Issues ranging from tip-over regulations to closings and bankruptcies created both challenges and opportunities
HIGH POINT — The year 2023 started with one of the most disruptive, albeit important, safety issues the industry has had to address in years: a new federal safety standard for clothing storage units.
As word spread throughout the industry regarding the new standard, companies did their best to meet and help explain new tip-over testing methods that would help ensure the federal guidelines were met to prevent these incidents from injuring or killing children in the future.
Everyone in the industry was on board to build safer furniture, which was the main goal of the standard developed by the Consumer Product Safety Commission.
However, there was no getting around the fact that this would have an impact on wholesalers and retailers alike, particularly because of the added weight needed to make sure these products were compliant.
As overheard in the halls at the winter 2023 Las Vegas Market, the issue was perhaps the biggest to impact case goods resources and their customers since antidumping shifted most bedroom production from China to Vietnam in the mid-2000s.
By the spring, the CPSC ultimately signed off on an alternative safety standard that met the provisions of the STURDY Act, a safety measure supported by the industry, concerned parents and elected officials alike as it had testing measures that would help ensure compliance and thus protect children and their families from the devastating impacts of tip-over incidents. Its testing methods and lesser weight requirements also were considered more subjective than the previous CPSC standard, which to many meant that it achieved the best possible outcome for all stakeholders.
As one industry member noted while the debate over the two standards was in full swing: “You don’t want one safety measure creating another safety issue in the process,” a reference to the injuries and even fatalities that could occur with tip-overs of heavier pieces and the likelihood of injury or worse moving such pieces into peoples’ homes.
But if anything the regulatory hurdles of each standard were just a glimpse of the challenges faced by an industry that has seen its share of issues in recent years. These ranged from supply chain disruptions and high container costs to the ultimate easing of freight rates that caused major pricing upheavals as goods facing higher transit costs were now competing with goods shipped at much lower rates.
While welcome by anyone shipping goods from overseas, the issue of lower container rates impacted anyone who imported goods from Asia, wholesalers and retailers alike. Many have struggled to adjust their pricing, often having to sell off goods shipped at the higher container rates at much lower prices to clear out that inventory and make way for the new (competing) product brought in at lower shipping costs.
Then there was the closing of well-known industry brands including Klaussner, Mitchell Gold + Bob Williams (whose assets have recently been purchased by Surya) and the bankruptcy of retailer Z Gallerie this past October, its third time in bankruptcy court.
While each of the companies’ situations was unique, they also faced a common challenge: an environment of low foot traffic and low retail sales. With sales down for most months of the year, there’s some silver lining in the fact that they also are outpacing the same months pre-pandemic. But it’s not much of one as many are comparing their fortunes or lack thereof to the breakneck pace of sales during periods of high demand during the pandemic.
Short of us having another global incident that keeps us cooped up in our houses for any length of time, we likely won’t be seeing a return to those record sales anytime soon, particularly as people have shifted spending to other areas, including dining out, travel and other forms of entertainment.
But if the pandemic taught us anything, it’s that people also realize the value of their home and will continue to decorate their homes even if it’s at a slightly slower pace. (In this household in particular, there’s the thinking that we need another house to buy all the furniture we want.)
And as this is being written, inventory levels continue to ease, creating demand for new product, which resulted in some aggressive product launches both at the High Point and Las Vegas markets in the second half of this year. In fact, some resources we’ve spoken to have reported a significant shift in the shopping and buying patterns at markets throughout the year, in a way that many hadn’t seen in months. Instead of just buying what they could get their hands on, buyers reportedly became much more engaged, showing interest not just in price or availability, but also in the actual designs they were looking at, as one sourced noted.
This leaves us wondering about the year ahead and what opportunities it will present. Obviously a lot will depend on the easing of interest rates and the impact that will have on what’s been a lackluster housing market, new construction and existing home sales included. As always we will continue to follow activity in this segment and others we’ve tracked during the year, including consumer confidence and retail sales.
The good news is that many people have been in the market for furniture across various age groups as we’ve seen in our ongoing Consumer Insights Now research, which will continue to publish in the year ahead. Such interest should continue to inspire the things that continue to drive our industry, ranging from new product development, innovation and marketing both on the wholesale and retail sides of the business.
Moving forward, we will continue to report on these and other developments impacting the industry, addressing key issues of importance as they arise. That said, we want your thoughts, ideas and input on how we can continue to do a better job providing the industry the most insightful, informative and meaningful content in our newsletters, market coverage and Consumer Insights Now research. We are grateful for your support and look forward to serving you in 2024 and beyond!