The 1675w bedroom by Homelegance is shown in a white finish and has casual coastal-inspired design influences.
HIGH POINT — Thanks to a surge in demand for inline product starting in late spring and early summer, many case goods resources say their written business in 2020 will be the strongest it has been in recent memory.
Unfortunately, thanks to supply chain disruptions that began when most retail came to a screeching halt in March and April, actual shipments and sales will be short of what they could have been.
The cause? Many overseas factories have been slow to ramp back up after shutting down for several weeks to months due to the overnight slowdown in the U.S.
Having let go of workers, many are still struggling to ramp back up production. On top of that, container shortages have made it extremely difficult to flow goods to the U.S. at a time when retailers need product most.
Fortunately, some have been able to maintain strong inventories and maintain some flow of goods. The challenge has been to maintain consistent inventories on top sellers. As product flows in and out of the warehouse at a moment’s notice, what tends to be doing well is simply what’s in stock.
“Considering we didn’t ship for over two months, we will be up around 10% this year,” said J. Scott Ostrander, president and managing partner of bedroom resource Austin Group, of actual sales this year.
He noted that business probably would have been even better if not for the disruptions caused by the pandemic. “COVID-19 hurt us those couple of months, but it helped us the past five months of the year. … We just couldn’t ship it fast enough.”
That said, Ostrander noted that the company’s core business was in the $899 to $1,299 retail for a bed dresser and mirror, with transitional and rustic contemporary styles being among the most popular among its customer base, in both master and second bedroom.
Riverside Furniture also lamented the difficulties in getting shipments in a year of upheaval.
“We are up on written business, but we are challenged getting the shipments we need,” said John Iasiello, senior vice president, strategic planning and business development at Riverside, adding that while the written business is up double digits, actual shipments in every category expect for home office are down some due to supply chain disruptions from Asia.
“A lot of demand right now for inline goods is driving business. Retailers, obviously they are looking for new product, but they want something they can get on their floors right away. Even at the October market, there was more focus on product you had on the shelves vs. new production.”
Still, he noted, the company is doing well in casual traditional or contemporized traditional looks in bedroom with the sweet spot being around $1,999 for four pieces.
He said a key goal during the year has been to be in stock on the A sellers at all times, with some longer wait times for other lesser selling groups.
Larger scale casual dining sets with leg and pedestal tables and companion side pieces, he said, continue to do well, although the company is starting to get into smaller scale sets, too. The strength of its dining business, he added, has been in table-and-four-chair sets that start at $999 and hit a sweet spot of $1,499.
Spending on the home
Scott Hill, president of sales and marketing at New Classic Furniture, said the company saw double-digit gains in written business this year, which he attributes to the spikes in demand from consumers spending more time than ever in their homes during the pandemic. He did not offer specifics in terms of actual sales.
“Customers are sitting and looking at their home furnishings and saying, ‘We have extra money, let’s spend it right now,’” Hill said. “Consumers have had more time at home now than they had before and have found that without spending a lot of money, they can get a lot of looks and value in the (wood) category.”
In addition to its core bedroom, the strength of which is in four piece sets retailing from $999 to $1,599, the company has seen high demand for casual dining with plenty of “style driven” offerings in the promotional to lower middle price points of $399 to $599 for a table and four chairs.
“Written business in casual dining is up double digits,” Hill said, noting that many tables are doubling as work stations for both students and work at home parents.
At Legacy Classic Furniture, demand has also been strong, said Don Essenberg, president. This is particularly true of master bedroom, which tends to be one of the last rooms in the home to get redecorated, as it’s the least visible. And with money being diverted to the home, many will find Legacy’s sets — retailing from $1,599 to $1,899 — a viable and affordable alternative.
That said, while actual bedroom sales will be up some from last year, they will not be as high as they could be “If we could get more containers,” Essenberg said. “It is frustrating. Business is phenomenal, but it is constrained by how many containers we can get out of Vietnam. … It’s not a production problem – it’s a transportation problem.”
The company also is expecting some modest growth in dining sales this year, partly led by sales of larger scale 80-inch tables that extend to 120 inches with two leaves that retail from $1.099 to $1,299 for a table and four chairs.
Casual dining is also coming on strong sourced out of parent company Samson Holding’s factory in Bangladesh. The company now has nine sets retailing from around $899 to $1,099 for a table and four chairs. Expected to hit retail in the first quarter or the second quarter, these are expected to help drive business in the category for Legacy in the coming year.
Styling and scale
Klaussner Home Furnishings has had some strong consistent performers in bedroom and dining room this year, including from its licensed Trisha Yearwood collections. Larger-scale rectangular pedestal tables also are doing well, which has as much to do with their styling as their scale.
“The new formal is much more casual,” said H. Kelly, senior vice president of case goods, said of tables featuring hefty pedestal bases and livable rustic finishes. “They are big stately pieces and have a traditional look, but they are very casual at the same time.”
As supply chain disruptions have affected importers and retailers a like, the year has been one of opportunity for domestic manufacturers such as Vaughan-Bassett, Legends Furniture and Gat Creek to name a few, not to mention a host of Amish resources.
They, too, have seen increased demand largely tied to their ability to turn around orders within several weeks and flow the goods shortly after. This automatically cuts out weeks-long shipping times on the water from Asia.
While most of these producers have nowhere near the mega-capacity of various Asian counterparts, some retailers have seen value in their proximity to the market.
Domestic producer Gat Creek expects double-digit growth in written business this year, fueled by most every category including bedroom, dining and home office. In the third quarter alone, the company had a 40% increase in orders, said Gat Caperton, CEO. Actual shipments/sales will be up just under 10% compared with 2019.
Such demand will have the company heading into 2021 at full capacity, which is fueling a planned expansion. The factory will increase by a third to about 130,000 square feet with new woodworking and finishing equipment. It also is expecting to hire more than 20 more workers to man the expanded operation.
2021 optimism
Caperton said he expects the growth to continue in 2021, which makes having the added capacity timely.
“I think demand compared with the preceding year will be up,” he said, adding, “Demand won’t be as high as it was in the third quarter, but there will still be good growth out there.”
Others also are bullish about 2021 especially since they expect written business placed later in the second half to turn into actual sales.
“Barring any future lockdown because of COVID-19, it will be a double-digit year,” said Jeff Scheffer, president and CEO of Universal Furniture.
That assessment will undoubtedly hold true as goods continue to get shipped in the first quarter and beyond, converting written business into actual revenues.
“I think shipments will remain strong through the first half,” said Jamie Collins, executive vice president of full-line resource Homelegance, noting that the company expects to finish the year ahead of 2019 in terms of shipments.
“We are all dealing with backlogs we have never seen before; that means business will remain strong through the first half,” Collins said. “The question is how much pent-up demand we have absorbed and what does that mean for retail as we move into the second half of 2021.
“The biggest unknown at this point as we turn the calendar is whether we will have enough freight capacity to ship from our factories,” he added.
Another unknown is how the distribution of a vaccine will impact the momentum the industry has seen in consumer demand. But here, too, industry officials remain optimistic.
“I think business in furniture will continue to be phenomenal,” said Don Essenberg, of Legacy Classic, noting that even once people feel comfortable going on vacation and dining out, they will still want to spend money on furniture. “The focus will continue to be on the home.”
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December 28, 2020 at 08:35PM
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Flow of wood goods key to 2021 - Furniture Today
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