Buy broad, not deep
Given growing concerns about credit, inventory levels and Wall Street, retailers and manufacturers face challenges ahead.
Furniture analyst Jerry Epperson predicts an uptick in business, starting in the second half of 2009 and continuing with significant improvements in 2010. Casual furniture represents roughly 10% of the overall furniture industry, but the segment for outdoor and covered areas has not been hit as hard by the stalled housing industry. Still, year-long economic conditions and the slowdown in spending are squeezing businesses.
Meanwhile, buyers are making decisions about which lines to buy and how much to stock. Changes in buying patterns became a theme that repeated as I talked with vendors at the recent High Point Market. Some told me they see the casual furniture industry’s traditional early buy approach fading.
Fresh in my mind are comments from retailers like Viking Casual Furniture founder Marvin Weiss, who said he will steer clear of container orders. (See more in our November issue, page 30.) In essence, that mindset will benefit domestic manufacturers who can produce and ship custom orders quickly. It also puts the forecasting and warehousing burden on manufacturers who import to be able to meet consumer demand once the economic turn arrives.
For retailers who can still serve their market’s needs without investing upfront in container-loads, one solution is to buy a broad selection with at least one back-up. The “one to show, one to go” mindset will become crucial for retailers who aren’t sure when consumers will start buying again. Selling that single sample from off the floor and missing out on potential sales from the lesser number of customers coming through the door is risky business at best.