Three things are certain in life: birth, death and change. The developments of the last 24 months have created huge disparity between different segments of the furniture industry. For many furniture brands, the pandemic served as a defining snapshot moment. An opportunity. Or the end of an era.
Where were you standing when it hit?
Retail-focused manufacturers with a strong brand, solid supply chain and good distribution channels enjoyed a bumper couple of years, as the middle class reallocated summer holiday budgets to home renovations. Expect retail furniture agents rocking the bling in ’22 with a flashy new motor and Gucci satchel. But these fat commission cheques won’t last forever.
If you found yourself employed by a traditional office furniture manufacturer that hadn’t diversified into softer home furniture, the pandemic was no fairy tale. Offices shut up shop, projects and turnover vaporised and CEO’s questioned if their business even needed an office. Or salespeople for that matter.
“But the home office market softened that blow” I hear you mutter. Actually, not really. Around the time of the great toilet roll shortage, the home office furniture market was still an unknown and mysterious place for 99% of traditional office furniture brands and dealers, most of whom were lacking in retail know-how, brand visibility and the one-click online presence needed to reap the rewards. Few of them knew how to sell directly to the consumer – and most couldn’t convert quickly enough from B2B to B2C.
Most WFH folk made do with the kitchen table, possibly nicked a chair from the office, and maybe ordered an accessory or two. But most of the cash spent on home office furniture landed in the coffers of the big mainstream online retailers. Ikea, Amazon, eBay et al.
A ray of sunshine for the office furniture market is current high demand for telephone cabins, acoustic improvements and workplace additions for returning office workers. Old fashioned or under-performing workplaces will not attract and retain ever-scarcer talent. Fix up look sharp.
And now the furniture agents are back out, timid, dishevelled, blinded by the daylight, hungry for meetings, sick to the back-teeth of zoom calls, queuing around the block to meet furniture dealers in the flesh. Either they’re under pressure to make up for two years’ lost time, or they need to maintain bumper turnover levels, Bentley fuel prices and inflated board expectations.
And the plot thickens. Lead times are still extended, raw material prices are still on the up (as is inflation), staff absences are still affecting production due to you-know what… and to add a geopolitical angle to this mess, we now have war in Europe. Unbelievable.
Eastern Europe has grown in importance and visibility for the furniture market in recent years. Many big names have invested in production in (or are sourcing from) Poland, Latvia and Ukraine for example. In addition market confidence in the wider region is being hit. Focusing purely on the economic fallout of war, after a tough couple of years, this development is bound to spell turmoil for some manufacturers. Expect more furniture industry acquisitions, redundancies, restructuring and shifting of production as companies attempt to navigate this latest chapter in ‘furniture resilience training 3.0’.
Money is seemingly being pushed around the industry. Sucked out of some areas and (so far) pushed into others. Whereas the traditional office furniture makers were once industry drivers, the devaluation of office furniture as a commodity product combined with increased value of many soft seating brands may actually turn the tables.
As the sands continue to shift, could we see opportunist cash-rich soft seating brands acquiring office furniture companies in 2022? And is it the office that’s dead, or just our old ways of working? Birth, death and change…. time will tell.
Catch you soon.