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5 Bottlenecks in Home Furnishings (and How to Avoid Them)

9 min read
Jul 8, 2022 10:30:50 AM

While many were convinced that the demand for furniture and home goods would subside once consumers got back into business as usual following the pandemic, recent sales projections prove that this is not going to be the case.

In 2021, furniture sales jumped by 35.6% over the 12 months between July 20 – June 21 over 2020 numbers. The demand is there. However, the current state of the manufacturing, retail, and shipping industries means that many home furnishings retailers aren’t prepared to step up to the challenge.  

We aren’t talking about “a new normal” anymore in the retail industry. In truth, the word “normal” has all but disappeared from our vocabulary –– except when The New York Times said that a “normal supply chain” is “unlikely in 2022.” That we remember. The past two years have forced home and furnishings retailers to contend with an unprecedented rate of bottlenecks from numerous sources.  

Issues such as employee turnover, skyrocketing shipping costs, and dropped communications with external suppliers have made many furniture retailers unable to cope with growing consumer demand. The industry is in a phase of disruption, so it’s time for new best-in-class furniture retailers to emerge from the rubble to take their rightful place in the sun.  

Large retailers are deploying massive resources to recruit and retain supply chain workers. But what about those home retailers that can’t afford to follow in Walmart’s footsteps by hiring 20,000 new supply chain associates?

Here’s the good news: you can ease some of the supply chain bottlenecks you are experiencing in your home furnishings business, increase your speed to market, and improve customer service in the process. It starts with targeting the pain points in your business operations.   

What do “Bottlenecks” Mean to You? 

Let’s whip out the ole dictionary here for a sec. In retail, bottlenecks can be defined as a delay at any point in the product ideation, production, and shipping phases. Bottlenecks can result from a wide range of inefficiencies, such as: 

  • Not enough employees to handle demand 
  • Mechanical errors
  • Delay in the arrival of production materials –– textiles, nuts and bolts, etc. 
  • Inefficient communication with external vendors 
  • Inadequate or improperly utilized internal communication tools 

Wondering about the impact of bottlenecks on the global supply chain? Drive to your local gas station. Like the oft discussed rise in global gas prices, every single vertical within the retail industry has been significantly altered in recent years. Prices for container shipping are now ten times what they were just two years ago.

The infrastructure necessary to ship pre-assembled furniture and the weight of shipping containers make the rising costs of shipping particularly cumbersome in the home furnishings industry.  

State of the Industry

In 2021, furniture sales jumped by 35.6% over the same quarter the year prior. The demand is there. However, the current state of the manufacturing, retail, and shipping industries mean that many home furnishings retailers aren’t prepared to step up to the challenge.

The strangest thing about the pandemic’s impact on the home furnishings industry? The fact that so many analysts focused on locking down a timeline in which things would return to “normal.”

The idea that, one day, the aftershocks of the pandemic would disappear, and we’d teleport back to the way the industry looked in 2005 may have been enticing, but it was founded in neither fact nor reason. Instead, we witnessed a dramatic shift in global retail that will last as long as the lifespan of those that lived through it.

One trend that doesn’t show any signs of abating is consumers’ drive to create a desirable living space in which to hunker down in turbulent times. Demand for home furnishings skyrocketed during the pandemic, and it will remain strong in the years to come.

The home furnishings industry reached $682 Billion in 2021 and is growing at a CAGR of 4.8% throughout 2022-2027. Online furniture sales are grooving at a CAGR more than triple that (16.79%). So don’t be fooled by false (retail) prophets… home furnishing sales are expected to increase, not decrease in the coming years.

Increased demand brings about an increase in profits, but it can also lead to production and communication errors for teams that aren’t optimized to handle the additional business. The past two years came with a valuable lesson for everyone in retail: technology is a more dependable investment than staffing alone.

Technology was the answer for frontline retailers that suddenly needed to offer BOPIS (Buy Online Pickup In Store) to remain operational. But technology can also empower production and purchasing teams to eradicate the unique bottlenecks that plague their verticals. The bottom line? Home furnishings retailers’, suppliers’, and buyers’ operations are forever changed.

No retailer wants to alienate customers by passing on the rising cost of shipping, staffing, and production materials. Fortunately, there is a way to prevent skyrocketing inflation by implementing a few targeted actions to reduce bottlenecks on the front end.  

Let’s take a look at 5 core causes of retail bottlenecks and how to make sure they don’t happen in your business.  

1. Inaccessible Product Information 

It’s incredible how often we see next level retail institutions trying to keep up while still using dated, ineffective communication methods. No organization built on creative collaboration should still have employees juggling Excel documents, emails, spreadsheets, and texts to access information. Especially not in the ever-evolving home furnishings industry, where a two-week delay to product launch can lead to a total change in consumer sentiment… and lost profits.   

Suppliers and buyers incur suffering and stalemates when trying to operate on archaic communication technology.  

Suppliers 

Each retailer needs to receive and review product assortments from suppliers in its own unique way. The process by which vendors present assortments to their potential buyers can quickly become complex when they are forced to reenter product information for each unique retailer. Vendors are left having to track down unique product details to create assortments, quotes and orders for every prospective business they’re trying to work with.  

It doesn’t have to be like this. There’s no reason that vendors should spend their time tracking down extensive emails and texts with manufacturers to get the information they need, not to mention time manually entering product information to meet the needs of potential customers.

The next phase of retail PLM evolution allows suppliers to customize and export quotes to retailers in a single click. Data export that used to take two weeks will take three hours, saving time and valuable mental resources when reaching out to new retailers. 

Buyers 

It’s gotten complicated for buyers to get the full story of a product. The communication process between buyers, suppliers and manufacturers lacks structure. This can present challenges such as incorrect or lost orders, late shipments, strained relationships and missed opportunities. Buyers want to spend their time researching new products, not juggling spreadsheets.  

The amount of data that it’s necessary to store for each PO varies by vertical. A buyer making an order for polo shirts needs up to 50-55 data points. A buyer creating a PO in the furniture industry needs 100-150 data points for each product. But that’s not all: each retailer likes to have that information in a different order.

With a centralized product lifecycle management solution, buyers can publish what their data and qualifications are up-front. This removes hurdles to set up new products, so they can send out initial purchase orders more quickly. No more harassing vendors. No more inaccessible data.  

The right PLM software can bring the thrill back to the buying process. It gives buyers fast access to essential product data. They can see the actual product, its components, and all of the features that make it stand out using real in-system product images, rather than messing around with a bunch of forms to obtain the most basic product information. They can also collaborate and communicate within the system – on specific products – which means they have historical, contextual product communications at their fingertips.   

2. Inadequate Staffing 

A staffing shortage is permeating every level of the retail industry, but not just at the top of the production funnel. A whopping 74% of retailers expect shortages in customer-facing positions this year. This means that the employees who are on the floor need fast access to product training and demos to get up to speed. But retailers can’t always access product data in time to adequately train their frontline staff.

All too often, essential product data is in a stalemate between manufacturers, suppliers, and the buyers who make purchase orders happen. This can be the kiss of death in the home furnishings industry, where customers do extensive research before making their high-ticket home purchases and expect in-store associates to know their stuff.  

How can retailers get access to product data in time to train a rotating array of frontline associates? An agile product lifecycle management solution that’s centralized in the cloud can help retailers take charge of their data.

The right retail PLM solution will ensure that the people who need access to product data to create training materials can find it BEFORE the furniture hits the shelves. For better training, better employee retention, and a more streamlined retail operation.  

3. Hard-to-Reach Partners

The retail industry has unique communication needs that aren’t shared by other verticals. Miscommunications cost even smaller businesses of just 100 employees an average $420,000 a year. That number is even higher in an industry like home furnishings, where the cost of shipping is at a premium. Communication errors are costly, leading to lost sales, dropped partnerships/clients, and slow trend responsiveness.

To prevent this, buyers and suppliers need to have a seamless method of communication with external partners. But most legacy ERP solutions only allow users to chat with internal employees, and not external contacts. This doesn’t work for retail sectors that need to do business with external entities –– such as buyers, suppliers, manufacturers, and supply chain workers. Legacy ERPs result in siloed product information, which leave buyers and sellers unable to access the product information they need to create quotes, export critical data, or get a PO signed.  

The furniture industry is centered around data, requiring an average of 100 to 150 data points for each item sold. Compare that to the 50 (or less) average data points for each piece of fashion apparel, and you’ll see why home furnishings retailers are particularly inclined to experience bottlenecks. And why they need to be proactive about implementing a retail PLM that allows for centralized communication with external vendors.

4. Poor Inventory Forecasting

Although we don’t talk about markdowns as much in the home furnishings industry, it’s a relevant conversation –– especially in a time when margins are eroding for so many retailers. Home furnishings retailers need to be trend responsive, too. In fact, the home furnishings industry is particularly susceptible to trends. The rise of work-from-home culture has led to a boom in home office supply sales, and retailers need to be prepared to respond to WFH decor trends in a timely manner.

But it’s not just trend responsiveness that’s needed. Buyers and suppliers need a simple way to communicate product data, such as colors, uses, makes and models, setup details, and product iterations. Buyers work tirelessly to track down critical product data to make more informed sourcing decisions.

However, with the right product lifecycle management software, all inventory data is housed in one centralized place. So, it’s easy for buyers/suppliers to find the data they need for more informed production and purchasing.

5. Products Get Lost in the Supply Chain

Major companies dominate the home furnishings market. This is largely because they have the infrastructure to support increased consumer demands, shipping delays, and worker callouts. But your home furnishings business doesn’t have to have a flexible staff with hundreds of workers on-call to fill in staffing gaps just to compete with the big guys.

Legacy ERP systems make it hard to track down product data. Buyers rarely have visibility into where a product is in their supply chain, much less the ability to talk to external partners when they need to track down data in a pinch.

A centralized PLM platform will give every single team in the production, shipping, and purchasing process total visibility into each product’s lifecycle. No more misplaced products. No more missing data. Just 360-degree visibility and real-time collaboration on a highly visual, easy to learn interface.

Closing Thoughts

The right PLM can enable buying and production to do all of their busywork with just the click of a button. It eliminates wasted time when catering POs (purchase orders) to each retailer’s unique specifications or trying to track down product data from various Excel sheets.

So retailers can enjoy a 3x increase in revenue per home furnishings employee and maximum productivity. Less manual data entry means that buyers and sellers can reserve their mental stamina to refocus on the parts of their jobs that they love the most –– learning, creating, and communicating about products.

It’s time we got better acquainted. Book a custom demo with one of our Product Lifecycle Management experts today!

Product lifecycle management is a quickly evolving industry with a lot of moving parts. We do all of the research, so you don’t have to. Stay ahead of news & trends by subscribing to our Product Lifecycle Management Blog.

 

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