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article imageOp-Ed: Furniture industry adapting to challenging business environment

By Elizabeth Brown     Dec 5, 2014 in Business
For years, the U.S. furniture industry has faced major challenges such as a sluggish economy, global competition, rising labor costs, technological trends, and new sales channels.
However, the industry has also seen a rise in sales for 2014 as manufacturers and distributors find innovative ways to serve consumers.
A quarterly index for the office furniture industry in October reached its highest point in more than seven years, according to a survey by Holland-based Michael A. Dunlap & Associates.
"We are confident that the industry is still on course to achieve its best year in more than a decade," according to a company spokesperson. "The industry will continue to accelerate during late 2014 and well into 2015."
The Business and Institutional Furniture Manufacturers Association projects a 3.3 percent increase in shipments for 2014 to $9.7 billion, followed by growth of 6.8 percent in 2015 to $10.3 billion.
Innovative Practices
Some furniture distributors are taking an innovative approach to increasing sales — by benchmarking the strategies of discount big box retailers such as Walmart, Costco, and Sam's Club.
For example, St. Louis-based DirectBuy took a membership-only approach that lets customers buy furniture directly from manufacturers (and not suppliers) at insider prices. The membership method enables individuals to purchase at price levels other furniture retailers have access to.
The company considers each of its outlets as a "private club" and not a store. DirectBuy's value proposition includes larger-than-usual savings and breadth of selection — as each location features hundreds of thousands of new products.
Raymour and Flanigan, a competing distributor, tries to reduce supply chain costs by recycling packaging material such as styrofoam, cardboard, and plastics. Much of the material from its chain of 110 stores are sent back to manufacturers. The company estimates that 15 million pounds are kept out of landfills each year.
Shifting Buyer Preferences
According to some observers, offering a wider selection of products (what big box retailers do) is a way to mitigate risk, given ongoing shifts in buying preferences from baby boomers and millennials. For distributors, inventory are often placed on consignment, shifting financial and operational risks back to manufacturers.
Buyers now tend to purchase lower volumes but with more frequency than in the past. When it comes to corporate purchases, companies placing orders for office furniture are typically small to midsize businesses, according to Michael A. Dunlap & Associates. "Most of the new business that’s being generated is through small- to medium-size enterprise buyers."
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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