How Case Suppliers Are Alleviating Excess Inventory Challenges – Both Retailers’ And Their Own

Disruptions first caused by the COVID pandemic sent the furniture industry and many others into disarray. Demand skyrocketed and supply worsened, prompting retailers to highly value in-stock items or, at the very least, product they could get their hands on quickly.

But then, as the pandemic waned, demand dropped. The inventory stockpiled over a season of peak demand began to sit.

Now, retailers and suppliers are having to adjust. Retailers’ needs have changed. Suppliers are being forced to pivot, having to address their own inventory situation as well as figure out how to win over retailers.

“Inventory levels seem to be high at a lot of retailers, but if you’re offering good value at good pricing, including incentives for purchases – you can get business,” said Scott Hill, president of sales and marketing at New Classic Furniture.

One thing Hill says New Classic does is send out weekly “wow” sales on specific items that run for that week only.

“It creates a sense of urgency,” he said.

Hill said manufacturing in Mexico still represents a big advantage for the company, as lead times are improving there. “Even with ocean rates coming down, Mexico still offers better pricing than Asia.”

In-stock information

Like many in the industry, having items in stock was a major issue for Universal Furniture over the past few years. The company took steps to mitigate, and with stabilizing demand, believes there is finally light at the end of the tunnel.

“Way back when, before things changed, we had more than 1,200 SKUs,” said Neil McKenzie, the company’s vice president of marketing. “Customers used to depend on a certain level of stock. Then it changed and got out of whack. We are normalizing what we were doing prior to pandemic.

“One thing we’ve done is added an ability to shop in-stock items on our site,” he said. “That’s for everyone and at the item level. We show the quantity of in-stock items. That went live late last fall. At the time, there was a massive need for knowing what was there. But we’re still seeing a significant demand for that information.

“We also added ability to shop for items that would be in-stock in the next 45 days, as well as the number of things that had been top performers that are not yet back in stock. We’ve gotten very good feedback from doing this.”

MacKenzie says the company has hundreds of items now that at least have some stock. Some items have 10 or more in stock. Others have more.

Tracking technology

High-end resource Phillips Collection has invested in technology that helps it keep better track of its inventory. It also acquired a new warehouse.

“Inventory is king,” said Jason Phillips, vice president of sales and marketing. “In the inevitable instances when we run out of stock, we have great technology that gives us real-time inventory counts of similar items. Our marketing team steps in to funnel that data in a compelling manner to our salesforce.

“Fortuitously, we also acquired our fifth warehouse just prior to the pandemic, which has afforded us some much-needed extra capacity to store merchandise.”

Some suppliers have opted to cut back on unveiling new products, as retailers are seeming less interested. But Phillips hasn’t cut back.

“With the additional warehouse space, we have not had to cut back on product development. In fact, we are still growing,” he said. “We just undertook an expansion of our Las Vegas showroom, which allowed us to display more new collections at the July market.”

Domestic advantage

Doug Bassett of Vaughan-Bassett says he and other domestic suppliers have an advantage, as dealers do not have to order by container.

“We have heard from many dealers that their warehouses are full,” he said. “Our message to them is we can help. We have in-stock on 90% of our line and ship within 48 hours. We can get it to them literally as they sell it. People don’t have to order container load or a truck load.

“The good news, for us, is that we can carry about $21 million in finished goods,” Bassett said. “We’re at $17 million to 19 million now, so we’re not overstocked. We want to get that number up.”

Like Vaughan-Bassett, Legends Furniture says having manufacturing close to home gives it an advantage.

“We run ‘just in time’ production and our minimum order is only 1,500,” said Tim Donk, Legends’ vice president of sales. “With a production lead time of two weeks, our dealers can get only what they need, when they need it. It’s a huge advantage right now.

“As for our import division, that 1,500 shipping minimum is a combined minimum if it’s coming from one of our domestic warehouses.”

Klaussner Furniture also makes most of its furniture domestically (around 70%).

“Our inventory is fine,” said Vice President of Marketing Len Burke. “We make our own foam and frames. We have more control in back end. We build goods to order. And for domestic, our core business, we build orders as we receive them and do just-in-time delivery.

“We’re there for our retail partners,” he said.

Dealing with disruption

Case good and upholstery importer Najarian Furniture gets most of its product from Vietnam. Like others, it was heavily affected by supply disruptions.

“We’re currently working with our retail partners and factories to keep goods flowing to the best of our abilities,” said Michael Lawrence, the company’s executive vice president.

“There is more supply than demand, and freight is still an issue, so the flow of shipments has slowed which is causing production slowdowns as factories need to get goods out of their warehouses. Inventory is being held at the factory for the most part, although we also have a 3PL warehouse in Ho Chi Minh that can store product.

“Excess inventory affects new introductions as retailers need to push out new product launches as they sell through their inventories,” Lawrence, continued. “Retailers are still moving forward with their new product commitments from spring market; it’s just a matter of working with them on timelines to ensure we have product available when they’re ready for it.”