Lead times are terrible. When will they get better?

Original article posted at Business of Home by Kaitlin Peterson.

Shutdowns of the manufacturing floor with the onset of COVID instigated an initial round of delays, which were compounded by a slow return to production as companies navigated new safety protocols. More than one year later, many major manufacturers still aren’t staffed at full pre-pandemic capacity, which makes it much harder to catch up on the backlog. And every time an employee tests positive for COVID, many more workers with whom they came into contact are sent home to quarantine, which only exacerbates the delays. Add soaring freight costs and a scarcity of raw materials (plus a shortage of containers to ship them in) and it quickly becomes clear that this is a mess with no easy answers or antidotes.

What’s a designer to do—and is there an end in sight? BOH called up Ray Allegrezza, the executive director of the International Home Furnishings Representatives Association (founded in 1934 to focus on the needs of the industry’s sales reps) and former Furniture Today editor in chief, to get a read on the current manufacturing climate. Allegrezza explains how the cracks in the furniture industry’s foundation finally gave way and offers his frank assessment about when the tide will begin to turn.

Let’s take a quick look back. In your eyes, what’s the fallout from 2020 in the home furnishings industry?

I wrote a column in December that said, “I can almost hear the audible sigh of relief as we shut the books on this year.” But you know what? The storm continues. I don’t think we’re going to be out of the woods until maybe the third quarter of 2021. This stuff is not going to mitigate—the supply chain is not going to bounce back.

What are the biggest hurdles in those recovery efforts?

The biggest thing right now is container prices. I’ve been talking to a lot of my manufacturer friends, and they’re saying that a year ago, they were paying $2,300 or $2,500 for a container. Now, if they can get on the list, it’s $7,500.

What are the big changes that you see dealers needing to make?

They need a brick-and-click position. They need to look at e-commerce not as the enemy, but as an alternate source of income. That doesn’t mean that you have to try to be Amazon Lite. You can explain to your customer why you chose not to do the Wayfair model, but you’ve got to be able to say, “Here’s what’s special about our model.” And you’ve got to have something to back it up.

I also think the messaging has to change. If your deal [to attract customers] is that there’s no down payment or interest for 60 months—[it sends a message that] this product can’t be too good or valuable, or you wouldn’t be able to get away with that. If it was truly valuable, you’d think that you’d have to have some skin in the game to take it home. But I guess I’m dreaming, because we already have some big players that do that consistently.

When we do all have product again, how will the landscape be different?

This is more anecdotal, but I feel really strongly that being forced to stay at home and buy so much stuff online, people have purchased brands that they’ve never considered before—and they found that they liked them! That’s not going to rock the boat overnight, but I think it’s going to have a residual effect.

What are the bright spots or reasons for optimism?

Nothing lasts forever, good or bad. Here’s my Pollyanna [thought]: Consumers, at the end of the day, make or break retail. We have been forced, all of us, to look at our homes through new eyes because we work there, we sleep there, we eat there. And what we’re seeing is that people have been forced to really take a good look at their home furnishings, and they’re seeing the little rip and tear or saying, “I can’t sleep on this bed one more night. This really is ridiculous.”

The bright side is that the more they focus on the home, the more the world is a scary, evil place that could kill you, home truly becomes a safe haven. “You know what? If this is the one place where I’m not going to die, I want it to look good and be comfortable. And if I can’t go on vacation, I’m going to take the $10,000 I was going to spend taking the family to Disneyland and do that room over.” I think that really is a legitimate bright side.

“We’ve got to create messaging that makes a recliner as desirable as the new iPhone. It can’t just be wood and fabric—it’s got to tell a story of comfort, security, safety and well-being.”

- Ray Allegrezza