Industry faces major changes
Ray Allegrezza, Editor in Chief -- Furniture Today, March 31, 2008
Like it or not, this industry is at a crossroads. Wholesale change is headed your way. The question that raises is whether you can embrace change and make it work for you, or will be immobilized and ultimately eliminated by it.
What is changing? Everything.
Start with pricing. I suspect it is going to be impossible to work next week's market without major discussions about increased prices. To be fair, the industry has been grappling with price hikes for quite some time. But lately, according to many of the suppliers and retailers I've talked to, it seems to have hit the tipping point.
Thomas Russell, one of our case goods editors, just got back from furniture markets in China and said that many of his conversations focused on increased prices from Chinese factories that were said to range anywhere from 4% to 14%.
I've spoken to a number of importers who told me that some of their source factories quoted pricing increases approaching 20%.
Another change, thanks to our anemic economy, is that some Chinese factories find it easier and more expedient to sell to European customers.
And speaking of a change in distribution, watch how the list of Chinese factories coming here direct gets longer and longer. It's all about finding new ways to increase speed to market while at the same time becoming more cost-efficient.
What do these changes mean to retailers? Plenty. Now, more than ever, retailers need to remember what made them successful in the first place. Things like great presentations, exceptional merchandising, and clear and concise communication with customers.
You might think I've gone off the deep end, but I can't help but wonder if price hikes might not represent a blessing in disguise. Perhaps now, armed with justification and proper consumer education, we can begin to migrate prices upward to more realistic levels.
