As we move through summer market season, it’s increasingly apparent that retailers’ appetite for new goods is less than robust. That’s not surprising, of course, given the speed with which consumers went from desperate to disinterest when it comes to buying home furnishings.That’s not to say that business has come to a standstill. Thankfully, it hasn’t. By most accounts it has simply returned to pre-pandemic levels. However, the frenetic effort to stockpile product during the supply chain crisis has left many with a glut of inventory and not necessarily of the most desirable goods.
And therein lays the challenge.
When consumers were willing to buy whatever they could get their hands on, many retailers reacted in kind, buying up whatever they could get. It didn’t matter if it was on trend, a best seller or one of the key styles that need to be represented on selling floors.
It also didn’t matter that prices were inflated by surcharges or other cost increases. The goal was to be in-stock; everything else was secondary. But then, like retail’s version of musical chairs, the music stopped, and there was no place for the inventory to sit (or more accurately be sold).
As a result, many retailers are now unable to find space for new goods. Additionally, the inventory now sitting in warehouses or still coming in from previous orders is often priced higher than the current market conditions can support or worse, misaligned with current demand.
That raises some challenging questions.
Do you sell the inventory you have at whatever price you can get and take the loss or the lower margin? Maybe, but what impact does that have on the balance sheet and consumer expectations about price-value relationships going forward?
You could wait it out and let the goods sit until you can move them through the system. But how long will that take, and what happens to revenue in the meantime? For many, there’s significant money tied up in that inventory, and the wrong decision could mean the difference between keeping the doors open or having to close them permanently.
Both paths are fraught with pitfalls and potential negative consequences.
Manufacturers, in turn, are facing their own inventory challenges, not to mention a blunted ability to develop and market new products in an environment where open-to-buy dollars are scarce and many customers simply don’t have space to add new goods.
If that sounds dire, it is. For some.
For others, it’s an opportunity to market their way out of a challenge and into major market share growth. That opportunity will start this week in Las Vegas, where some will be on hand to explore product, networking and partnership opportunities.
Others will stay home, perhaps thinking there’s little to be gained unless there’s product to be bought or sold. That’s unfortunate, as the commerce of ideas is as important as any other commerce.
See you at market … or not.
I’m Bill McLoughlin, Editor in Chief at Furniture Today and Editorial Director for BridgeTower Media's Home Furnishings Division. In the more than 25 years I’ve covered retail I've seen tremendous changes in the way people shop and the way companies serve the consumer. My goal is to share that experience and the insights gained along the way. This is an industry made great by its people and I look forward to meeting and conversing with as many of you as I can. Your comments are always welcome and encouraged.
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