In the darkest days of the COVID-19 pandemic, demand for many consumer products surged. But few industries experienced an explosion of activity like the furniture business.
The natural inclination of locked-down shoppers beginning in 2020 was to spruce up their homes and yards. Hence the flood of orders for items to furnish home offices or create more comfortable living quarters — and the ensuing logjam of product in the supply chain.
Much of the furniture purchased by Americans today comes from overseas. Gone are the days when the industry was dominated almost entirely by producers in North Carolina, which had been known as “The Furniture Capital of the World” since the late 19th century. Now, furniture retailers and distributors rely to a great extent on sourcing from China, along with a handful of smaller producers in Vietnam, Italy, Poland and Germany.
In the case of China, a combination of factory shutdowns and the sudden increase in consumer demand brought the furniture supply chain to a virtual halt. Buyers, turning to the internet in the absence of physical showrooms, found themselves waiting up to nine months for product to arrive at the door.
The picture is quite different today. Now, furniture retailers find themselves with too much product in the pipeline. “If you’re on the domestic side of the furniture supply chain, you’re probably feeling like your belly’s a little full right now,” says J.T. Marcum, corporate vice president with Cort, the big rental service for home and office furniture. “And the supplier side overseas is a bit anemic. There’s a lot of slack in the line.”
Prior to the pandemic, the furniture industry was functioning under a low-inventory, just-in-time production model, which worked fine as long as goods were flowing smoothly. But when COVID-19 hit, stock started piling up at overseas factories, with no way to get it across the ocean.
The bulk of that inventory has since moved to the U.S., but is now clogging up domestic warehouses for lack of consumer demand. And retailers are reluctantly taking deep markdowns to turn the product into cash.
The rental business has fared better, Marcum says. With little on the shelves for purchase during the pandemic, Cort was able to step in with furniture for rent. “We had assets,” Marcum says. “We replace about 20% to 30% of those assets every year to keep our stock fresh, so there was a challenge to get that 20% in. But unlike a lot of retailers, we don’t turn our inventory four to five times a year.”
Cort did experience some difficulties in obtaining product last year when ocean carrier service began tightening up and production in Vietnam shut down, “but not nearly what we saw in other retailers,” Marcum says.
With much of its business derived from commercial accounts, Cort faces a big question mark with regard to the future of office furniture. Not surprisingly, that business experienced “a dramatic downturn” when offices shut down and work from home became the norm. And the nature of office work in the months and years ahead remains cloudy.
“People aren’t sure how their employees want to work,” Marcum says. But Cort is treating that dilemma as an opportunity for exploring innovative options. One is the shift to “resimercial” furniture — items designed to create a home-like vibe in the office. It’s part of a drive by employers to entice staff back to the workplace, while supposedly spurring them to be more comfortable and creative. Major firms like JPMorgan are using furniture as one means of battling the newly entrenched remote-work mentality.
Regardless of where workers end up, there will still be a need for furniture, so providers such as Cort are seeking ways to avoid future disruptions in their supply chains. Marcum says the company sources both domestically and internationally, with an eye toward maintaining a diverse supply model. It’s also cognizant of the need to purchase from factories with ethical labor practices.
On the international side, China could be losing at least some of its luster as a cheap producer of furniture. Marcum says Cort shifted much of its sourcing to Vietnam in partial response to the imposition of U.S. tariffs on Chinese imports. Vietnam also has the advantage of workers who live close to the factories, unlike in China, where their homes might be hundreds if not thousands of miles away. “Vietnam’s labor pool is very reliable and incredibly skilled, and the quality is fantastic,” Marcum says.
Like all furniture sellers and renters, Cort faces challenges in transporting and warehousing product domestically. In response to the backup at U.S. ports, and the scarcity of ocean containers moving inland, it began transloading cargo at the port into domestic boxes, which carry more product at a lower per-unit cost. But the reliability of rail, an even more economical way of moving freight across the country, remains a problem.
Overall, according to Marcum, the furniture business is slowly recovering from the disruptions of 2020 and 2021. “It’s been a very nice year,” he says. “The commercial side is starting to find a new normal, and trade shows are happening again.”
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