Getting the New Year off to a cheery start, the head of the IMF says that the organisation expects a third of the world economy and half of the European Union to be in recession in 2023.
The world economy clearly hasn’t got the ‘New Year, new you’ memo.
The continuing war in Ukraine, high levels of global inflation and a predicted COVID surge in China mean challenges are set to persist for the furniture industry (and many others).
Consumers will be tightening their belts and spending less on homewares, and there are also supply chain issues and inventory management issues to deal with.
But despite the doom and gloom, there are several ways that furniture businesses can stay resilient and weather the storm that 2023 is promising to be.
How to keep your furniture business resilient in 2023
Reassess your supply chain
2022 was a supply chain nightmare at times. Labour shortages, ongoing COVID lockdowns in China, and the rising cost of raw materials made getting resources and products from A to B much more challenging than usual.
Supply chain disruptions will likely continue in 2023. So furniture businesses will need to be smart about their partners and suppliers.
Take the time to consider how you can make your supply chain more resistant to disruption. Locate and replace the weakest links in your supply chain. And try to reshore or nearshore your raw materials. Working with suppliers in your home country means goods travel shorter distances — and a lot less can go wrong.
Streamline operating costs
The Advanced Supply Chain Group recently surveyed 1,000 UK consumers and found that 75% are planning on spending less on home furnishings in 2023 than they did in 2022.
High interest and inflation rates plus reduced demand for homewares means furniture businesses will likely feel the pinch over the coming year.
To make the money you have coming in go further, look to reduce operational costs and improve efficiency wherever possible. That might mean investing in tech that automates or streamlines parts of your business process.
For example, with the help of inventory management software, you can set minimum stock levels for each product (so you’re never stuck with stock that won’t shift).
You can also forecast in real-time based on the most up-to-date info, which means you spot risks and opportunities more quickly and accurately.
And with forecasting, stock level and order info all in the same place, you’ll find it easier to create a cost-efficient production schedule.
In the past, most consumers browsed furniture products on the internet before heading to a bricks-and-mortar store to make a purchase.
But times have changed. Online shopping has exploded in popularity. And furniture businesses have to follow suit if they’re to keep pace with consumer expectations.
Consumers now feel comfortable shopping and buying homeware products — both big and small — online. What’s more, data shows that 2/3 of online searches for furniture are transactional. This means that these customers are ready to buy.
So, to capitalise on these trends, furniture manufacturers must have an online presence, make online orders possible, and work to create a seamless e-commerce experience for shoppers.
Learn to navigate reduced customer demand
The furniture industry saw a huge boom during the pandemic as customers focused on revamping their spaces at home.
Reduced consumer demand means you can’t continue with business as usual. You need to reassess and realign your inventory strategy.
This means monitoring the right warehouse metrics, including:
- Inventory turnover
- Inventory to sales ratio
- Cost per line item shipped
- Carrying cost of inventory
- Cash-to-cash cycle time
These figures will help you forecast more accurately — and manage inventory more efficiently — ensuring you’re carrying the right amount of stock in the face of changing customer demand.
Focus on sustainability
Two-thirds of consumers will pay more for sustainable products. You could be boosting your bottom line and benefitting the planet by improving the eco credentials of your product line.
To do this, you need to examine the products you manufacture. Are they made from environmentally friendly materials? And are they manufactured in a way that seeks to minimise their carbon footprint?
You also need to examine your operations as a whole. The environmental impact of your supply chain, your warehouse, and even your office HQ all impact the sustainability of your products.
Commit to going green — and incorporating this commitment into your branding and marketing — and you may just edge ahead of the competition in 2023 and beyond.
Rethink your product offering
While consumers may feel less able to spend on big-ticket items, the desire to create a comfortable and stylish home hasn’t gone away.
With this in mind, look at your product offering in 2023. This is a great time to innovate and adapt to the market’s changing demands.
Adding smaller, less expensive products to your inventory may help you maintain consumer interest throughout the year to come.
Think about how you can help consumers bring new life to old furniture pieces and interiors, empowering them to prolong the life of existing furniture while staying up to date with interior trends too.
Inexpensive accents, upholstery upgrades, and schemes that support the repair or resale of existing homewares will help businesses to capitalise on both the cost and environmental consciousness of consumers.
Look to the future
As well as preparing for recession, resilience means preparing to exit the recession too.
To ensure your furniture business is ready for opportunities further down the line, and get an early lead over your competitors, take some time to plan for a period in which your business can thrive rather than just survive.
Configurable inventory management software can help furniture manufacturers navigate all of the challenges 2023 has in store. Try Workhorse for free and set your business up for a successful year ahead.