My coverage responsibilities at Furniture Today dictate that I spend a lot of time discussing industry developments from a product standpoint, which translates into a lot of time talking with vendors.
It seems lately all those conversations have been about supply chain woes and backlogs, and the challenges manufacturers face in that regard obviously carry through to their retail customers. I spent a decade of my career with a focus on coverage of retail operations, so even if I spend more time on the phone these days with vendors, I still count a number of dealers as contacts and friends, and try to write from a perspective of how what impacts their suppliers impacts their stores.
A couple of exchanges I’ve had lately on the dealer side brought home backlogs’ adverse impact on retailers and their staff. I’m not going to name names here, as I’m guessing the anecdotes I’m sharing are not confined to the companies or stores in question.
Anecdote 1: When I read publicly owned furniture companies’ filings, a common refrain is how backlogs are putting a drag on reportable sales. To those vendors, I say, “Be glad you aren’t a commission-based retail salesperson.”
An RSA at a store all would recognize told me that he and his colleagues are quoting more than 30 weeks for production of special orders, with stock backlogs running 10 to 20 weeks. With commissions based on delivery of sold goods, that is a very long time to wait on a paycheck.
“The backlogs have many of us wondering if unemployment wouldn’t be a better financial move, as we are experiencing 50%-plus income reductions as a result of the backlogs,” he said, adding there’s little hope in sight for improvement right now. “My coworkers and I don’t see how the backlogs can actually be reduced without closing retail locations to allow factories to catch up with the record number of special orders placed last year and the incredibly high demand on stock items.”
Anecdote 2: At other stores, a vendor is taking price increases on sold goods for which consumers already have placed an order. One of those stores had two containers on order that included a mix of sold furniture and stock. I was told that the manufacturer’s rep informed the dealer that if they didn’t want to accept the increase on the sold merchandise, “you can cancel, and we’ll offer it to someone else.”
The store obviously can’t call their own customer and tell them the furniture they’ve bought is going to cost more, or maybe worse, cancel their purchase — if they want to keep that customer, that is, as well as get any business from her friends she’ll share the experience with on Facebook.
The retailer is thinking of dropping a couple of the vendor’s spots on the floor and will consider dropping more for price increases on sold orders.
It’s worth noting that this retailer does significant business with the vendor, with dozens of pieces on the showroom floor. We hear a lot about smaller accounts getting shut out, and if a vendor takes that approach with even large accounts … well, it’s not a good look in an industry long reliant on mutually beneficial vendor/dealer relationships.