supplier, revealed an 18-month plan to spend $1 billion, the largest single investment in the 75-year history of the company, according to insider industry bible, Furniture Today.
“Ashley’s goal is to build an even stronger supply chain to meet ever-growing customer demand,” CEO Todd Wanek said. “This is not only a commitment to bringing the supply chain back to previous levels, but to enhancing the company’s current capabilities to be able to deliver to customers in just days.”
These kinds of efforts can make a difference in addressing the public's desires that don't appear to be subsiding, Schumacher said.
"We'll get to mid-year before we really get a clear idea of just how repaired the supply chain will be, but everything is cranking toward that. Everybody is realizing it's not going to be fixed overnight," he said. "I really believe that the focus on home is here to stay, (that) home is truly the focus of a huge chunk of our lives, and people are looking at their homes differently now because of this (pandemic).
"I think that we are looking at a wave of change at how people view their homes, and that's going to continue to always push demand for new and innovative products they furnish those homes with, and that bodes well for our industry. It doesn't mean we can just depend on that. It's going to really take a huge focus on that customer experience, and working within this different dynamic and really managing the supply chain differently and better, but what an opportunity."
With the world's furniture market valued at more than $609.7 billion, Global Market Insights projects a 5.4% growth rate through 2026.
Hopefully your delivery will arrive before then.
Based at the Naples Daily News, Columnist Phil Fernandez (email@example.com) writes In the Know as part of the USA TODAY NETWORK. Support Democracy and subscribe to a newspaper.