Insider's Guide to Furniture & the Home Furnishings Industry

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Why are furniture orders taking so long to arrive?

Tuesday, December 15, 2020

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The entire furniture industry has been experiencing major delays and shortages over the past year (since late 2019.) 

Delays are getting worse and there is little chance that they will improve in the near future.

The delays are both international and national. They will continue for at least another year and probably well beyond that.

  • Covid is a new factor with a significant impact. It is a convenient (and easily understandable) excuse, but it is not the major cause of the current delays.

Internationally, President Trump's trade embargo against China drastically disrupted imported shipments. 

  • China used to supply more than 80% of U.S. furniture imports. This included both finished goods and raw materials.
  • Since the imposition of extremely high tariffs, China's share of imported furniture, fabrics and parts has shrunk below 20% within the past 3 years.
  • Vietnam and other Asian nations have benefitted from the reduction in Chinese furniture and parts shipments.

Although these alternative sources quickly expanded manufacturing facilities, shipping capacity has not been able to keep up.

  • China had huge modern port facilities which could receive, load and ship large container loads with great efficiency.
  • Port facilities at the new Asian sources are far less extensive and efficient.
  • Threatened tariffs for the new Asian furniture sources (similar to those already imposed on China) have delayed development of major new port construction.

Major delays in international container shipments of finished furniture, components and materials have had dramatic effects on mattresses, wood and upholstered furniture sold in the U.S.

Imports of other consumer goods have also been affected.

The overseas container shortage is magnified by a major shortage of truck drivers in the U.S.

A November 23, 2020 article in Furniture Today stated that transportation (trucking) companies nationwide are currently receiving orders at 120% of capacity.

  • For 2021, incoming and outgoing furniture deliveries are expected to increase to 130% of capacity.

Part of the driver shortage is due to Covid shutdowns and restrictions, but it is not the only factor.

The driver shortage began when new regulations went into effect late last year.

  • These regulations limited the number of hours and miles truck drivers are allowed to travel each day(and week.)

Because of anticipated shipping delays, furniture manufacturers have been hoarding essential supplies.

  • Fabrics, lumber, plywood, foam, fiber, mechanisms, etc. are all in short supply.
  • Component and parts orders that used to take weeks to arrive are now taking months.

Manufacturers are ordering double and triple times the normal quantities of raw materials.

  • This has created the same type of panic buying situation as when toilet paper and cleaning supplies disappeared from grocery stores.

Retailers are also placing larger orders, attempting to replace depleted inventories.

Although furniture showrooms lost business due to the Pandemic, overall 2020 furniture sales have increased by 20% over 2019.

Online furniture retailers are showing huge increases in sales due to the Covid Pandemic.

  • Wayfair's 2020 furniture sales are up 66% compared with 2019. Other online retailers have seen similar increases.

Furniture retailers are placing larger orders, trying to build up depleted inventories.

  • In-stock merchandise is quickly selling out, including product lines that used to be slow sellers.

A contributing factor in the current supply system logjam is the size of the companies currently making and selling furniture.

  • Small furniture retailers and manufacturers are rapidly disappearing.
  • Large furniture retailers and manufacturers are getting bigger.

The shift from small to large furniture companies has been ongoing since the 1980s.

  • At that time, the top 100 furniture retailers accounted for fewer than 20% of total U.S. furniture sales.
  • Today, 80% of U.S. residential furniture is sold through the 25 largest retail chains.

The loss of small furniture companies accelerated in 2007 - 2010 when the Recession hit.

  • During a 4 year period, 40% of U.S. furniture manufacturers and 20% of retailers closed down.
  • Small businesses were particularly hard hit, either closing down or selling out to larger competitors.

80% of U.S. furniture sales are now made through the 25 largest retail chains.

  • These mega-retailers rely on huge furniture manufacturers to supply their needs.
  • Most of the giant manufacturing facilities that can mass produce large enough quantities to service the big retailers are located overseas in Asia.

Supply chain delays and shortages have resulted in major cost increases for virtually every component and raw material needed to make furniture.

  • Shipping and delivery costs have jumped, while service has deteriorated.
  • Manufacturers are increasing costs to retailers.
  • Retailers are raising prices to their customers.

The furniture industry is currently experiencing major shortages of both finished products and raw materials.

Worldwide supply chain disruptions and severe U.S. truck driver shortages have created major shipping delays which will not be quickly remedied.

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