Are You Rethinking Your Approach to Inventory?

With many uncertainties continuing to impact the supply chain, furniture retailers may find themselves wondering how to adjust their inventory strategy.

According to a recent study by Furniture Today Strategic Insights, 40% of retailers describe their inventory position as “weak” or “desperate.”

Even though consumers are experiencing longer waits for many products and services, store owners are understandably eager to capitalize on the current demand. As a result, businesses that had moved toward just-in-time ordering processes have been reevaluating their approach.

Unfortunately, nobody can predict what the “new normal” will look like. Likewise, it is unclear how long the boom in the home furnishings market will last. What we do know is that businesses that remain nimble and develop effective strategies now will likely be the winners when the dust starts to settle.

As you plan for the years ahead, here are 5 ways to stay on track:

1. 1. Strengthen Inventory Management
      Not only does inventory tie up cash flow, it introduces the opportunity for items to be lost or damaged, takes up warehouse space and adds to administrative work. Before you take the step of bringing more items in stock, take a long, hard look at your inventory management practices to wring out as much waste as possible.

1. Keep Your Supply Chain Short
   Promises of faster, cheaper production had lured some buyers to overseas markets. However, many are now questioning the sustainability of that approach as they feel the ripple effects of the pandemic, labor shortages and geopolitical crises. By reducing the number of steps in the process, companies that source their products closer to home are in a better position to insulate themselves from issues beyond their control.  

3. 3. Expand Your Supplier Base
      Facing longer lead times on all fronts, consumers may be more flexible on their preferred furniture styles and designs if they can get the product quickly. The wider your supplier base, the more options you can give your customers when supply challenges arise.   

3. Plan For Price Increases
   Many manufacturers have absorbed at least some of the recent increases in the costs of labor, materials and transportation, but consumers are now starting to see this reflected in the price tag. With rising inflation, be prepared for how higher prices will affect your bottom line as well as how you will continue to communicate value to your customers.
4. Build Relationships
   By creating strong supplier relationships, you not only gain an edge in sourcing products, you open a line of communication that can help each of you understand trends, emerging challenges and ways to better meet consumer needs.