With Chinese New Year and investigations into Vietnamese imports looming, IHFRA’s Ray Allegrezza strains to see how things play out
By Ray Allegrezza
Every day, I probably get a dozen or so calls a day from reps, suppliers and retailers wanting to talk about the business…and specifically, where we think it may be headed.
In the spirit of full disclosure, while I enjoy speaking with my peers, I want to be the first to admit that my crystal ball broke years ago.
And if truth be told, even if I had a crystal ball, I doubt that it would give me a clear peek into the future.
Here’s why: In my 30+ years reporting on this industry, I have never seen a more perfect, perfect storm.
I realize that the pandemic has turned the world…and our business…upside down, but even before we ever heard about Covid-19, our sector was barreling down a road fraught with potholes and speed bumps in the form of price hikes in raw materials, paradigm shifts in consumer shopping preferences, the ongoing growth of online commerce, shifts and consolidation at both manufacturing and retail, tariff issues and so much more.
Again, and that was before the pandemic reared its ugly head.
What’s occurred since the pandemic reminds me of one of my favorite episodes of The Twilight Zone. The episode, starring Burgess Meredith, was called Time Enough At Last, and is a study in irony.
The story is about a mild-mannered bank teller who only wants to spend every waking moment reading classic literature. A nuclear blast wipes out humanity, but the teller, who was in the bank vault at lunch reading, is spared. He finds his way to what is left of his town’s library and is thrilled to see seemingly endless piles of books. But the teller, who can’t see without his glasses, stumbles, steps on and ruins his glasses and is condemned to spend the rest of his life unable to see any of the thousands of books all around him.
In our case, the cruel irony right now is that we have far more orders than we have furniture to fill those orders.
With pockets lined with stimulus money and after months stuck at home, consumers are buying furniture with both hands. But with Covid-19 still ripping supply chains in pieces, supply simply can’t match demand and I don’t see that changing anytime soon.
And if that alone did not make things interesting, keep in mind Chinese New Year is just around the corner and you know that always further rattles the supply chain.
And speaking of China, they are struggling to satisfy consumption in their own country. So, if they begin to divert exported goods and opt to sell them in country, look for further empty shelves here.
To give you an idea of China’s clout, the country exported close to $540 billion in goods and services back in 2010, based on statistics from the Office of U.S. Trade Representatives. And while not topping the list, furniture and bedding in that year accounted for a whopping $35 billion.
But as they say during those late-night infomercials, “But wait…there’s more.” In our case, the “more” could be two issues brewing regarding Vietnam.
A recent press release from the Office of the U.S. Trade Representatives said that under instruction from President Trump, the office is investigating “two significant issues with respect to Vietnam.
“The USTR will investigate Vietnam’s acts, policies, and practices related to the import and use of timber that is illegally harvested or traded, and will also investigate Vietnam’s acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to U.S. commerce.
“USTR will conduct the investigation under Section 301 of the 1974 Trade Act. As part of its investigation on currency undervaluation, USTR will consult with the Department of the Treasury as to issues of currency valuation and exchange rate policy.”
With my crystal ball defunct, if asked to read the tea leaves, my best guess considering all of the above is that 2021 will be a year of unprecedented opportunities and unprecedented challenges.
Home furnishings industry veteran Ray Allegrezza is executive director of the International Home Furnishings Representatives Assn. (IHFRA).