We surely don’t
know how this mess we are in is going to turn out, but If you are prospering, keep focused. Do what you do well and prepare for everything!
I don’t know how anybody else feels, but I think it would be interesting to know what is going to happen for the rest of this year. The more uncertain the times, the more everyone looks to “wise people” for guidance. Right now, the predicting business has never been more popular.
The problem with predicting the future, however, is that even experts just about always get it wrong.
Predictions are based on what we think we know now, not on what we might learn tomorrow. So often the day after tomorrow is radically, completely and unpredictably changed by unforeseen events. It's a circular dilemma; “We can’t predict the future because we can’t predict the future.”
That being said, where does that leave those of us in the bedding (and furniture) business who need to make business decisions about tomorrow, today?
The Way We Were
In February 2020, other than the usual political disputes, life seemed to be proceeding fairly smoothly for most furniture and bedding store owners who adopted best practices. Even so, in January clouds of concern appeared on the horizon as rumors of a dangerous virus started to circulate.
In August 2016, nobody saw an SUV-sized asteroid speeding along at 29,000 mph toward the earth. It missed hitting earth by only 1,800 miles! With COVID-19 we were not as lucky. As usual we didn’t think it would happen to us. Also as usual, we were unprepared for a pandemic to develop as fast and furiously as it did.
What Happened!?
The retail world effectively came to a halt on March 14 (day one, year ZERO), when general lockdowns were ordered. The stock market dropped—portions of the economy collapsed and grocery store shelves were wiped clean (no toilet paper pun intended). Businesses closed their doors and six million people filed for unemployment in one week!
We discovered a new socio-economic phenomenon that I call the Covid Effect. Side effects include:
- General fear and anxiety (and fear of leaving home)
- Massive unemployment
- Supply chain disruptions
- Governmental controls
- Steep drop in consumer confidence
- GDP collapse
- Potential fracture of our social fabric
- Surge of internet sales, particularly for home goods
- Cancellation/postponement of social mixing events
- School closures and cancellations
- Olympic Games canceled/postponed
- Disneyland closed!
What the U.S. Government did next was find multiple trillions of dollars and poured them rapidly and directly into the economy. The mandate was “get money into the hands of consumers (since the U.S. is a consumer-driven economy) as quickly as possible. The plan was to worry about the consequences later. As of this writing, it seems to have worked fairly well. Even though a recent government report showed a 32.9 percent decline in GDP, the U.S., for the most part, has not devolved into a depression economy as might be expected with those GDP numbers.
Yes, there has been suffering, and many firms have gone out of business. But, we haven’t seen the soup kitchens and bread lines of the 1930s. Plus, a lot of businesses have flourished. The stock market, after the March 14 lows, staged a recovery.
Why hasn’t the U.S. fallen, so far, into the maw of economic disaster? I can only guess that the “stimulus” has a lot to do with it.
What Happens Now?
Do we really need another stimulus? Time will tell. As I write this, the unemployment rate is hardly sufficient to sustain vigorous economic growth. But sales of furniture and bedding have been surprisingly robust. Initially, people forced to stay home spent money, much of it from stimulus funds, online. In-store traffic more recently has been surprisingly resilient.
In August 2016 nobody saw
an SUV-sized asteroid speeding along at 29,000 mph toward the earth. It missed hitting earth by only 1,800 miles! This time we were not as lucky.
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We don't know what the future holds, but if the rebound falters, should we flood the U.S. with money? Why not? Sounds great, doesn’t it? It might be the right thing to do depending on how you interpret economic theory. But, can it go on forever without having serious consequences, such as hyper-inflation and systemic dis-employment?
It’s a Dangerous World
We are in a critical balancing act right now; trying to get the world back to normal while battling a pandemic that just won’t go away. Since much of the initial recovery was directly driven by printed money. A sudden deceleration of the money supply could cause marginal businesses that survived by a thread to close, thus laying off newly re-hired workers. We could be sent back to March 14, or worse.
To be truly optimistic, you have to hope that the virus will be brought under control, either by a cure, a vaccine or herd immunity. What happens if nothing changes, or hings get worse in the next six months?
Is This the New Normal?
I hear people asking the question, “Is this the New Normal?” My response is, "Is there anything about life, business and the world normal to begin with? American civilization has been fortunate to live in an unusually stable, safe, and prosperous era since 1945. It is the normal we take for granted. The thousands of years prior to 1945 are the real normal; centuries that featured the Four Horsemen of the Apocalypse riding into town every so often to spread “the Sorrows of History.”
Business as Usual
Some days we hear cheering news of progress and other days stories that are surprisingly depressing. So, it's too early for me to make any predictions that would probably be wrong anyway.
In the meantime, what should mattress and furniture store owners do? My advice is to be prepared for anything.
Contingency Plans
After Hurricane Harvey hit in 2017, I wrote the article "Preparation & Response To Disasters" that can be found at www.furninfo.com/Authors/David_Benbow/37. It includes ideas that retailers can use to plan for weather and fire-related disasters. The specifics differ from our present situation, but the message is the same. Retailers need to outline potential business challenges and come up with "what if" plans to cope. You almost certainly have a plan in place should a number of your employees come down with COVID-19. Expand this list to account for possible situations including cash shortages, further supply chain disruptions, inventory outages, social unrest, hyper-inflation and meteors!
The Good News
The good news, for the moment anyway, is that the home furnishings industry is an OK place to be. Expenses that usually go to travel, business clothes and eating out, have been re-directed into home improvement, including furniture and, especially, new mattresses.
The jury is out on whether or not the trend towards working from home will persist, but right now we are seeing an exodus from inner cities for a variety of reasons. Perceptive mattress retailers might think about focusing some extra advertising on this segment of the population with creative messaging.
What Else?
Your time will be well spent if you check out David McMahon's article in this edition of Furniture World on how to "Do More With Less." Also check out his article from July/August Furniture World on "Customer Journey Management." It explains how to make the most of lead traffic that originates from your website, social media, email, phone calls, etc. And while you are at it, don't miss the article in this issue on The Great American Home Store, which put these principles into action just in time to grow it's business during the pandemic.
What About Training?
No matter what may happen, the basic principles of selling have not changed, and will not change. That is one prediction that I am not afraid to make! All Retail Sales Associates must know the “Five Groups of Knowledge” and the “Steps of the Sale.” Don’t allow the stresses of the pandemic and the other horrors of Year Zero to cause you to forget the basics of the business.
Care for your Supply Chain
We sometimes forget how long and tortuous the supply chain for consumer products is. A while back I wrote about the "weakest link" in the supply chain. At that time I perceived it was retail sales associates, the last link in the chain. That was before the Covid problem took a wrecking ball to the entire furniture and bedding supply chain. Manufacturing plants can once again shut down for weeks because of a virus outbreak. Every industry in America is having this experience. The other day I couldn’t find bird seed, of all things, in the stores. Needless to say, the Cardinals and Blue Jays in my neighborhood are chirping their protests, and not very peacefully. They are not that unlike home furnishings customers who are already chirping due to delays in promised delivery times. What do you do about supply chain disruptions? Well, for starters, don’t over-promise on delivery.
One of my biggest gripes about RSAs and retail stores in general, is their tendency to tell customers what they want to hear. If you know your mattress arrival is two weeks out, don’t tell the customer it is coming in tomorrow. Some, if not all mattress manufacturers are having supply problems and this could get worse.
Serious mattress and furniture retailers must keep
a lot of backup stock. It’s harder to do when the supply chain is cracked, but don’t pass up any chance to build inventory.
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Over-Inventory
Serious mattress and furniture retailers must keep a lot of backup stock. It’s harder to do when the supply chain is cracked, but don’t pass up any chance to build inventory. Consider instructing RSAs to not show SKUs that are out of stock. And, if you have to order something, explain that there might be delays up front. Remember, nobody can predict the future. A critical link in the supply chain could close tomorrow without notice. Most customers will understand that if you explain it to them up front.
Follow Up!
Following up with customers is more important than ever. Any customer who purchases product that needs to be ordered must be provided with regular, frequent status updates. Customers hate being left hanging on pins and needles, especially if they were over-promised to begin with. Don’t forget, brick and mortar stores have a much better ability to stay in touch with their customers than online sellers. Take advantage of this and use it as a selling point.
Conclusion
This article just lays out a few ideas to consider. I surely don’t know how this mess we are in is going to turn out, but If you are prospering, keep focused, do what you do well and prepare for everything!
