The continuous uncertainty in the furniture industry: what should companies do?

If I had to describe the current situation of the furniture industry, uncertainty would be the most accurate word. The demand has dropped drastically, and no one can tell if it is going to stay where it is or hit a new low. The current forecasts suggest that the first quarter of the year 2023 will be bad. But nobody knows what to expect later.

What we do know, however, is that the manufacturing of furniture is slowing down. Factories are being shut for two, or even four weeks straight, and some see a 50-70% lower demand. And we are talking about huge companies here – ones that used to have a EUR 100 million annual turnover.?

As for the supply chain, it seems that the worst has passed. A few months ago, there was plenty of uncertainty and other issues, but things have settled down, as did the prices.?

With one uncertainty following the other, it is natural that companies are looking for crisis-proof ways to save themselves. And while there isn’t one formula for resilience, there are some things companies can do to protect themselves against current uncertainties –?and perhaps future ones, too.?

Focusing on renovation

Focusing on renovation might be one way to reduce costs and increase profit. We are already seeing renovation gaining more popularity in Western countries, but I am sure the wave will catch onto other states, too. Renovation helps reduce the use of electricity for heating as well as diminish the dependency on Russian gas.?

Going online

E-commerce may not be the answer to all problems, but it has become essential for businesses to survive. It is not enough to simply have an online presence – companies must deliver unmatched customer experience. From the ease of choosing the right product to packaging, delivery, returns, and post-purchase support, each touchpoint of the customers’ journey must be as perfect as possible. And while it certainly is an investment, it is one that pays off well.??

Diversifying the supply chain

I have spoken about the issues of supply chain many times, but I’m not hesitant to repeat myself – diversification is crucial. With the world getting smaller and smaller, issues on the other side of the globe can affect your plans significantly. Thus, having option B is essential. To minimize transport costs and reduce delivery times, many European companies look for suppliers in neighboring countries, which often helps to reduce costs and increase the stability of their businesses.?

Availing social housing

Due to rapidly increasing living costs, social housing seems to be thriving. I’ve personally encountered some manufacturers who are booked up for another year and a half, and their main orders come in from social housing developers. This is one of the many proofs that social housing is having its momentum, and it shouldn’t go away any time soon, as many such projects are partially funded by the governments.??

Deduction schemes

Some factories, particularly in the UK are investing into expansion. High investment is happening due to the Super Deduction Scheme where they can get ~25% back from the government on the investments they are doing until April 2023. Historically, even big companies such as IKEA and others, very often invest during uncertain times or tough economic conditions. It offers a great opportunity to invest cheaper when a good chance arises.??

Cutting costs, expanding your customer and supplier base, and responding to uprising demands as soon as possible is essential for any business to thrive. And while this time is certainly not an easy one for the furniture industry, I believe that many companies will get through it if they are resilient and willing to change for the better.