Retail Observer

RETAILOBSERVER.COM AUGUST 2021 48 W e are currently in the highest-selling period of the year specific to the Furniture and Bedding category. According to a May 2021 report from the International Sleep Products Association, Q3 has been the strongest three-month stretch for bedding dealers over the past five years (2015-2019, to remove the impact of COVID-19), accounting for 26.2% of annual sales. Of course, Labor Day, which falls during this quarter, has historically been the strongest-performing holiday on the bedding calendar. All that said, the industry is still facing some challenges during this typically prosperous stretch. Let's explore them. Foam and Supply Chain challenges. The Furniture and Bedding industry continues to see all manufacturers managing through an unprecedented foam supply shortage, further exasperated by strong consumer demand. While many manufacturers are approaching 100% foam allocation, most need to be north of 150% to recover from current back orders. Relief from foam pressures will ease somewhat over the next several months with many manufacturers stating that they should be back to normal shipping times by Q4. • Travel and Tourism – The return of travel, specifically in the summer months, took some disposable cash away from the Furniture and Bedding category. A recent TripIt poll found that 97% of people were planning on taking a trip in the next 90 days. • Raw Material Increases – Most manufacturers have seen price increases go into effect during the first half of 2021. This reality forces the independent channel to increase their retail prices in order to maintain margins. If retail prices supersede the perceived value of the product, the consumer could pull back on spend. • Container Shortages – A lack of available containers has led to increased shipping charges, in some cases 5x over average. This has also led to longer lead times and back orders for the channel. This, too, is partially compounded by high consumer demand. While we continue to face challenges, there are many trends favoring the independent retailer. Consumer demand remains very strong. GDP grew 6% in Q1 and is expected to grow 9% in Q2. And the back half of the year should see strong mid-single digit growth in consumer spending. Here are some things you can do to be even more successful in today's marketplace: • Market to the consumer with messaging that resonates – Finance is still a great option for many customers, especially in the furniture and mattress category. • Make sure to push what you have in stock and available today – While it may be difficult to maintain inventory at pre-COVID levels, you can still highlight those items that are readily available. Nationwide Marketing Group has multiple sources to help fill inventory needs from the Marketplace to a Pick 5 Program that offers discounts from manufacturers on in-stock items. • Price product to maintain margins when manufacturer increases come your way – Remember that the purchase cycle for mattresses and furniture is typically several years. Most consumers will be looking for product within a predetermined budget they have in mind – not for the $899 sofa that is now priced at $999 due to increases. • Be transparent with customers about product delays and supply chain constraints – It's better to reach out to that customer every week to update them on their purchase, even if it's just to thank them again for choosing you. I can speak to this personally. My wife and I bought a new stove recently and were told that it was going to be four months before we would receive it. The company called my wife every week to give her an update and thank her for coming into their store. Constant communication was important to her, and it validated my wife's decision to purchase from the store. In my opinion, today's consumer will continue to look to the local business to serve their needs for the immediate and near future. Make sure you are consistently reaching out to them with relevant content, and they will continue to choose you over the competition. Mike Derro Furniture Trends RO Mike Derro, Vice President of Furniture and Bedding, Nationwide Marketing Group RO WHAT'S AHEAD FOR FURNITURE AND BEDDING RETAIL IN Q3 AND BEYOND?

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